Dorel Looks to Expand on Heels of Current Upswing

“There is every indication that this momentum will continue over the next few months,” said Martin Schwartz, president and CEO for Dorel Industries. According to Schwartz “The Cannondale product is the best it's been in years and the results are clear.” 

 

Since January, the company has increased dealers at a record pace, many in key U.S. markets such as Los Angeles, Northern California and Colorado.

Speaking about the bike business, Bob Baird, Dorel Industries’ president of recreation & leisure, told shareholders the mission was, “To be the global innovation leader in the world, maybe not the biggest but we will be the best over time – maybe the biggest someday, too. We have got basically any product you want-be it for a child, an adult-whether you want to pedal slow, pedal fast, any price point, maybe not super low but call it $70 and up. [We have] any price point to the nice bike over here for $13,000, which I will lift up in a little while.”

Dorel will continue to acquire its international distributors going forward. Baird commented on this strategy, “We want to control our own destiny and distribution. We picked up Hot Wheels in the U.K.-now Cycling Sports Group the U.K. We picked up the number one distributor in Australia, now CSG Australia, and we are going to continue on that strategy. Those are doing terrific. That strategy is working for us.”
Baird also pointed to several high-profile urban cycling programs, like bike lanes in NYC, cycling programs in Paris, and bike paths in Toronto and Montreal, as major drivers of growth in the industry.

Other opportunities for growth relate to Dorel’s new Apparel Footwear Group, boasting custom and regular offerings with branded apparel from companies such as SUGOI, Cannondale, GT, Schwinn, Ironhorse and Mongoose. “We've barely scratched the surface in the expanding custom market and expect to triple this business within 5 years,” speculated Schwartz.

Growth is not the only opportunity Dorel sees within its brand portfolios. The company is also looking at synergies between complementary brands and streamlining processes.

 

As an example, Baird pointed to SUGOI and Cannondale apparel. “When I joined, SUGOI had 29 apparel suppliers across 20 countries. Cannondale apparel had 20 suppliers across 11 countries. Not one matched. So I'm pleased to say we have seven core apparel suppliers now,” he said.  Part of this streamlining included ceasing all production at Cannondale’s Bedford, CT facility. “We used to make 230,000 frames in Bedford a year. We're going to nothing for the 2011 model year.  The economics are just staggering there, so it was a good business decision.” Baird stated.

Dorel's CFO Jeffrey Schwartz said consumer confidence has risen in many of Dorel's markets including most of Europe. “While margins could be affected by rising commodity and freight costs, the momentum we have established so far this year positions us to benefit from further new product introductions and our brand equity,” stated Schwartz.