Dorel Sports posted a disappointing quarter, with revenues for the three months ended Sept. 30 tumbling by 18 percent from the year-ago quarter to $45.2 million. Organic revenues fell by 19 percent when ignoring currency fluctuations.
The company blamed this performance on the continued weakness in the global bicycle market, especially the disruption of the North American retail environment, which was amplified by persistent inclement weather during the quarter. In addition to store closures, the floor space for bikes has been reduced.
Sales declined in Dorel's Cycling Sports Group (CSG), which covers Independent Bicycle Dealers (IBD) and specialty store channels, with a continued reduction in discounted sales because of improved inventory management. CSG's closeout sales represented 11.6 percent of the sales volume, compared with 16.3 percent in the prior year's quarter.
Dorel said there's “some optimism” in Europe as key indicators continue to tick up, and consumer confidence is beginning to return. In Brazil, Caloi saw increased sales volume for the first time this year, driven by the mass market.
Dorel Sports' operating profit tumbled by 97 percent to $176,000, which the company blamed on the lower revenues, partly offset by an improved gross margin, which increased by 0.6 percentage points to 22.4 percent, thanks to an improved product mix and the implementation of cost-cutting measures in key markets.
Dorel Sports' sales are expected to rebound in the fourth quarter, generating an operating profit in line with the fourth quarter of last year.
Dorel Sports is one of the three business segments of Dorel Industries. It consists of a large portfolio of bike brands including Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and Sugoi.