Like many other bike companies, Dorel Sports, the cycling division of Dorel Industries, has been growing during the pandemic. It registered revenues of $285.6 million for the second quarter, representing an 18.5 percent increase from the same quarter last year, driven by strong performances at the Cycling Sports Group (CSG), whose brands include Cannondale and GT, and Pacific Cycle (PCG), which comprises brands like Mongoose and Schwinn. This was offset by lower sales at Caloi, the Brazilian subsidiary of the Canadian-based group, due to prolonged Covid-19 related store closures in Brazil.
PCG’s growth accelerated, as consumer demand for bikes spiked during and after the pandemic lockdowns. The management attributed this to the fact that many people are using bikes to exercise or as a way to avoid public transport. The spike in demand for all types of bicycles was maintained throughout the quarter. Online sales were particularly strong, as customers shifted to e-commerce at the height of the pandemic. Sales were limited by a lack of supply for certain models, although Asian suppliers re-opened their factories in February. As a result, on-hand inventory dropped considerably.
Dorel Sports’ gross margin jumped by 3.0 percentage points to 23.6 percent. Operating income reached $26.8 million, up from $10.1 million last year, lifted by the performance of CSG and Pacific Cycle, but Caloi registered an operating loss due to sustained store closures and the shutdown of its own factory in Brazil through April and May.
The group anticipates that demand for bicycles will remain strong through the summer season. On-going supply constraints are expected to limit sales, but expectations are that third-quarter revenues and operating profit will continue to be strong. However, the management is not releasing any guidance for the full year due to the current volatility in the bicycle industry.
Dorel Industries, which also includes the Dorel Juvenile and Dorel Home divisions, reported third-quarter revenues of $724.0 million, up by 8.1 percent against the year-ago quarter, and net income of $11.1 million, up from $2.8 million last year.