Dorels Cycling Sports Group Sees Bike Sales Drop

MONTREAL, Canada – Dorel Industries which since some years has taken a significant interest in the worldwide bike business with the brands Cannondale, GT, Mongoose, Schwinn and Iron Horse, saw its bike sales drop during the first half of 2009.

Dorel Industries says that: “Bicycle sales by the Cycling Sports Group to the Independent Bike Dealers (IBD) and sporting goods customers were down as consumers are purchasing less of the Company’s high-end products or are trading down to lower priced items.”

In a statement on the financial results it is further stipulated that revenues within the segment’s core bicycle business at the
mass merchant level were down from the prior year, but these declines were offset by the contribution of the parts and accessories business that was acquired late in June of 2008.

The Cycling Sports Group is part of Dorel’s Recreational/Leisure division which second quarter revenue increased by 2.1% over 2008, while year-to-date this increase was 7.4%. Excluding the impact of new business acquisitions and foreign exchange variations, the segment’s organic revenue decline was approximately 5% for the quarter and 4% year-to-date. Dorel believes that the poor weather
that was experienced in most of North America throughout May and June also has a negative impact on sales.

In July and August Dorel announced the acquisitions of certain assets of Iron Horse Bicycles, based in the United States, and Australian-based distributor Gemini Bicycles. The Iron Horse transaction of US$5.2 million comprised of inventory and various trademarks and trade names, including the well-recognized "Iron Horse" brand.

At a cost of US$2.2 million, the assets acquired in the Gemini purchase will be merged with Cannondale’s existing Australian operations under the new Cycling Sports Group (CSG) Australia division and will be dedicated to the Independent Bike Dealer (IBD) channel.

Dorel CEO and President, Martin Schwartz further said at the presentation of the financials results: “As we approach the 2010 model year, early reaction to our new IBD product line has been outstanding and our pre-delivery order level is up significantly from last year at this time. Based on the feedback we have received thus far, we believe we will increase our bike sales next year to the IBD retail chain, regardless of the economic situation.”