Dorel Sports has seen its sixth consecutive quarter of revenue growth, with third-quarter revenue at $305.6 million, an increase of 22.1%.
The continuing record demand for bicycles throughout the summer drove another quarter of ‘substantial’ growth at the Cycling Sports Group (CSG) and Pacific Cycle divisions. Caloi’s revenue increased in local currency as IBD sales increased and mass-market stores began reopening following the COVID-19 shutdowns. Nine-month revenue was $779.4 million, up 15.3%.
Operating profit for the quarter was $24.2 million compared to $6 million a year ago, with the improvement at both the CSG and Pacific Cycle divisions. Operating margins were ‘strong’, said Dorel, helped by the lack of discounting and the curtailment of events and marketing which lowered related expenses. Caloi’s operating profit rose year-over-year and reversed an operating loss from this year’s second quarter.
Excluding restructuring costs, adjusted operating profit set a record at $27.8 million, up 395.5%. Nine-month operating profit was $50.4 million, compared to $20.6 million in 2019. Adjusted operating profit was $54.4 million, an increase of 169.2%.
“All three of our business segments contributed to an excellent quarter for Dorel,” stated Dorel president and CEO, Martin Schwartz. “In Sports, the second quarter trend of increased demand for bicycles continued and outpaced product availability. In spite of this, the segment was still able to achieve the highest earnings in its history. Similarly, Dorel Home had an excellent quarter despite sales being limited by a lack of supply in some of its product categories. Dorel Juvenile improved its earnings and recovered from a first half adjusted operating loss that was due to the negative impact of the COVID-19 pandemic.
“The third quarter was in line with our expectations as consumers continued to choose Dorel products in Sports and Home and our Juvenile segment rebounded from the impact of the first wave of COVID-19. However, as we enter the fourth quarter, the visibility on earnings is more difficult and the expected second wave of the pandemic is beginning to have a significant impact, particularly in Europe.
“While thus far, Government subsidies have softened the impact on consumers in most markets, it is unknown if this will continue going forward. In fact, Government restrictions, similar to those put in place earlier in the year, are back in certain markets, which will almost certainly impact our sales.
“In addition to these unknowns, all three of our segments are dealing with known and current challenges on transportation out of Asia due to a lack of supply and substantial cost increases. The recent strength of the Chinese Yuan relative to the US dollar could also result in cost increases, further pressuring earnings. While we remain confident in the long-term, the fourth quarter may be challenging.
“While overall adjusted operating profit is forecasted to be similar to last year, there is a downward risk to our projections. We believe that the challenges faced in the fourth quarter could be overcome and that 2021 is anticipated to be a good year leveraging the strengths of our three business segments.
“Finally, I want to reiterate my sincere appreciation to all of our employees who continue to work extremely hard in sometimes difficult conditions. Your contribution to Dorel is invaluable.”
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