Thule Group said excessive inventory levels in the cycling channel have worsened in recent months and would impact sales and profitability in the second half of the year.
Thule noted that it communicated in its half-year report on July 21 that the general market in bike retail, at the time, was unstable with high inventory levels of bikes and bike accessories in the low- to mid-price range and that the situation could impact demand for Thule products.
The situation “has amplified, as bike retailers around the world have reduced their purchases significantly in the third quarter when compared with the record year 2021. We believe that the chosen approach of the bike retail sector will continue in the near future and therefore impact Thule Group with reduced sales and profitability until the next biking season in the spring of 2023.”
In Thule’s statement, Magnus Welander, CEO and president of the Thule Group, said, “Long lead-times have led to the inventory build-up of the bike, and bike-related gear has escalated in the third quarter. Bike retailers around the world have, in general, as a consequence of having high inventory levels and consumer uncertainty, chosen to be very restrictive with new orders; this has had a greater impact on Thule Group sales than we estimated at the time of the half-year report.
“Our view is that this is a temporary slow-down in the bike retail sector’s purchases compared to the exceptional record year 2021 and the extremely strong pre-season in the first quarter 2022. Underlying positive bike trends, with huge investments in infrastructure for bike commuting and recreational biking, as well as consumers’ positive view of bikes as a means of transport and recreation, remain. As bike-related products in 2021 represented almost half of the Thule Group’s sales, with high margins and a larger share of sales than normal in the second half of the year, the reduced sales volumes will also impact our profitability in the coming nine months.
“As communicated at our Capital Markets Day in May 2022, we are convinced about the positive long-term market trends for all our product categories. As a consequence, we expect continued strong demand for Thule Group products going forward. We are well-equipped for the future, with a flexible business model and production set-up, strong financial position, investments into new product categories, and our long-term growth-oriented strategy, which remains unchanged.”
Photo courtesy Thule
