BUSINESS

Dorel hopes to cycle its way to growth by raising bike prices, adding new lines

05/28/2015 01:56 EDT | Updated 05/28/2016 05:59 EDT
MONTREAL - Bicycling enthusiasts around the world are facing higher prices as manufacturers adjust to a stronger U.S. dollar and introduce new lines of more expensive rides this summer, bike maker Dorel Industries said Thursday.

"Everyone in Canada will be raising prices from last year," chief financial officer Jeffrey Schwartz said following the company's annual meeting.

The Montreal-based company, the world's fourth-largest bike firm, anticipates a turnaround in its sports business in the second half of this year after currency headwinds caused revenues to drop nearly five per cent in the first quarter.

Dorel, the company behind the Cannondale and Schwinn bicycles, said in addition to raising prices, it is cutting costs and introducing nine new bike platforms — the most in its history.

"Probably too much for a company our size to do, but we needed to catch up," Schwartz added.

Among those announced so far are fat bikes with extra large tires and a bike aimed at the growing trail category in the mountain bike market. Prices for the Habit being launched in July start at US$1,799.

For triathletes, Dorel has the Slice. There are five models ranging from US$2,700 to just under US$11,000.

The company is also seeking to bolster its parts and accessories business with the introduction of a carbon fibre saddle, created in collaboration with Airbus. The lightweight Fabric ALM saddle recently began to sell in Canada, with prices ranging between US$200 and US$500.

Dorel (TSX:DII.B) hopes the seat, made without foam or padding, along with a new clip-on water bottle, will be among the products that can help expand its parts and accessories business to industry norms.

The higher margin accessories business is a US$10 billion global industry. While most bike makers derive up to 20 per cent of their sales from parts and accessories, Dorel's take is less than three per cent.

Dorel says research and development investments in new bikes and Cannondale and GT parts and accessories should allow that part of its business to double or triple in sales in the coming years.

It is also launching new child car seats, strollers and home furnishings, including a ready-to-assemble sofa.

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