Financial reports have been released for Q3 (July-September) 2020 and the COVID bike boom still seems to be positively affecting the industry. Demand for products remains high due to customers still living in a socially distanced world and governments investing in cycling infrastructure. How long will the bike boom last? Can we make this growth sustainable? And when will supply and demand even out? We've put these questions to the industry and will be publishing them in a Burning Question next week.Fox Notches Record Quarter with Bike Division Revenue Growing 32%
Fox has announced a record third quarter that includes a 32% growth in revenue from its Speciality Sports Group (Fox, Marzocchi, Easton, RaceFace). Sales across the business rose 23.4% to $260.7 million versus $211.3 million for the same period last year. This increase in sales can be broken down into a 17.7% increase in Powered Vehicles Group and a 32.4% increase in Specialty Sports Group. Fox claims that demand for both aftermarket and OE equipment have driven the increase in sales for the Speciality Sports Group.
Sales for the first nine months of the year are also up for Fox. From January 1 to October 2, Fox recorded $628.2 million in sales, an increase of 11.2% compared to the same period in 2019.
Mike Dennison, Fox CEO, said, "Our record third quarter results demonstrate not only the success of our superior products but also the phenomenal resilience and execution by our entire global team. With swift allocation of resources, we were able to take advantage of the strong demand trends within our end markets, while still driving gross margin improvement amid an uncertain and complex manufacturing environment. Based on the strength of our year-to-date results and our expectation for momentum to continue through the fourth quarter, we are pleased to reinitiate annual guidance for 2020.”
More info, here
Shimano Bicycle Sales Down 3.8% with Increased Income
Shimano's bike division reported a decline in sales for the third time in 2020, but it was able to report an increased operating income of 4.9% (44,131 million yen). Shimano's sales fell by 3.8% in the period of July-September, but when compared to its decline of 14.6% in the first half of the year this quarter's fall to 204,499 million yen could represent something of a recovery.
The Japanese component brand's quarterly report noted demand for bicycles began to rapidly increase from early spring, as cycling is an easy form of recreational exercise and a mode of transportation with a lower risk of infection. As demand kept rising, however, it began to outstrip supply, and there were shortages in distributor inventories in Europe, North America and China.
The report made special note of the brand's Deore MTB range
that "continued to be well-received in the market".
More info, here
Demand for Hope Products Doubles
Demand for Hope products is currently 100% greater than normal levels. Hope reopened its factory in April and since then has invested around £1.5 million in new machinery and taking on manufacturing staff to scale up the production. It has continued working around the clock and has also increased its number of night shift staff. This has allowed it to ship out 25-30% more product but it admits there have still been some shortages for its product as with most manufacturers.
Hope is apparently seeing demand outstripping supply for both B2C and B2B and is even fielding calls from bike shops it has never worked with before that are desperate for some product to sell. Hope said: "With our passion for keeping all production on-site in Barnoldswick, there will always be a restriction on annual growth. We are still not comfortable sub-contracting any of our production and losing control of quality."
More info, here
Bike Imports at Highest Levels for 5 Years in USA
Two reports have shown bike imports to the United States were up in both July and August. US Department of Commerce figures picked up by Bicycle Retailer and Industry News
, show that 1.9 million bikes worth $151 million were imported in July and 1.7 million bikes worth $142 million were imported in August. This represents the highest level of bike imports since April 2015, when the industry brought in bikes worth $180 million.
The increase in imports is likely due to the increased demand for bikes as well as replenishing stock from lockdowns and factory shutdowns in Asia. BRAIN also notes that, "In July and for the first week of August, importers had an extra incentive to up the pace: a 25% tariff on China-made bikes that took effect Aug. 7."
Dorel Sports Records Sixth Consecutive Quarter of Revenue Growth.
Dorel, the parent company of GT, Cannondale and Mongoose that recently announced its intentions to go private in the near future
, has reported that sales in its Sports division were up 22% to $306 million in Q3. This is the sixth quarter in a row that revenues have increased year on year. Martin Schwarz, CEO, said: "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."
Dorel tempered expectations by forecasting difficulties ahead and a challenging fourth quarter. Its report noted that lockdowns were being re-instated in Europe and challenges on transportation, cost increases and supply out of Asia, plus the recent strength of the Chinese Yuan relative to the US dollar, could also result in cost increases.
GoPro Revenue Jumps 114%
GoPro's Q3 revenue has increased by 114% and is up 109% sequentially from Q2. Last year's Q3 was a particularly weak one for GoPro
following a production delay with the new Hero 8 cameras, which shifted the bulk of its sales from the third quarter to the fourth quarter. Unfortunately, GoPro had already announced the camera, which meant demand for the Hero 7 fell as it was no longer the brand's flagship model.
This year, GoPro had the release of the Hero 9 Black in Q3 to help boost its figures and it resulted in a very strong quarter. Revenue was $281 million, up from $131 million in 2019 but still a bit below 2018's $285 million. GoPro also ended Q3 2020 with 501,000 subscribers on its PLUS platform (which costs $69.99 per year ($5.83pm), or $7.49 if you go month-to-month), which is up 35% sequentially and 65% year-over-year.
More info, here
MIPS Continues Strong 2020
MIPS' net sales increased by 94% to SEK 102m in Q3, meaning it accounts for nearly half the brand's annual sales of SEK 225m for the year to date. The quarter was the strongest in the history of MIPS and generated an operating profit of SEK 55m. MIPS sales were down 20% in Q2 as "helmet manufacturers pulled the emergency brake" due to COVID but its sales have now recovered in Q3 enough that the Swedish brand's net sales from January to September have increased by 24% year on year to SEK 225m.
Max Strandwitz, President and CEO, said: "Demand from the US has primarily been driven by sales of bicycle helmets specifically for recreational use. The market situation in Europe has been favorable mainly from strong demand for bicycle helmets used for commuting."
More info, here
Leatt Revenue Grows 18% Year on Year
Leatt has reported an 18% growth in revenue in its third quarter from $9.65 million in 2019 to $11.37 million in 2020. This increase in revenues is attributed to a $1.16 million increase in body armor sales, and a $1.38 million increase in sales of other products, parts and accessories but they were partially offset by a $0.76 million decrease in neck brace sales, and a $0.07 million decrease in helmet sales during the period. The third quarter forms part of a strong first 9 months of the year for Leatt with 23% higher revenues from the same period in 2019.
More info, here
E-Bikes Become More Than a Quarter of Giant's Growing Revenue
Giant's third-quarter revenue increased 14.6% to NT$19.47 billion with 27% of that total now coming from e-bikes. Giant said in a press release that countries where consumers are still sticking to social distancing guidelines, "are turning to bicycles and e-bikes to commute or as an alternative form of exercise to keep themselves fit and healthy." This has gone hand-in-hand with greater investment in cycling infrastructure that has helped to boost demand.
Giant also noted that "E-bikes sales price and margins are much higher than traditional bikes" and have contributed to not only an increase in revenue but an increase in gross margin too. The Taiwanese company said it would continue to grow its range and production of e-bikes to grow its market share.