Dorel Sports reports fourth consecutive quarter of revenue growth

Dorel Sports has reported its fourth consecutive quarter of revenue growth in the first quarter of 2020 at $188.2 million, an increase of $3.6 million, or 2.0%, compared to a year ago.

Sales improvements were at Cycling Sports Group (CSG) and Pacific Cycle (PCG), partially offset by weakness at Caloi. PCG saw strong retail point-of-sale (POS) with growth accelerating particularly in the last two weeks of March as consumer demand for bikes spiked amid the pandemic lockdowns, and ahead of the Easter holiday period. Caloi’s decline was attributed to lower demand due to price increases aimed at offsetting devaluation of the Brazilian real and COVID-19 which forced many retailers to close towards the end of the quarter.

Operating loss was $0.6 million versus an operating profit of $4.5 million last year, Dorel Sports said. COVID-19 reduced first-quarter operating profit by over $6 million through a combination of reduced sales in the second half of March due to lockdowns, unfavourable foreign exchange due to the strength of the US dollar and an increased impairment loss on trade accounts receivable considering the economic impact of the COVID-19 pandemic.

Despite some constraints, the company said second-quarter sales are expected to remain strong where consumers can access bikes, including mass retailers and e-commerce, two channels experiencing an exponential increase. Through April, PCG customer POS has increased versus the prior year. CSG’s North American business is expected to deliver sales growth while European revenues are expected to decline due to ongoing lockdowns across Southern Europe.

Dorel anticipates that Caloi sales will decline as many of its key customers are expected to remain closed through the quarter. Even though short-term supply will be an issue due to the high demand, and store closures will affect distribution, a return to
profitability is expected for the second quarter.

“In mid-March, the Coronavirus pandemic literally brought a halt to the global economy as lockdown orders forced an unprecedented situation,” said Dorel president and CEO Martin Schwartz. “Our priority is to ensure the health and well-being of our employees worldwide.

“Additional safety measures have been implemented in our facilities and where possible, employees began working from home. While like most companies, Dorel’s revenues have been affected, many of our products have remained popular with consumers purchasing them in stores where open, and increasingly online. We feel we are in a good position in the short-term and going forward as the economy recovers.”