The Accell Group has today issued a statement declaring that it will scale down its inventory destined for traditional channels in the North American market.
The statement offers:
Next to an overall tough market for bicycles, sales via the traditional distribution channels (dealers and MultiSport) have been under pressure for a longer period of time in North America. As such, we also recently saw an unanticipated contract termination by a large MultiSport chain.
On the opposite, online sales (via own webshops and third party online stores) and sales of e-bikes are growing fast. In addition, the related cooperation with Beeline for home deliveries, ready-to-ride bike assembly and service is doing well. These positive developments cannot yet fully compensate for the lower sales in general and more in particular via the MultiSport channel. Hence, we are further adjusting our American organisation. Senior management has been replaced and the activities in North America will be fully integrated. Inventories destined primarily for the MultiSport chains will be scaled down as quickly as possible.
New CEO Ton Anbeek, Chairman of the Board of Directors, said: “During the past year, a lot of hard and goal-oriented work has gone into the execution of our new strategy in North America and Europe. In the years to come, we expect to show a clear trend reversal of our group performance in terms of turnover, results and working capital. In North America we see sound opportunities for omni-channel, while the evolution of the e-bike segment is running a few years behind the e-bike segment in Europe. As such, the region offers us clear potential for future growth.”
Accell suggested that its outlook for the second half of the year is on course to exceed that of the same period in 2016.
However, the underlying operating result for 2017 will be affected by the strong sales decline in North America. The restructuring of the American organisation and the scale-down of inventories will have an impact of around €5 million. As a result of the above, the underlying operating result for the full year is likely to be lower than in 2016. Accell add that operating results (before interest and taxes) for 2017 will be influenced by higher costs in the second half of the year related to the implementation of the new group strategy.
The group does not anticipate to fully complete the reduction of inventories in North America during the remainder of 2017, which will have a negative effect on working capital at year-end.