Dorel Sports, a division of Dorel Industries, saw its revenues for the first quarter ended on March 31 decrease by 10.7 percent to $184.5 million. Excluding fluctuations in foreign exchange rates and the divestment of the performance apparel line business, the decrease compared with last year's first quarter was around 5.2 percent. The operating profit was $4.5 million as compared to an operating loss of $0.8 million last year. The prior year's first quarter included a $6.6 million impairment loss recorded on Toys“R”Us trade accounts receivable and a $1.5 million operating profit related to Toys“R”Us shipments prior to the U.S. bankruptcy. The bulk of the division's operating profit in the first quarter was derived from Cycling Sports Group (CSG), which posted its fourth consecutive quarter of improvement, with the Cannondale line demonstrating excellent momentum.
CSG had a very good quarter in all of its markets, with only Pacific Cycle showing a decline in the mass channel, although the trend reversed in April, the company said. The positive performance of CSG was driven by new products and increased sales of e-bikes in Europe and growth in the U.S. independent bike dealers' (IBD) channel, challenging the industry's negative trend. In Brazil, Caloi posted double-digit sales growth in local currency thanks to a range of factors including better mix, sales to the country's bike sharing program and price increases implemented last year.
Meanwhile, Pacific Cycle offset CSG improvement, accounting for most of the revenue decline, and reduced the increase in operating profit for the segment as a whole. This was due to high retailer inventory remaining from the fourth quarter and poor weather in certain regions. April sales, however, have rebounded with strong POS at all retailers. This trend will be reflected in second quarter results, as two-thirds of the first quarter revenue loss in the mass channel was already recouped in April.
Dorel Industries, headquartered in Montreal, Canada, operates three distinct businesses in juvenile products, bicycles and home products. Dorel Sports' division includes brands like Cannondale, Schwinn, GT, Mongoose, Caloi and IronHorse. Dorel Industries posted consolidated revenues of $625.6 million in the first quarter, down from $642.3 million a year ago. Reported net loss was $8.3 million, as compared to a net income of $4.7 million last year. The company is currently working on the restructuring program announced in March to optimize its business as a more focused global consumer products company. Dorel Juvenile is restructuring operations in several markets. The company trusts that these measures will bring the desired results this year and the next. With specific reference to the Dorel Sports division, the company expects increased revenues and adjusted operating profit for both the second quarter and the year.
