Dorel's sports segment saw revenues decrease by 1.1 percent to $214.0 million in the first quarter to March 31. Dorel Sports is one of the three business segments of Dorel Industries, along with the Juvenile and Home Furnishing divisions. The sports division consists of a large portfolio of brands including Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and Sugoi.
Lower sales volumes in the Cycling Sports Group were also caused by unfavorable weather, lower discounted sales than prior year and reductions in the inventories of independent bicycle dealers, which reached historically low levels. Sales in North America were also impacted by considerable retail consolidation. In the U.S., brick-and-mortar sales on a same-store basis are struggling while there is ongoing growth in e-commerce sales, the company pointed out.
On the other hand, Dorel Sports' operating profit for the quarter rose by 92.5 percent to $10.1 million as a result of restructuring measures, improved margins and initiatives to control costs in almost all regions. Less discounting and selective price increases in the Cycling Sports Group, combined with Pacific Cycle's improved product mix, also contributed to the rise. Caloi achieved higher margins thanks to improved pricing and product mix, combined with the strengthening of the Brazilian real.
Dorel Sports' gross profit rose to 22.9 percent of sales, up from 21.9 percent in the previous year's first quarter. Excluding restructuring, other costs and the impact of a change in the international business from a licensing model to a distribution platform, the adjusted gross profit for the quarter increased by 2.7 percentage points to 24.6 percent of the revenues.
Dorel Sports launched a series of restructuring measures last year, which are expected to result in annualized savings of $5.0 million. Product development will remain key, the company said.
Cannondale launched new versions of the brand's high performance mountain bike platforms, the Jekyll and Trigger models. Both have been well received, with positive media reviews and strong sell-through, the company claimed.
The Schwinn Lemon Peeler was launched on Amazon and all 500 limited edition bikes sold out. Schwinn was also voted as most recommended brand by women across America in the women's 2017 Choice awards.
Dorel Industries reported consolidated revenues of $646.7 million in the first quarter as compared to $645.9 million in last year's first quarter. Reported net income was down to $8.8 million from $16.7 million last year. Excluding restructuring and other costs, adjusted net income increased by 15.4 percent to $22.7 million.
Of the company's three business segments, Dorel Home stood out, with revenues for the quarter increasing by 8.8 percent and operating profit approaching 10 percent of the revenues. The company expects all its three segments to exceed earnings in the previous year.
