Revenues for Dorel Sports, the bike division of Dorel Industries, went up by 7.4 percent in the second quarter to $241.0 million, or by 9.4 percent in constant currencies. Excluding foreign exchange rate fluctuations and the divestiture of its performance apparel business last year, revenues increased by 11.1 percent. Most of the growth was derived from the Cycling Sports Group (CSG), which posted its fifth consecutive quarter of improvement, with the Cannondale line demonstrating excellent momentum.
CSG posted high single-digit organic growth, with continued success in Europe, driven by the e-bike category. The U.S. independent bike dealers (IBD) channel saw solid growth thanks to new product launches by Cannondale. During the quarter, the brand launched its new app featuring a live dashboard to view speed, distance, calories burned and carbon emissions saved.
The Brazilian Caloi brand also showed solid results, with low double-digit organic growth on the back of success in sales to a bike sharing program and a better product mix. Pacific Cycle reversed a sales decline incurred in the first quarter with double-digit revenue growth due to a strong sales recovery at retail, both at brick-and-mortar stores and online.
To a lesser extent, the group's other businesses all recorded growth, despite U.S. tariffs imposed on China-sourced goods and their impact on retail price points.
By region, revenues in Europe were disappointing, down by 12 percent to $45.9 million. Sales in the U.S. market, which accounts for two-thirds of revenues, gained 16 percent to $163.5 million as the IBD channel bounced back. In Canada, sales were up by 24 percent to $8.6 million. However, in Latin America, revenues declined by 3 percent to $20.0 million and the Asia business dropped by 17 percent to $3.1 million.
Sales to online retailers surged by 50 percent to $29.2 million, while sales to brick-and-mortar retailers went up by 3 percent to $211.7 million.
The duty imposed by the U.S. on imports from China contributed to shrink Dorel Sports' gross margin by 0.6 percentage points to 20.6 percent. Still, the division managed to book an operating profit of $10.1 million for the quarter, against a loss of $3.3 million last year.
The management said it is now focused on inventory and margin improvement. The revenue growth in the first half of the year is expected to continue into the second half, led by strong sales and earnings at CSG.
