WESTPORT, CT (BRAIN)—Sales for Fox Racing Shox jumped $10.2 million in the third quarter of the year, helping to boost the bottom line of its parent company, Compass Diversified Holdings.
Fox reported revenue of $43.3 million for the quarter ending Sept. 30, up from $33.1 million for the same period last year.
Year to date, Fox has collected $101.2 million compared to $75.7 million during the first nine months of 2007.
The growth can be attributed to increased sales in Fox’s bike and power sports divisions, as well as a spike in aftermarket sales from service revenues, said James Bottiglieri, chief financial officer for Compass.
“We are very pleased with Fox’s substantial growth during the quarter and nine-month period, and are optimistic about the company’s prospects going forward into 2009, as we expect to continue to achieve both top line and bottom line growth,” Bottiglieri said during a conference call held last week to discuss the company’s third-quarter earnings. “In terms of top line growth, the company has a number of opportunities outside of its core non-biking sector, which will begin to materialize over the course of 2009.
Companywide, Compass reported a huge increase in net sales for the third quarter, soaring to $147.9 million during the third quarter of 2008 from $72 million in 2007.
Joseph Massoud, chief executive officer of Compass, said there’s no doubt that some consumers are tightening spending, but, overall, the economic downturn and credit crunch hasn’t had a dramatic effect on Fox because it caters to an enthusiast crowd.
“At one point we owned the largest BB gun manufacturer in the world and it has a very similar dynamic in terms of: Enthusiasts do what enthusiasts do,” he said.
For Fox, that has been particularly true in Europe and Asia where the trend is shifting from road biking to mountain biking, which, even in small increments, has provided a huge amount of growth in mountain biking, Massoud said.
“There’s also no doubt that if you look at the largest four or five OEM manufacturers that—at their high-end—we are strapped on a higher portion of those bicycles than we have been historically,” he added.
Compass is also working on developing Fox in non-mountain biking segments. Ford recently announced a partnership with Fox for a suspension system on its new Raptor F150 truck and Fox continues to collaborate with U.S. and foreign militaries, Massoud said.
Also, Compass is working on several operating initiatives for Fox that could translate into full-year savings of about $2 million by next year.
“Meaning that if you go seek second supply or second and third suppliers for your key components two things happen, number one is you’re likely to get some cost efficiency but, number two, you’re also likely to be able to exact product that’s more timely delivered. You might be able to get improvements in service. You might even get some improvement in the product, some improvement sort of coordination and design,” Massoud said.