Dorel’s Results Down Due to Challenging North American Retail Market
MONTREAL, Canada – Results at Dorel Sports declined again in the third quarter as the company reports an on-going weakness in the global bicycle market and a very challenging North American brick and mortar environment. Nevertheless Dorel President and CEO, Martin Schwartz is still positive, “We believe at this point that our fourth quarter adjusted operating profit should be in line with the fourth quarter of last year.”
The company’s nine months financial statement showed a 2.8% decline in revenues to USD 1.954 billion (€ 1.68565bn). This resulted in a net profit of USD 49.7 million (€ 42.8 mn) compared with a profit of USD 50.5 million (€ 43.5 mn) in the first nine months of 2016.
Just like in previous quarters this year Dorel’s Sports division including the Cycling Sports Group (CSG) revenues were under pressure as a result of the weak North American market. The financial statement of this division statement showed a 10.7% decline in revenues to USD 628,6 million (€ 542 mn). This resulted in a net profit of USD 15.7 million (€ 13.5 mn) compared with a profit of USD 21.4 million (€ 18.5 mn) in the first nine months of 2016. The third quarter revenue even decreased USD 45.2 million (€ 39 mn), or 18%, to USD 205.5 million (€ 238 mn) from USD 250.7 million (€ 290 mn) last year.
Toys ‘R’ Us bankruptcy
The Toys ‘R’ Us bankruptcy filing last September halted shipments temporarily substantially affecting Dorel’s revenues. Poor weather conditions in the U.S. Pacific Cycle, soft bicycle market and changing buying habits in combination with disruption in the North American retail environment due to internet sales were all mentioned by Dorel as reasons for these disappointing results.
Dorel also reports that CSG’s inventory management improved significantly in 2017 as closeout sales in the quarter represented 11.6% of sales volume in 2017 compared to 16.3% in the prior year’s third quarter. A combination of inventory management improvement in term of product mix that has led to reduced discounting at CSG and selective price increases in key markets, contributed to the gross profit percentage increase.