TAICHUNG, Taiwan (BRAIN)—Trek’s John Burke told a gathering of the company’s Taiwanese suppliers Thursday night that he’s never been more bullish on cycling’s future than he is right now.
While citing the current economic turmoil rattling markets and company’s worldwide, Burke said the bicycle industry appears relatively stable. And Trek had a stellar month for sales in October with sales up 7.2 percent over last October, he added.
Burke made his comments at an annual party hosted by Trek at Taichung’s Winsor Hotel to honor the company’s Taiwanese suppliers. He also told the crowd of more than 100 people that Trek’s finances were solid. “I can assure you that Trek has never been in a better financial position,” he said.
Burke noted that by the end of this year the company would have opened 140 concept stores worldwide, which is helping to drive the company’s growth. He said annual revenue at the Madison, Wisconsin, company will hit approximately $725 million this year—a figure that highlights the company’s steady growth since 2000 when Trek’s revenue was half that amount.
“Trek is a solid company and has had solid growth and we are really optimistic about the future,” he added.
Several key Taiwanese suppliers generally agree that business is holding steady for mid-to-upper end bicycles and components made in Taiwan. John Chen, Wellgo’s general manager, said that sales growth in the U.S. and Europe is relatively flat but sales of Wellgo’s pedals and other products throughout Asia are up.
Still, at a recent meeting of A-Team members—some 21 major IBD suppliers—they were warned to pay close attention to accounts receivables, particularly money owed by smaller, less well-financed companies.
Another key Taiwanese supplier who asked not to be named said some bike makers have canceled some orders or postponed delivery. Forecasting sales is a nightmare. Bicycle manufacturers are concerned that they could be stuck with unsold inventory next year and would be forced to heavily discount it to move it through retail. On the other hand, given the volatility of today’s economy, suppliers want enough product available to meet retail demand.