Tandem Group’s bike biz back in profit as firm dodges Toys R Us fallout

The Tandem Group, the parent to Falcon Cycles and Dawes, among others, has issued a trading update following a period of refining the business and one that demonstrates that reduced turnover needn’t necessarily mean reduced profits.

Despite dropping its turnover by around 4% to £36.8 million in trade to the year ended December 31st, 2017, the business is expected to book in net profits “significantly ahead of the prior year’s results.” The statement outlines that the bike segment has returned to profitability following a period of losses.

The business has undertaken a number of cost control measures to streamline its bicycle operations. This included the merging of Claud Butler into the Dawes brand. Group overheads reduced by approximately 3% year-on-year, while the business turned its attention toward developing high profit lines.

While Claud Butler and Dawes bicycle sales to independent cycle shops reduced, sales to corporate customers under the Falcon, Townsend and Elswick brands grew.

“We continue to be particularly encouraged by our Squish and British Eagle brands which both saw increased turnover during the year. As a result of the restructuring of our bicycle operations we previously reported that we expected to save approximately £1.0 million of related overhead costs in 2017,” said the statement.

The update further offered that direct to consumer sales outside of the bicycle segment had seen anticipated slow growth, while toy division sales were flat.

Clearing out the dead wood, the business undertook a drive to shift outdated stock with strong success, particularly on bicycle inventory. This, according to Tandem, has enabled the business to enter 2018 with confidence and shelves stacked only with current model year stock.

With Toys R Us entering financial difficulty in the USA and subsequently filing for chapter 11 bankruptcy, the Tandem Group ceased supply to the UK division ahead of its later collapse on February 28th. As a result the business has no outstanding debtors balance with the toys giant, but anticipates that the firm’s absence will dent future results.