Dorel Industries Inc this week announced results for the second quarter ended 30 June 2011. While total revenue for Q2 2011 was US$619.0 million, up a modest 1.9% year on year, Dorel’s Recreational/Leisure segment saw a sales increase of 15.9%.
This was driven by strong sales in Cycling Sports Group (CSG), Dorel’s Recreational/Leisure independent bicycle dealer (IBD) division. Excluding the impact of foreign exchange variations on the segment’s non-US based businesses, organic revenue increased approximately 12% for the quarter and 11% year to date.
For the quarter, the IBD channel experienced sales gains in all of its divisions, which are located in the US, Europe, Japan and Australia, with Europe posting a particularly strong sales increase of over 50%. There was also strong revenue growth within the segment’s international IBD distributors in Europe and Latin America.
“Dorel’s Recreational/Leisure segment maintained its strong performance through the second quarter with a year-over-year revenue increase of 16% and an operating profit gain of 25%. With its strong focus on innovation, Cannondale has become a much desired brand and is selling very well. In addition, the marketing investments made in Schwinn have brought the desired results,” commented Dorel President and CEO, Martin Schwartz.
The recreation, furniture and baby products giant saw total company year to date revenue reach US$1.23 billion, compared to US$1.20 billion last year. Net income was US$54.2 million or US$1.65 per diluted share compared to US$71.1 million or US$2.14 per diluted share for the first half of 2010.
Premium bike attraction
According to the company, consumers remain attracted to Dorel’s premium bicycle brands. The demand for Cannondale is reported to be very strong; and GT, Schwinn and Mongoose continue to make important gains in key North American and European IBD markets. Growth is coming both from existing dealers and from new distribution for all brands through a combination of additional dealers and cross-selling at existing dealers.
The sales success of the segment’s premium bicycles can be attributed to successful new product introductions and increased promotional spending, which is improving brand awareness. Product development also remains a key focus. This is evident in the innovations in the 2012 Cannondale line up, which is now ready to be shipped. The 2012 Schwinn and GT lines also feature significant changes with updated frame specifications and components.
Pacific Cycle
After a slow start due to a wet spring and retailers closely controlling inventories, second quarter Pacific Cycle sales to the mass merchant distribution channel improved slightly over last year. (Pacific Cycle specialises in sales to local bike shops and mass-market retailers in the US. It was acquired by Dorel in 2004.) Here, POS levels have increased since the weather finally broke in early June. Bolstered by an aggressive advertising and marketing campaign which has increased Schwinn‘s brand awareness, Pacific Cycle is reportedly increasing its market share in the adult category. Schwinn is ‘outperforming the competition and has made gains over last year’s second quarter.’
