Paul Harrington, who left as president and chief executive of Reebok International to replace Tony Palma as chief executive of Easton-Bell Sports, is moving to a company that managed to reduce its losses in the fourth quarter of 2007 and to achieve a financial turnaround for the full year, after numerous acquisitions that drove sales growth. The group now consists of major operations such as Bell, Easton, Giro and Shanghai Cyclo.
In the quarter ended Dec. 29, the California-based multi-sport company saw its net losses fall by $0.3 million to $5.7 million, compared with the year-ago period. Income from operations rose by 48 percent to $2,109,000, although gross margins slipped by 3.7 percentage points to 31.4 percent, reflecting higher spending on research and development. Turnover increased by 8.4 percent in the period to $155 million.
The outgoing management indicates that it was expected better results for the full year, where Easton-Bell achieved net income of $14,469,000 against a loss of $5,852,000 the year before. The difference was made up by 13.4 percent higher sales to $724.6 million and gross margins that rose by 1.1 percentage points to 34.4 percent of sales. Operating income for the year grew by 92 percent to $67,491,000.
European sales fell by 9 percent to $70.9 million, while sales to other markets outside the USA increased by 96 percent to $28.2 million. On the domestic market, sales were up by 14.4 percent. The global sales increase would have been only 4.4 percent on a pro forma basis, assuming that Easton would have been included for all of 2006, although it became part of the group in March of that year.
Sales in all categories grew except for snow sports, fitness and certain bicycle-related products. Sales of helmets for snow sports fell by 11.3 percent to $28.7 million and cycling accessories dropped by 2.6 percent to $68.3 million. Sales of cycling helmets were up by 13.8 percent to $133.8 million.
Easton-Bell has initiated a three-year program designed to streamline its distribution, logistics and manufacturing operations worldwide. It will include the installation of an SAP platform.
