Q2 saw Dorel Sports hit new highs as demand for bikes skyrocketed during the Covid-19 lockdown.
As noted earlier in the year, Dorel – owner of CSG, Cannondale, GT and Schwinn – saw a surge in business after a tough Q1 affected by the pandemic outbreak. The surge has been so great that Dorel has “record low levels” of inventory.
Overall revenue for Dorel was flat for the six months ended 30 June 2020 (US$1.3 billion), while revenue for Q2 was up 8.1% to US$724 million (2019: US$670 million).
Dorel Sports saw its fifth consecutive quarter of growth, with record profitability. Revenue was US$285.6 million, up 18% (2019: US$44.6 million). Excluding foreign exchange, organic revenue was 21.1%. prolonged store closures in Brazil and a factory closure in April and May hit Caloi in revenue terms, While CSG and Pacific Cycle were star performers. Six-month revenue was US$473.8 million, up 11.3% (2019: US$48.3 million).
Dorel Sports said: “There was a spike in demand for all types of bicycles which rose dramatically and was maintained throughout the quarter as consumers sought a healthy escape from weeks of COVID-19 lockdowns. Online sales were particularly strong with purchasing activities shifting to e-commerce at the height of the pandemic.
“Sales were limited by a lack of supply of certain models despite Asian suppliers re-opening in February. As a consequence, on-hand inventory dropped considerably, contributing to Dorel’s overall inventory reduction in the quarter.”
Will the boom continue?
Dorel Sports expects strong demand to be maintained,, but noted the pandemic continues to have the capacity to disrupt: “Based on current trends, demand for bicycles is expected to remain strong through the summer season. On-going supply constraints will limit sales, but expectations are that third quarter revenues and adjusted operating profit will continue to be strong. The current volatility in the bicycle industry caused by the pandemic, changes in current demand levels and possibly in the seasonality of bicycle sales, is making visibility beyond the third quarter more difficult to determine.”
CI.N recently quizzed Cycling Sports Group MD Russell Merry on the firm’s model year structure mix up and the current bike boom’s longevity.
Speaking on the group’s overall performance, Dorel President & CEO, Martin Schwartz said: “Dorel’s overall revenues have recovered sharply from the initial negative effects of COVID-19 with strong performances in two of our three segments. Dorel Sports and Dorel Home benefitted from increased demand for its products as consumers sought bicycles and home furnishing products during the prolonged lockdown periods. Increased sales of in-stock items allowed both segments to reduce inventory to record low levels.
“Our divisions did an excellent job of reducing costs and holding discretionary spending and as a result, selling expenses were down considerably. Our balance sheet has improved significantly from year-end with significant reductions in inventories and overall debt. I am extremely grateful to our employees worldwide who demonstrated their clear commitment to Dorel by directly contributing to our lower costs in the second quarter and who continued working at our facilities under enhanced safety protocols.”