Dorel CEO and president Martin Schwartz told shareholders at the company's annual meeting Thursday morning that despite the slow start to the year—which he attributed to bad weather that persisted through April—he remains confident that the recreational and leisure segment will exceed last year's earnings.?
The bike division's revenue was up nearly 8 percent in 2012, reaching $928 million, up from $862 million in 2011.?
"Both our bicycle retailers and us remain positive about our product offerings and expect sales to improve," Schwartz told shareholders. "The weather will always be a variable beyond our control but our market share is growing. In terms of our outlook, Dorel's first quarter results do not reflect our expectation for the balance of the year."
Dorel's recreational and leisure division—recently renamed Cannondale Sports Unlimited—posted an 8 percent drop in revenue for the first quarter and a 12 percent decline in gross profit. The segment includes cycling brands Cannondale, GT, Schwinn, Mongoose, Iron Horse, Pacific, RoadMaster and Sugoi.?
Still, Schwartz pointed to double-digit growth in Cannondale sales in 2012 that drove growth in the bike division's revenue. Operating profits increased almost 19 percent last year. "It was, in fact, a year of great achievement for Cannondale particularly and the bike segment in general," he said.?
Schwartz highlighted several initiatives in the division that he expects will build on 2012's momentum, including the new Cannondale Gazette, a digital newspaper it launched at the start of the Tour of California that details the race and the achievements of its Cannondale Pro Cycling team. A second edition will be published with the start of the Tour de France on June 29.?
He pointed to the 2014 Cannondale Synapse Carbon Hi-Mod, which the company launched earlier this year and has been met with acclaim and endorsements from industry media, and the Cannondale Sports store, which he expects will open soon in New York and offer consumers a flagship environment to shop for Dorel's key bike brands, apparel and parts and accessories.?
Dorel is also launching a TV ad campaign to promote the Schwinn brand in the U.S. market.?
"With all these exciting things happening and those that are planned, we're confident that Dorel's prospects in the bicycle business remain excellent," Schwartz said.?
Schwartz noted a 53 percent increase in Dorel's share price over the past 12 months, with its stock priced at $41.15 at close of market Wednesday. That's up from $26.90 a year ago.
