MONTREAL, Canada – The financial results of Dorel Industries’ bike business showed a double digit drop during the third quarter of the year. Dorel’s Recreational/Leisure division, owner of Pacific Cycle, Cycling Sports Group (representing bike brands Cannondale, GT, Schwinn, Mongoose, Ironhorse, Hot Wheels, and Circle bikes among others), and the Performance Apparel Division (Sugoi) saw its revenues fall 11.1%, gross profits went down by 8.7%, and earnings reduced by 26.8%, all compared to 2008.
The company attributes the third quarter decline to Pacific Cycle’s lower sales at mass merchants, noting the IDB and specialty sporting goods stores sales increased over last year’s third quarter results. “This development reflects the overall trend in the bicycle industry,” commented Dorel President and CEO, Martin Schwartz.
According to Schwartz the results in the IDB and specialty sporting goods stores are under pressure resulting from the consumer’s choice for lower-priced offerings rather than the higher-end products, which boast a higher margin.
Another factor to consider are the purchases made by Dorel during the quarter and in early October (Ironhorse, and bicycle distributors in Australia and the U.K). With those acquisitions excluded, Dorel estimates its organic revenue declines at 10% for the quarter and 6% for the year-to-date.
Despite lower revenues in the bicycle division, the juvenile and home furnishing segments were very successful in the third quarter of 2009 making it the most profitable quarter ever for the Canadian Dorel Industries. The company’s third quarter earnings dropped 6.1% to US$ 518.5 million, but even with the lower revenue, it still registered an 11.1% increase in earnings over 2008.
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