Easton-Bell has finalized the legal procedures for the establishment of an office in the western part of Switzerland for the Europe, Middle East and Africa region, although it is still looking for the most suitable office space. It is also recruiting new managers for the new EMEA operation, including category managers and marketing managers for the bike and snow segments. The operation will be run by the company's managing director for the region, Paul Stratta, who will relocate there from his temporary office in Brussels.
The new office will have a showroom to present its offerings under the group's action sports brands: Giro, Bell, Blackburn and Easton. Its general purpose will be to better service its long-standing distributors in the region; to interpret the demand from the region for the development of new products, which will continue to be based in the U.S.; and to coordinate new product launches across EMEA through appropriate sales and marketing programs, complementing and aiding the distributors' efforts. It will also take care of the after-market business. Customer service will remain in Ireland.
There are no plans to change the network of distributors, and the company will continue to develop close direct relations with key accounts such as Décathlon and Go Sport in France and Halfords in the U.K. Stratta says the goal of the new setup is to push the level of Easton-Bell's annual sales in the EMEA region up to a level of around $200 million within five years' time. The current level could not be learned, but industry officials estimated it at just under $100 million at the present time.
Easton-Bell reached total sales of $834.9 million worldwide last year, 8.0 percent more than in 2011, with increases of 4.8 percent in action sports to $362.6 million and 10.7 percent in team sports to $472.3 million. On a currency-neutral basis, these two segments grew by 4.2 and 10.2 percent, respectively. The group reported increased sales of cycling helmets and accessories, but pointed out that it sold fewer high-margin snow helmets because of poor snow conditions and high inventories in Europe.
Unfavorable currency exchange rates had a negative impact on the group's profitability. The gross margin for the year remained flat overall at 34.0 percent, but an increase in marketing and R&D expenses led the company to post an 18.2 percent lower net profit of $8.5 million. Some interesting new product categories may come out of these investments.
In the fourth quarter of 2011, the group experienced a surge of 16.9 percent in total revenues because of earlier shipments of new baseball, softball and other sports items for the spring 2012 season. The company also benefited from the launch earlier in the year of Giro's cycling shoes.
