The Exel Groups Sport division saw net sales declined slightly due to increased competition in the Nordic walking market in Europe, while profits took a hit from their investment in expanding the category into China, Japan, and North America. Third quarter net sales fell 2.4% to 8.6 million ($10.5 mm) compared to 8.9 million ($10.9 mm) last year. The divisions operating profit dropped 58.4% to 500,000 ($610,000) versus 1.3 million ($1.6 mm) last year. Operating margins declined to 6.1% compared to 14.2% during the previous year.
Management said that marketing investments in expanding the Nordic walking market and growing the Exel brand in North America are the primary contributors to the decline in profits. Also, while the Nordic walking market is showing a temporary slow-down, management expects it to show “strong growth” in the future. Exel plans to continue its North American expansion and accelerated marketing into the fourth quarter. As a result, profits should decline compared to the previous year. Management also feels that competition has “become more fierce” in the German-speaking Nordic walking market and has intensified product development.
