Cannondale owner Dorel Industries Inc stated last week that Q2 2013 earnings in its Recreational/Leisure segment will be weaker than anticipated. ‘The continued poor weather across the US, Canada and Europe has led to lower than expected sales volumes, particularly in the independent bicycle dealer channel.’
Dorel notes that this situation is now being further compounded by widespread discounting by its competitors in the bicycle industry. The company continued to state that ‘As a result of the soft first half, full year earnings in bicycles will not, as previously indicated, exceed 2012 levels.’
Dorel has initiated significant cost reductions across the Recreational/Leisure segment. This includes a headcount reduction of some 50 positions worldwide, roughly 5% of the segment’s workforce. As a result, Dorel will record a second quarter one-time charge of approximately US$2 million for severance pay.
“These issues in bicycles are mainly related to matters beyond our control,” said Dorel President and CEO, Martin Schwartz. “Our bicycle products are proven and our brands remain very strong. Cannondale continues to attract both excitement and highly positive comments.”
Schwartz continued, “The reality is that we are now into mid-June and the weather has not improved sufficiently which means that we will be unable to make up the accumulated year-to-date sales shortfall. With the cost reductions being implemented, we are optimistic that bicycle earnings in the second half will increase double digit over last year.”
Dorel will announce its second quarter results on 9 August 2013. Dorel’s Recreational/Leisure portfolio of cycling and apparel brands includes: Cannondale, Mongoose, Schwinn, GT and SUGOI.
www.dorel.com
www.cannondale.com
