Dorel Industries Inc. reported third-quarter sales in its Dorel Sports segment decreased $45.2 million, or 18 percent, to $205.5 million from $250.7 million last year.
Excluding the positive impact of foreign exchange rates, organic revenue declined by approximately 19 percent.
Dorel Sports brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and Sugoi.
Nine-month revenue decreased $75.1 million, or 10.7 percent, to $628.6 million compared to $703.7 million a year ago. Organic revenue for the nine-month period declined by approximately 14 percent 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 in the third quarter of 2016.
The revenue decline is attributed mainly to continued weakness in the global bicycle market, disruption in the North American retail environment and persistent inclement weather in the U.S. Pacific Cycle was affected by changing buying habits at certain major mass merchants, amidst a soft bicycle market and poor weather that began last spring, contributing to reduced consumer demand. As well, the September 2017 bankruptcy filing of Toys “R” Us halted shipments temporarily, pushing sales into the fourth quarter. Sales in CSG decreased on a continued reduction in discounted sales, as inventory management has improved significantly in 2017. CSG’s closeout sales in the quarter represented 11.6 percent of sales volume in 2017 compared to 16.3 percent in the prior year’s third quarter.
Versus prior year, third-quarter operating profit declined by $5.6 million to $0.2 million and when excluding restructuring and other costs, adjusted operating profit declined by $10.3 million to $0.6 million. For the nine months, operating profit rose by $54.1 million to $15.2 million and when excluding impairment losses, restructuring and other costs, adjusted operating profit declined by $5.7 million, or 26.5 percent, to $15.7 million. The decline in adjusted operating profit for both the quarter and year-to-date when compared to 2016 are explained by lower revenue partly offset by improved margins which for the third quarter and year-to-date improved by 60 and 120 basis points to 22.4 percent and 22.6 percent respectively. This is due to continued inventory management improvement in terms of product mix and pricing actions in key markets.
Photo courtesy Cannondale