The Tandem Group has this morning issued a trading update within which the group has reported further improving profitability and a slimming down of expenses where exhibition attendance and international travel has been cut from budgets.
The impact of Covid-19 has proved overall beneficial to the business, in particular within its cycling arm which posted a “strong finish” to 2020. This growth has come alongside the firm’s independent bicycle dealerbase, as well as national retailers.
The junior range from Squish is said to be enjoying a market share growth, with sales markedly ahead of last year’s tally. Additionally, Dawes and Claud Butler carried through strong demand supported by Falcon, Boss, Elswick, Townsend and Zombie. Electric models showed “significant” sales growth through Q3 and Q4, alongside a new Wired e-Scooter line.
“We expect the strong demand for bicycles to continue in the immediate future. There is still growth potential, particularly from Squish, and we remain of the belief that there will be further growth in ebikes and from increasingly fashionable escooters. As a result, we have committed more heavily to stock purchases in these areas for 2021,” said Tandem’s update.
In the second half of the year trade was marginally more subdued than in the first half, where revenues increased by 6% to reach £16,927,000. Q3 came in marginally behind the year prior, but q4 trading made up or this bringing unaudited Group revenue for the full year was approximately £37.1 million.
Gross profits rose across the cycling, golf, B2C channel and within the wheeled toy business where margins are among the highest in the group.
In tandem, operating expenses fell by around 11%, primarily as a direct result of Covid-19 halting trade exhibitions and travel bills across the group.
Profits before tax are therefore expected to be nicely head for the year, something that has improved the group’s cash position further.
Key for retailers of the groups bike labels, stock availability improved toward the close of 2020 enabling the group to limit disappointment over the Christmas period. It goes without saying that this issue does remain a threat to almost all brands in the cycling business at present, though the group did outline the problems explicitly, telling shareholders “Lead times, particularly on bicycles, are longer due to global demand for components and we are therefore committing to purchases much further into the future.”
“One of the most pressing current issues is with respect to freight where, despite having part of our freight requirement at fixed prices, there has not been enough capacity in the system to fulfil demand, coupled with port congestion and COVID-19 related delays. To ensure supply we are currently being quoted many times the rates we were paying in the Autumn of 2020. Whilst we have continued to import products, in some cases we have chosen not to at this time, although it is unclear when freight rates will begin to reduce to allow this to become commercially viable again.”