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Strong Preseason Boosts Confidence

Published May 4, 2010

***NOTE: Nick Margadonna's first quote in the print issue was cut off. The full quote has been added to this web story. We regret the error.***

BY JASON NORMAN

MONTEREY, CA—Healthy first quarter sales fueled confidence and brought smiles to manufacturers showing new product at the Sea Otter Classic. Vendors said preason orders from dealers suggest that they are banking on customers coming through their doors in greater numbers this spring and summer.

Nick Margadonna, sales and marketing manager for Michelin bicycle products, said the tire brand’s first quarter was a lot stronger than expected.

“The way that we grew, I don’t think we can sustain that all year, because it was big. It’s a good indicator that the rest of the year is going to be really solid.”

Margadonna said it’s too early to attribute their strong numbers to the consumer.

“It’s the dealers’ expectations who are driving it,” he said. “We had a big sell-in to our distributors who then had a big sell-in to the dealers. It’s too early to tell what the consumers are going to do, but the dealers are indicating that their sales are going to be strong in how they’re buying in the first quarter.”

Hydrapak director of sales Matt Patterson said the pack company also is seeing a boost in business at the start of the year. He said distributors have increased orders about 20 percent compared to 2009.

“Last year I think accessories weren’t bought because it’s the smaller things that you can do without,” Patterson said. “But this year we’re seeing a great spike in business with our partners.”

Manufacturers at Sea Otter reported that their dealers came in with strong preseason orders, suggesting a renewed optimism among retailers about consumer spending.

“We’re definitely seeing that,” said Patrick VanHorn, corporate communications manager for Giant Bicycle. “It seems like dealers are starting to think, ‘Let me get my inventory levels up. Let me order more, and make sure I’ve got stuff in stock now.’ With the start of the quarter, it seems like people are starting to pull their wallets out of their back pockets. We saw dealers who were much more interested in keeping their inventories up,” VanHorn added.

Rob Roskopp, owner of Santa Cruz Bicycles, said preseason is shaping up with orders coming in strong three months into the year.

“It’s stronger than we expected, so that means you’ve got to get more inventory in. It makes it more difficult, but it’s a good problem to have,” Roskopp said.

Even so, a general shift toward just-in-time ordering from retailers persists. Mark Vanek, marketing manager at Marin Bikes, said he’s noticed that more retailers are going that route and suppliers have adjusted their orders to avoid getting stuck with inventory.

Manufacturers also are trying to reduce inventory closeouts by launching bikes throughout the year and dropping model year altogether. Santa Cruz was one of the first to relinquish model years designations, prompting others to do the same.

Jeff Titone, marketing director for Titus Cycles, said it’s trying to get away from model year releases. It prevents the company from having to dump product at Interbike and protects its retailers’ inventories, he said.

“They don’t have to worry about discounting to clear out their old inventory,” Titone said. “And, overall, it’s going to be a better strategy to keep our momentum going throughout the entire year.”

Another sign that the economy is on a slight if slow rebound is the return of some high-end sales. Patterson said he’s seeing good sell-through of Hydrapak’s mid-level to high-end packs.

“We launched a couple bags from $110 to $130, and those have done really well,” Patterson said. He forecasts a 10 percent increase in sales this year from 2008, which was a banner year for the industry.

Vanek is also seeing increased sales of Marin’s higher-priced, better spec’d range of mountain bikes.

“With high-end product, whether it’s bike or surf, you have a very dedicated user group. They probably had to hold off on spending a little last year because it was such a bad time for everyone,” Vanek said. “But this is probably the first activity they’re going to spend money on.”

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