Dorel Industries, the parent company of Pacific Cycle, has been working to transform the company from a bicycle manufacturer to a recreation holding company. The Recreation and Leisure division reported fourth quarter sales declined 6.3% to $75 million compared to $80 million last year.
Earnings from operation for the division fell 12.3% to $5.7 million, versus $6.5 million last year. The operating margin was 7.6% of sales, a decline of 50 basis points compared to 8.1% in the fourth quarter of last year.
Most of the sales decline was due to sales of bikes through the mass merchant channel, where the company lost a number of SKUs with a key customer early in the year. Management said that they have since regained more business with this customer and sales should be more normalized going forward.
Pacifics independent bike dealer business was said to be up in the double-digits for the year, partially offsetting the mass business declines.
Overall, Pacific Cycle sales for the year were down 4.6% to $328.4 million, while operating income was down 29.9% to $24.4 million. Going forward, the company sees more opportunity for growth in expanding into different recreation-oriented product lines like electric scooters and swing sets.