Dorel Industries Inc. added a record number of independent bike dealers, or IDBs, in the first quarter on the way to record sales and profits in its Recreational/Leisure segment. But the consumer products company said segment revenues rose 12.5% thanks largely to a recovery at its mass merchant business driven by favorable spring weather. 
 
The Canadian company said sales at the segment reached $181.7 million in the quarter ended March 31, up from $161.4 million in the first quarter of 2009. Gross profit rose 250 basis points, or 24.6% to 25.4% of revenue, or $46.1 million. Earnings from operations for the cycling business rose 51.3% to $15.1 milliin, or 8.3% of revenue.


The results reflect support and excitement for new models introduced by the Cycling Sport Group, said Martin Schwartz, CEO and president of Dorel, which also operates a Juvenile Segment that makes baby Cosco car seats and other products and a Home Furnishings Segment. 


Sales increased and a significant number of new dealers were added across the US, with strong additions in key markets such as Los Angeles, Northern California, and Colorado. Cannondale dealers continue to embrace GT and Schwinn with a number of these dealers, adding Schwinn and GT to their stores. Demand has been strong and the current order backlog is up versus last year at this time. 
 
Dorel divides its cycling business into two channels: mass merchant and IBD, which has been built largely on its 2008 acquisition of Cannondale Bicycle Corporation and its Sugoi Performance Apparel business. Dorel IBD brands include Cannondale, GT and higher end Schiwnn bikes. The company launched a multi-million dollar print and television advertising campaign last month to support the Schwinn brand at retail and on-line.

Outlook
“Consumer confidence has risen in many of our markets including in most of Europe,” said Schwartz. “Exciting new product introductions and other marketing initiatives in all of our segments coupled with our concentration on opening to mid price points has attracted many to our brands. In Recreational/Leisure, enthusiastic reaction to our new model bicycles within the IBD network as well as strong sales to mass merchants are expected to continue in the months ahead. Supporting the sales efforts in bikes is a multi-million dollar, integrated advertising campaign launched in mid April to further build awareness of the famous Schwinn brand.”


Martin cautioned that margins could be affected by rising commodity and freight costs as the year progresses.