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Accell Group Dampened by Poor Summer Weather

Published November 15, 2011

HEERENVEN, the Netherlands (BRAIN)—Bike sales fell below expectations in the third quarter for Accell Group due to bad summer weather in Europe and general economic conditions, the Dutch company said in a press release issued Tuesday.

For a number of Accell Group dealers, the combination of those factors resulted in higher inventory levels at the end of the season, leading to discounts and margin pressure. Dealers are also hesitant to build up and finance their own stock due to concerns over the economy.

The effects on Accell Group vary by country. In Germany, demand continued to be strong, spurred by the growing popularity of electric bikes and sports bikes, and the market grew.

“Market developments in the other countries remained weak. The sale of bicycle parts and accessories runs well while turnover from the fitness activities remains difficult,” the company said.

Accell’s earnings results are also strongly influenced by one-time additional costs due to scaling back its fitness business, including closing its office in North America and transferring those sales to third-party distributors or back to the head offices in the Netherlands. Another factor is the 6.9 million euro fine levied against Accell by the Netherlands Court of Appeal for Trade and Industry stemming from an anti-competition case in 2000. Those costs, however, were offset by the 17 million euro profit Accell gained by selling its 22 percent stake in Derby Cycle in October.

The medium to long-term outlook for the company remains positive with 2012 bicycle collections well received at the fall tradeshows and positive feedback from new technologies for its e-bike brands. Europe’s uncertain economic situation makes estimating performance difficult, but Accell Group expects higher sales and increased net profit for the full year compared to 2010, the company said.

Accell Group is a 577 million euro company and Europe's market leader. It owns more than a dozen mid and high end bike brands in Europe and Seattle Bike Supply in North America.

Topics associated with this article: Earnings/Financial Reports

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