Dorel Industries has released results for the first quarter ended March 31, 2020. Total group revenue was US$580.8 million, down 7.2% compared to US$625.6 million a year ago. The reported group net loss was US$57.8 million, compared to US$8.3 million in Q1 2019.
At Dorel Sports, which includes brands such as Cannondale and Schwinn, the first quarter of 2020 was the fourth consecutive quarter of revenue growth, at US$188.2 million, an increase of US$3.6 million, or 2.0%, compared to a year ago.
Dorel Sports’ operating loss was US$0.6 million versus an operating profit of US$4.5 million last year. The division noted that coronavirus reduced first quarter operating profit by over US$6.0 million. This was through a ‘combination of reduced sales in the second half of March due to lockdowns, unfavourable foreign exchange due to the strength of the US dollar and an increased impairment loss on trade accounts receivable considering the economic impact of the Covid-19 pandemic.’
Dorel Sports noted that, in Q1 2020… ‘Many bicycle factories in Asia were forced to close for four to six weeks, reducing supply. Though demand remained strong, there were some constraints in the ability to realize sales as many countries locked down retail operations.
‘Some of the larger sporting goods outlets closed although e-commerce sales are making up for the lack of brick and mortar sales. By the end of April, many dealers that had been closed in Northern Europe had reopened while most of the dealers in the southern countries remained closed.’
‘As reported in the media, the bicycle industry has seen a surge in business in recent weeks. Many people are getting out for fresh air and exercise, while others are using bicycles as a mode of transportation to avoid public transport during the Coronavirus crisis.
‘The desire for physical and mental health wellness, outdoor fun and fitness, while remaining safely isolated, are all driving factors for the significant increase in bike demand. This has been helped by the breaking, warm spring weather in many regions. Cities around the world are closing additional traffic lanes to give cyclists and pedestrians more space and some are temporarily or permanently expanding cycling infrastructure in response to Covid-19.’
Despite some constraints, Dorel Sports notes that second quarter sales are expected to remain strong where consumers can access bikes, including mass retailers and e-commerce, two channels experiencing an exponential increase.
The North American business is expected to deliver sales growth while European revenues are expected to decline due to ongoing lockdowns across Southern Europe. Even though short-term supply will be an issue due to the high demand, and store closures will affect distribution, a return to profitability is expected for the second quarter.
