MONTEREY, CA (BRAIN)—The overwhelming consensus among Sea Otter exhibitors is that business has been good in their respective first quarters, but that rising raw material and shipping costs could have an impact for future earnings.
“We were above target for what we had actually planned for this first quarter,” said Patrick VanHorn of Giant. “We’re about 10 percent over what we projected for the first quarter.”
VanHorn thinks that rising fuel prices could have an impact on shipping costs later this year. “That’s really going to slow down the growth the industry is hoping for,” he said. “I think that’s Giant’s biggest concern right now. All of the manufacturers were forced to raise prices primarily because of the costs of raw materials, and also because of rising fuel costs.”
VanHorn said retailers are cognizant of these rising fuel prices and are adjusting their buying habits as a result. “I think retailers are smart now and they see that and realize ordering one or two bikes is just not going to be a good idea for them,” he said.
Marin’s Mark Vanek said the company was up the first quarter 9 -13 percent domestically from the same time last year. Both high-end road and mountain sold through quickly, he said. Twenty-six inch comfort bike offerings have been on the decline, but Vanek sees this as an industry-wide trend.
Vanek said Marin was able to hold pricing on 2011 bike offerings while taking a little bit of a hit because of rising raw material costs. He doubts Marin will be able to do the same thing for 2012 product. “For 2012 it’s definitely on the way,” Vanek said, “because we’ve heard it from our vendors that ‘it’s coming.’ I think some manufacturers have already done some of the price increases to maybe cushion the blow for what’s happening next year.”
Santa Cruz had one of its best months ever last month for this time of year. Santa Cruz’s 29er push with the carbon fiber Tallboy has helped boost these numbers, and now with a price friendly aluminum offering it should help the cause even further, according to Santa Cruz’s Scott Turner.
Continental Bicycle Tires’ Brett Hahn said the company’s first quarter was strong, but that supply remains a concern industry wide because of those aforementioned raw material costs. Continental just announced a price increase of 6 – 8 percent across the board on tires and tubes, Hahn said. “I think that’s on the low side compared with our competitors,” Hahn said. “We held off as long as we could. Many announced those several months ago. We tried to protect the IBD as much as we could on that, but found ourselves having to pass it on.”