Cycling Sports Group parent Dorel Sports has pinned sluggish sales to a decline in consumer demand with unfavourable weather impacting North American mass bike channel sales.
As a result Dorel Sports has posted a second quarter revenue decrease of US$27.5 million, or 11.6%, to US$209.1 million and by approximately 11.1% after removing the impact of varying exchange rates year-over-year.
Six month revenue leading to June 30th decreased US$29.9 million, or 6.6%, to US$423.1 million and by approximately 6.4% after removing the impact of varying exchange rates year-over-year. Organic revenue declined by approximately 13.4% and 11.7% for the quarter and six months respectively when removing foreign exchange fluctuations and the change in Cycling Sports Group (CSG) International’s business model for which the revenue recognition transitioned from a licensing model to a distribution platform.
CSG second quarter revenues further declined due to lower discounted sales to the Independent Bike Dealer (IBD) channel when compared to prior year’s second quarter. According to the statement to investors, CSG’s closeout sales in the quarter represented 7% of sales volume in 2017 compared to 21% in the prior year’s second quarter and excluding these closeout sales, revenues were flat for the second quarter year-over-year and as a result, gross margins were improved.
In Brazil, Caloi’s top line was affected by weak consumer demand, amid ongoing political and economic turmoil, as well as increased competitive pressure as other key brands in the market began to reduce retail price points. This was true for both the quarter and year-to-date.
“We anticipate that Dorel Sports overall will have a better second half than last year with an increased adjusted operating profit. We are currently seeing some weakness in the mass channel which means third quarter results are likely to be lower than last year, but expect that a solid fourth quarter performance should more than compensate for this,” concluded Mr. Schwartz.