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Raleigh makes profit; availability problems eradicated for 05 bikes - BikeBiz

Raleigh makes profit; availability problems eradicated for 05 bikes

Agreeing that bike availability in 2004 was his company's "Achille's heel", Raleigh MD Mark Gouldthorp says a number of global factories will be making the 05 Adult bikes, not just one factory in Vietnam. With year after year of losses at the Nottingham firm, Gouldthorp says "the corner has been turned" and that he wants to make IBDs more profitable. A pre-Christmas newspaper advertising campaign will promote IBDs and only IBDs.
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2005 adult bikes will be sourced from additional factories in the Far East, Middle East and Continental Europe - with models capable of being sourced from more than one location, said MD Mark Gouldthorp.

Availability from 1st March onwards will be "excellent," promised Goulthorp.

Despite this year's delivery problems, Raleigh made a profit of over £500 000 on a gross revenue of £35m in the year October 2003 to September 2004. In 2001/2, Raleigh made a loss of £9.7m on revenue of £39.3m. The loss was brought down to £3m in 2002-3.

Profits have returned partly because of job cuts as production has been out-sourced. Raleigh had 514 employees in 2000/1. By last year, with 265 employees, the payroll had been almost halved.

Ten years ago, Raleigh had a market-share of about 40 percent of the UK market. Just before the MBO in 2001, this share had sunk to 15 percent. Gouldthorp estimates the Raleigh market share is on the rise, now standing at above 20 percent.

And, with profits on the rise again, Gouldthourp said a strong Raleigh helps the market overall. The profit target for 2005 is £1m.

Raleigh wants to get closer to its IBD customers. Nine are part of a think-tank set up earlier in the year. The IBDs are from all parts of the UK and are privy to much of Raleigh's product development work, including factory visits to the Far East.

The think-tank members have welcomed news that Raleigh is to reintroduce the Univega brand in the UK. A nine-model range will retail for £500-£2000. IBDs which want more than this selection will be able to order product seen in the German catalogue.

Some of Raleigh's recovery is due to the relaunch of the Chopper but not through sales alone, said sales director Carl Wright.

"The Chopper was a nice financial boost but we did it more for PR than sales. Our PR agency estimates we got £5m worth of media coverage from the Chopper relaunch. The Raleigh name was talked about, and talked about favourably."

Wright believes the time is now right for the sort of pre-Christmas advertising campaign that always used to be a tradition.

Raleigh will run full page ads in red tops to support its 500 IBD accounts.

"We've turned the corner now, it's time to reinvest in the brands," said Wright.

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