Shimano's sales dropped by 15.7 percent to 241,700 million yen (€2.1bn-$2.3bn) during the first nine months of 2016. The Japanese maker of bicycle components and fishing gear blamed continued high inventories at bicycle distributors in Europe, North America and China, brought on by unfavorable spring weather in Europe and stalled consumer spending on sports bikes in China.
In the Bicycle Components segment, sales decreased by 18.8 percent to ¥192,900 million (€1.7bn- $1.8bn). Bad weather in March and April undermined retail sales of bicycles in Europe, resulting in a higher level of distributor inventories. However, sales were brisk in Europe starting in July, thanks to more favorable weather conditions.
In North America, retail sales of completed bicycles were weaker than in the same period last year. In China, the company saw no signs of recovery in retail sales of sports bicycles, which have been lackluster since 2015, partly due to heavy rains in various regions. In the Japanese market, sports bicycles' sales remained sluggish and inventories continued to be high.
In Shimano's Fishing Tackle segment, revenues increased by 0.8 percent to ¥48,400 million (€420.9m-$461.2m). Shimano said the Japanese market remained buoyant owing to relatively stable weather from the beginning of the year to mid-August. Despite the negative impact of last April's earthquake in Kumamoto, segment sales exceeded the level of the first nine months of 2015.
Fishing tackle sales in the rest of Asia were robust at the beginning of the year, supported by the weaker yen. However, the company said they ended at the same level as the previous year after nine months because retailers started adjusting inventories from the summer onward.
Meanwhile, sales in Europe, North America, and Australia did not fully recover from the dip in the first half. Revenues from Other segments increased by 1.1 percent to ¥294 million (€2.6m-$2.8m).
The company's gross margin gained 0.7 percentage points to 40.8 percent, but the operating margin dropped by 2.6 percentage points to 22.7 percent.
Shimano maintained its full-year guidance, with revenues expected to reach ¥325,000 million (€2.8bn-$3.3bn).