Net sales at Fox Factory, Inc. jumped 31.0 percent to $42.8 million in the first quarteras Asian factories ramped up production of mountain bikes and off-road vehicles, its parent company Compass Holdings Inc. reported.
OEM sales to mountain bike manufacturers rose 18.2 percent, while sales to the power vehicle industry soared 107 percent. The increase in the mountain biking sales was attributed to inventory replenishment by OEMs, who had cut production sharply a year earlier to adjust to a glut of carryover inventory on dealer showrooms. Fox Factorys Aftermarket sales in the mountain biking sector rose by $800,000.
Companywide, gross margin rose 140 basis points to 30.3% of sales thanks to increased production volume as well as a favorable product sales mix. Selling, general and administrative expense increased 25.9 percent, or by $1.3 million due to a $300,000 increase in marketing costs, $500,000 more in engineering costs and additional administrative costs of $500,000. Income from operations more than doubled to $5.0 million compared to the corresponding period in 2010 as higher sales more than offset increases in selling, general and administrative costs.
Fox derived 78 percent of sales in 2010 from more than 200 OEMs and the remaining 22 percent from approximately 7,600 distributors, independent bike dealers and other Aftermarket customers.
