Dorel's share price plunges as Sting-Ray's sales slow

Pacific Cycle - a division of Dorel of Canada - sold half a million Sting-Ray chopper-style bikes in the first eight months of 2004, the "fastest selling product in the history of the bicycle industry." But "full inventories" mean shops are not selling the bikes as fast as last year.
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A statement from Dorel said:

"A combination of the filling of initial orders from retail customers last year and the fact that those customers began 2005 with full inventories, has resulted in lower sales of the Sting-Ray, with the majority of the impact expected in the second half of the year."

Bike shops in the US and the UK, and and big box retailers in the US, stocked up on Sting-Ray's at the height of the category's boom but sales were impacted by copy-cat machines and a slackening of demand.

Dorel's chief financial officer, Jeffrey Schwartz, said: "Retailers wanted to have as much inventory as they could because it was a hot product. It's cooled down, but it's not gone. We're selling way too many at retail for it to be gone.

“Retail sales of the Sting-Ray continue to be above average as compared to other bicycle categories and remain a key part of the Schwinn portfolio. Market research indicates that the chopper style bicycle trend is continuing. Being the number one selling chopperstyle bicycle in the world, the Sting-Ray brand has been expanded with the introduction of three-speed and electric models.”

In a financial press release Dorel warned that full-year results will be flat with last year's profit of $3.04 a share, a lower than expected result. Dorel shares plunged by 12 percent on the Toronto Stock Exchange yesterday.

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