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ANA sales down 36% last year, but with old inventory cleared out, CEO is looking forward

Published March 8, 2019

KENT, Wash. (BRAIN) — Accell Group N.V. on Friday announced global revenues were up 2.4 percent, but its North American business reported a 36 percent decline in revenue for the year. The CEO of the North American division told BRAIN it's turned a critical corner in its long restructuring saga: it has cleared out more than 100,000 bikes left over from when its sporting goods channel sales collapsed in 2017.

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Additionally, CEO John Short said Accell North America met its revenue and margin goals in January for the first time since he joined the company a year ago.

Short said he aims to return ANA to profitability by 2020, and said he’s on track.

"Our mandate is to get the business turned around and make it make money. We’ve got our head down and butt up, focused on that,” Short said.

However, the company’s European owners may not be willing to wait much longer. In the earnings announcement, Accell repeated an eye-opening promise it made first in December: that it is conducting a strategic review of the North American business and will announce a plan for the division no later than the third quarter this year.

"All options to eliminate profit dilution (from the North American business) are being explored,” the company said Friday. Previously, Accell said those options include selling ANA or right-sizing it.

Cleared out

Short said ANA’s revenue and profitability figures look especially bad because the company was forced to clear out inventory that was in the pipeline when its sporting goods sales collapsed in 2017. That was the year that Sports Chalet, EMS, and Sports Authority all went bankrupt and closed stores, and then Dick’s Sporting Goods stopped buying bikes from ANA, switching primarily to Pacific Cycle brands.

“Clearly there were ugly numbers in 2018,” Short said. In late 2017, ANA began disposing of large quantities of the excess bikes, often at its cost or below. "We sold all over the place - online, through dealers and discounters, usually at cost or below," he said.

By late 2018 that inventory was gone and while ANA was restructuring its dealer business, its total revenues were considerably smaller than when it was closing out thousands of excess bikes.

BRAIN has previously reported on ANA’s woes in the specialty market and its plans to rebound with an omnichannel distribution strategy that includes offering its Beeline software as a service to dealers.

On Friday, Short said those plans are starting to show results. The new Beeline platform went live Jan. 28.

Short said the Beeline software is ’intended to be the glue between dealers and online e-commerce business that allows customers who otherwise never walk into a IBD to have bikes fulfilled by a dealer near them. And when they walk into the store they also want to pick up a helmet and locks and that sort of thing."

He said ANA has about 180 dealers signed up for the program, representing about 240 to 250 storefronts. He said about 100 more dealers are in the process of joining the program in the next month.

He said ANA is now rolling out fresh models that are part of a more focused offerings for each of its brands, which include Raleigh and Diamondback with traditional bikes and Raleigh Electric, Haibike and iZip with e-bikes.

“It’s a good news bad news situation,” he said. “For example, we’ve tightened Haibike’s line with the intention of being deeper in the SKUs that we are continuing with. But we clearly underbought them. That’s great news because the bikes are great and the brand continues to trend. And we won’t have left over product this year.”

Short said ANA's three e-bike brands together makes ANA the number 1 or number 2 e-bike brand in North America. He said iZip will launch an entry level $1,499 model soon that will allow dealers to compete with Rad Power Bikes and other online brands that are seeing explosive growth at that price point and below. Raleigh Electric also will introduce some new models retailing for under $2,000.

Core v. Non-core

Accell announced in December it was splitting off ANA from its “core” businesses in future financial statements. The second half and full year 2018 financial released Friday were the first to do so.

The report showed that Accell’s core business had revenues of 1.03 billion euros ($1.2 billion) for the full year, up 6 percent from the year before. EBIT was 54 million euros, down from 62 million the previous year.

The non-core (ANA) business had sales of 61 million euros, down 36 percent from the 95 million recorded in 2017. The non-core EBIT loss was 21 million euros for the year

Topics associated with this article: Earnings/Financial Reports

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