Easton-Bell had an 8.3 percent increase in revenues to $202.8 million for the second quarter ended July 3. Operating income rose by 36.0 percent to $20.1 million, and net income improved by 27.5 percent to $5.0 million. Gross margin rose by 1.8 percentage points to 34.0 percent as a result of a better sales mix, manufacturing efficiencies and gains in currency exchange.
Revenues from team sports were up by 8.3 percent on strength in American football, baseball, softball and NFL collectibles, partially offset by lower sales of ice hockey skates. Ice hockey sales were hurt by delivery issues in sticks and late development in skates. The company has since broadened its sourcing for sticks.
Sales in action sports grew by 8.2 percent with positive gains from cycling, accessories and winter sports. The gross margin went up by 3.1 percentage points to 29.1 percent. Winter sports sales have been stronger than anticipated because of strong sell-throughs last year, and Giro has developed an inventory strategy on core items to help it chase more business if the weather is favorable again.
Giro is also planning the launch of high-end cycling footwear for next year priced from $199 to $349 in about 500 specialty accounts. Customers are returning to higher price points in cycling, the management says, even as they move more down-market in team sports products.
Easton-Bell said most of the cost pressure it had seen in Asia related more to labor costs rising by 10-15 percent rather than higher raw materials costs. It has not pushed through price increases to date, but has worked with suppliers to increase efficiencies. It also has moved some of its reconditioning work from the U.S. to its Mexican plant.
Meanwhile, the group’s Riddell unit has won almost $30 million in damages in an infringement case with Schutt Sports in Wisconsin. A U.S. federal court jury found that Schutt’s DNA and Ion helmets for American football infringed on the concussion reduction technology that Riddell uses in its Revolution helmets. Discussing the judgment, Easton-Bell said it had worked out an agreement with its competitor that would permit Schutt to continue shipping product in order to keep the market supplied while a final determination of the case is made. Schutt has 14 days to file an appeal.
