Dorel – the parent company of Mongoose, GT, Sugoi, Cannondale, Pacific Cycle and Schwinn – has announced the best year end results in its history.
Results for the year ended December 30th 2008 recordied an overall Net income rise of 29 per cent with sales increases totalling 20 per cent.
“Dorel’s 2008 performance is the best ever achieved despite challenges which intensified as the year progressed. Rapidly rising commodity prices were a major factor for a good part of the year, affecting the majority of the company’s operating divisions. We were successful in passing some of these higher input costs on to retailers without significantly weakening consumer demand of Dorel products at store level. Despite the deepening global economic crisis through the second half of the year, Dorel’s products continued to demonstrate that they are in demand even in times when retail sales as a whole decline,” commented Dorel CEO and President, Martin Schwartz.
“However, despite the demand for Dorel’s products at retail, our inventories rose to record levels during the fourth quarter as retailers reacted to the economic crisis by significantly cutting back on orders to suppliers, almost across the board, to
reduce their in-stock level, added Schwartz. "The Recreational/Leisure segment was able to grow sales organically in this environment, but they were still lower than our expectations."
Recreational and leisure segment revenues increased by 79.2 per cent in the fourth quarter, in large part due to the acquisitions of Cannondale, Sugoi and PTI Sports. Organic sales growth also occurred at the segment’s mass merchant customers in the quarter.
Earnings from operations in this segment for the full year improved by 31.4 per cent. The increase was driven by the core bicycle business with sales gains at the majority of the mass merchants. Gross margins increased to 23.4 per cent from 19.5 per cent in the prior year primarily due to the contribution of higher margin products sold by Cannondale and Sugoi. The parts and accessories now sold through Pacific Cycle also attract higher margins.