Dorel Report Highlights a Disappointing 2013
MONTREAL, Canada – In a press release announcing Q4 and year-end financial results, Dorel President Martin Schwartz was frank in his assessment of the Canadian company’s track record last year.
“2013’s performance was disappointing. A number of the issues we faced were industry and economy-related, while others were the result of less than perfect execution on our part.” But Schwartz was still positive on the company’s 2014 outlook stating, “Matters in our direct control are being addressed and there has been definite progress.”
4th quarter revenue for Dorel, which counts bicycle brands Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI among its holdings in its Recreational/Leisure division, totalled US$633.5 million, up 1.8% from US$622.6 million a year ago. Net income was US$11.0 million down from US$29.1 million in 2012.
Schwartz attributed the poor performance in large part to top line weakness, reduction in mass merchant traffic, and reluctance on the part of IBDs to increase inventories. An overall weakness in the global cycling market and bad weather in the first half of 2013 were also cited as a contributing factors.
Part of Dorel’s response to the lackluster year was a restructuring of operations in the Recreational/Leisure division, in an effort to enhance its competiveness in the cycling industry.
“Specifically, we want to significantly reduce development and supply chain lead times with our global partners, improve cost structures and operating margins. This plan will result in higher levels of service for our customers and consumers and will improve profit through 2014 and 2015. We expect to realize annualized cost savings of at least US$6 million once the restructuring is completed in late 2014,” said Schwartz.
One reason for the optimistic outlook for the Recreational/Leisure division in 2014 was a slight rebound during the fourth quarter. Segment revenues were up US$18.8 million or 8.3% for the quarter. Nonetheless, organic sales for the full year decreased approximately 2% and this impact was seen in both the IBD and the mass merchant distribution channels.