MONTRÉAL (BRAIN) — Dorel Industries saw sales growth in the specialty bicycle market in the first fiscal quarter this year, the company reported Friday. Dorel's Cycling Sports Group offers the Cannondale and GT brands in the IBD market.
In a news release announcing first quarter results, the company pointed to the IBD growth but did not release specific category numbers backing up the statement.
"Excluding the impact of foreign exchange and the performance apparel line of business divestiture, CSG posted higher sales in all major markets," Dorel said (the divestiture remark relates to Dorel's sale of its Sombrio and Sugoi apparel lines to Louis Garneau Sports last year).
"This was driven by new products and increased sales of e-bikes in Europe and growth in the U.S. independent bike dealers (IBD) channel, challenging the industry's negative trend," the company said. "The bulk of the operating profit in the quarter was derived from CSG ... the Cannondale line demonstrating excellent momentum."
REI announced in February that it would be carrying Cannondale bikes at all of its locations this year. The retailer previously offered the brand at many locations but not all. Dorel counts sales to REI as IBD sales.
Dorel was less successful in the quarter in the mass market, where its Pacific Cycle division offers Schwinn, Mongoose, Ironhorse and other brands. The company said revenue declines at Pacific Cycle offset the gains at CSG.
"This was due to high retailer inventory remaining from the fourth quarter and poor weather in certain regions. April sales have rebounded with strong POS at all retailers. This will be reflected in the second quarter results as two-thirds of the first quarter revenue loss in the mass channel was already recouped in April," the company said.
In a conference call later, Jeffrey Schwartz, Dorel CFO, said Pacific Cycle already had made back almost 60% of the first-quarter losses with Caloi and CSG having strong sales months.
"We're pretty optimistic about how our bike business is looking," Schwartz said.
The Dorel Sports division, which comprises CSG and Pacific, saw a 10.7% decline in revenue in the quarter, tallying $185 million in revenue, down from $207 million in the same period last year. Operating profit this year was $4.5 million, an improvement over the $774,000 loss in the period last year. Much of the loss last year was a result of a $6.6 million impairment from the loss of receivables from Toys R Us.
Dorel's other two major divisions, Dorel Home and Dorel Juvenile, saw mixed performances in the first quarter. Dorel Home revenues were up 9.6% to $211 million, while Dorel Juvenile sales were down 5.4% to $230 million. The company plans to start a restructuring in the Juvenile division this quarter, which will cost an estimated $25-30 million this year and next. The majority of the costs will be in employee severance and related costs as Dorel Juvenile is streamlined in Europe, Latin America and Asia.
