Dorel Industries reported net sales at its Recreational/Leisure segment increased by $19.2 million, or 9.1 percent, to $229.0 million in the third quarter ended Sept. 30 driven primarily by the timing of shipments to the mass market channel.
The company increased sales to both Wal-Mart and other mass retailers as well as independent bicycle dealers, or IBDs, which carry its Cannondale, GT, Mongoose and higher-end Schwinn models. Excluding the impact of foreign exchange variations on the segment's non-US based businesses, the segment's organic revenue increase was approximately 11 percent for the quarter and 8 percent year-to-date.
Gross margin increased 180 basis points to 24.2 percent of revenue. Operating profit improved $2.5 million, or 25 percent, to $12.5 million. The improvement in operating profit was due primarily to break-even results at the company’s apparel division, which consists largely of Sugoi and which lost $2.2 million during the third quarter of 2011.
Segment sales for the first nine months of the year were up 6.4 percent to $701.8 million, while gross margin reached 25.2 percent, up 110 basis points from the same period in 2011. Segment operating profit increased 13.1 percent to $55.5 million. The company expects operating profit will continue to increase in the fourth quarter and exceed year earlier results.
“We are strong everywhere,” President and CEO Martin Schwartz said in reference to the mass and IBD channels. “We're very confident on where we're going to finish the year in that segment.”
