Dorel Industries, parent company to Pacific Cycle and the Schwinn and GT brands, reported revenues for the first quarter declined 4.4% to $451 million compared to $472 million a year ago. This was primarily due to declines in some of Dorels other consumer products businesses, but a decline in Recreation and Leisure Division sales also negatively impacted the top and bottom lines. Earnings declined 11.1% to $24.2 million from $27.2 million and diluted earnings per share dropped to 74 cents compared to 83 cents last year. In dealing with the revenue decline, it was principally due to lower sales in the Home Furnishings segment, with a decrease of $11.6 million, and in the Recreational and Leisure segment, with a decrease of $5.9 million.
The Recreational and Leisure sales declined 7% to $77 million versus $83 million the year before. Bicycle sales decreased through the mass merchant channel, because a major customer reduced on-hand inventory levels during Q1. Management stated that this customer is expected to return to more traditional levels. Gross profits declined about 100 basis points from 22.1% to 21.1% of sales. Earnings from operations decreased to $7.1 million from $8.7 million the year before.
Pacific Cycle is continuing its push into the Independent Bike Dealer distribution channel with product specifically designed for these retailers. Pacific Cycles sales into the IBD market increased 60% over last year. “What we are doing is we are designing product especially for the IBD market. We're using brand. For instance, GT is now only an IBD brand,” Dorel President & CEO Martin Schwartz, said during a conference call with analysts and the media. “We are looking to develop that and keep it in the IBD market, and develop again more and more product for that market, as we believe that is something we can do well in and that we can do independently of the mass merchant.”
