Revenues at Dorel Industries' Recreational/Leisure division, which includes the Cannondale, Sugoi, Schwinn, GT, Mongoose, IronHorse and Instep brands, rose by 17.2 percent in the fourth quarter ended Dec. 30 to $205.9 million. At constant currency rates, organic sales rose by nearly 19 percent.
Turnover was driven by mass market products, whose sales rose by 20 percent, supported by the marketing campaigns for Schwinn at the early part of the year and in November. The group spent $5 million in the full year for the campaigns to boost brand awareness in the mass and independent bicycle dealers (IBD) channels. Dorel had sensed that brand awareness for Schwinn had diminished and estimates that retailers appreciated the investment.
The division's sales to IBD were up by about 20 percent as new models were well received in Europe and North America. The performance achieved with IBD was not limited to Cannondale but comprised the majority of brands sold through that channel.
The division's gross profit rose by 20.2 percent to $46.5 million and earnings from operations increased by 18.0 percent to $10.6 million. Earnings were hit by a weaker-than-expected performance of the group's apparel and footwear business and inventory writedowns due to goods that arrived late.
In the full year, the division increased turnover by 13.7 percent to $775.0 million. Gross profit rose by 19.4 percent to $183.6 million and earnings from operations increased by 31.3 percent to $52.3 million. At group level, Dorel booked an 8.1 percent increase in revenues to $2.31 billion and a 19.2 percent growth in net income to $127.9 million.
Dorel forecasts that sales and earnings from operations will increase in 2011 for the recreational/leisure business as well as its other two segments: products for children and home furnishing. The recreational/leisure activity enjoyed a good start to the year. Upward pressure on commodities, including steel, will force the company to seek price increases.
