Dorels Bike Business the Bright Spot in First Quarter Results
Dorel Industries failed to meet analysts expectations for the first quarter of 2011. Dorel CEO and President Martin Schwartz (photo) stated that: a highlight of the first quarter results is the momentum of our bicycle business, particularly in the IBD channel. Our recreational/leisure division, home to bicycle brands
MONTREAL, Canada – Dorel Industries failed to meet analysts’ expectations for the first quarter of 2011. Dorel CEO and President Martin Schwartz (photo) stated that: “a highlight of the first quarter results is the momentum of our bicycle business, particularly in the IBD channel. Our recreational/leisure division, home to bicycle brands such as Cannondale, GT, and Sugoi, continued to deliver positive results.
Dorel’s recreational/leisure division revenues grew 10.3% to US$18.8 million, with operating profit improving by 17.9%. Revenue growth exceeded 25% in the IBD channel, a development the company attributes to enthusiasm for the 2011 model year product line overall and an expanded Cannondale dealer base in particular.
Total revenue from the segment for the first quarter was $200,427,000, with a gross profit of $50,995,000 and an operating profit of $17,771,000. All markets saw sales growth, but Europe and Australia were the stand outs, with the Cannondale and GT brands showing the strongest growth. Sales in the segment’s mass merchant category registered single digit declines, attributed to bad weather and the late April date for this year’s Easter holidays.
Dorel is expecting its significant investments in bicycle brands to continue the upward trend and the company is predicting an overall improved performance over 2010. Despite the lacklustre mass merchant figures so far, the company says point-of-sales activity has improved in recent weeks and remains optimistic for the balance of the year.
The Footwear and Apparel Group, run from Sugoi headquarters in Vancouver, BC was plagued by excess inventory and operational challenges associated with setting up the new division, but made some improvement over 2010. The company has identified the segment for improvement initiatives in 2011.
“We’re not pleased with the way everything’s running right now, so we still have a lot of work to do, but we’ll get there,” Schwartz said.
For the company overall, per diluted share earnings fell to $0.94 from $1.15. According to figures compiled by Thompson Reuters, analysts had been looking to $1.00 per share earnings. However, the company did exceed expectations for its overall earnings, climbing 1.9% to $607.8 million from $596.3 million. Analysts had predicted a drop to $591 million.
Dorel’s cycling brands include Cannondale, Schwinn, GT, Mongoose, IronHorse, and Sugoi. Dorel is a US$2.3 billion company with 4700 employees and facilities in nineteen countries.