MONTREAL, Quebec (BRAIN)—With two months of Cannondale and Sugoi sales on the books, Dorel Industries reported a strong first quarter as revenue in its bicycle division soared 55 percent.
Dorel’s recreation/leisure segment, which includes the Cannondale Sports Group (Cannondale, GT and Sugoi) and Pacific Cycle (Schwinn and Mongoose), netted $34.6 million in profits in the first quarter of 2008, compared with $17 million in 2007. Revenues increased from $87.8 million in early 2007 to $136 million over the same period in 2008.
Martin Schwartz, Dorel’s chief executive officer and president, credited the success to the Cannondale/Sugoi acquisition and Pacific’s performance over the first three months of the year.
“The segment experienced strong sell-through in advance of the busy spring season. This was particularly the case at Pacific Cycle with its mass merchant customers,” Schwartz said during an April 30 earnings conference call.
For competitive reasons, Dorel does not break up numbers within the recreation/leisure segment, but Jeffrey Schwartz, Dorel’s chief financial officer, said that both Cannondale and Pacific saw significant growth from a performance standpoint in the first quarter.
Martin Schwartz noted developments in the bike division including GT’s newly launched demo program and the introduction of Cannondale’s Rize and Moto models into the marketplace.
“Acceptance has been excellent worldwide and both bikes are expected to represent the lion’s share of volume in mountain bike sales,” Schwartz said.
Dorel also saw higher profits in its juvenile and home furnishing segments in the first quarter.
Overall, Dorel reported first quarter earnings of $556 million compared with $455 million during the first three months of 2007. The company’s net income increased 25.7 percent—from $27.9 million in 2007 to $35.1 million so far in 2008.
For more on this story, including Jeffrey Schwartz’s comments on retailers’ reactions to Dorel’s acquisition of Cannondale, be sure to read the May 15 issue of Bicycle Retailer and Industry News.