Sales of Cannondale bikes drove 12 percent revenue growth at Dorel Industries Recreational/Leisure segment in the fourth quarter ended Dec. 30, 2012. Sales at the segment, which also owns the Schwinn, Mongoose, GT and Sugoi bicycling brands and sells bikes to mass retailers Walmart and Costco, reached $225.6 million and broke $900 million in the full fiscal year.
Organic sales also rose 12 percent with most of the growth coming from Cannondale sales to the Independent Bicycle Dealer (IBD) channel. Growth was seen across virtually all categories and geographies, including Europe, where Cannondale sales rose in the double digits, Schwartz said. The growth was driven by strong pre-season sales of model year 2013 bicycles. Gross margin improvement was attributed to improved mix and cost containment and helped boost operating margins 160 basis points to 7.3 percent in the quarter.
“Fourth quarter revenue increased markedly due to the ability to ship more product and strong sales of electric ride-on toy, said Dorel President and CEO, Martin Schwartz. We just had more [bicycles] in on time and were able to get more of the orders out to the customers than we have in the previous year. We had more inventory in our dealers going into the January, February, March period.
Growth was boosted by a continuing turnaround at the bike apparel company SUGOI, which resulted in a modestly profitable quarter, in a sharp reversal from a year ago.
On the mass side of the business, bike sales were somewhat flat following strong shipments in the third quarter. However, Dorel saw strong sales of electric ride-on toys during the holiday season.
Segment gross margin increased 200 basis points to 24.9 percent in the quarter, while operating margins grew 160 basis points to 7.3 percent or revenue, or $16.5 million.
