Revenues within the recreational/leisure segment of Dorel Industries grew by 11.3 percent to $175.7 million in the fourth quarter ended Dec. 30. About two-thirds of this came from acquisitions the company made in the second half, with the rest from a 25 percent increase in sales from its Cycling Sports Group, which sells to independent bicycle dealers (IBD). Its Pacific Cycles division, which sells Schwinn, Mongoose and Iron Horse to mass merchants, had a slight decline. Operating earnings for the division nearly tripled to $9.0 million from $3.2 million the year before.
For the full year, the segment’s sales climbed by 3.8 percent to $681.4 million, but operating earnings dipped by 5 percent to $39.8 million. Dorel said that because of the recession, consumers bought fewer higher-end bike products last year, trading down to lower-priced items with lower margins. In addition, other brands started discounting early. The sales increase was again mostly due to the Cycling Sports Group and acquisitions. Organic sales actually fell by 3 percent.
Management confirmed that the restructuring of its overall bike business is on schedule, including the downsizing of its U.S. manufacturing footprint. Frame manufacturing continues to be shifted outside the country while assembly remains a U.S. operation. To date, the company has spent an estimated $2.9 million on reorganizing the business.
