[Updated] Q3 Revenue Round Up: Falling Consumer Interest, Layoffs & Drop in Sales
Following the boom across the cycling industry over the past few years it seems like the industry is beginning to slow down with demand falling along with revenues. Let's get into all the key details from brand's recent Q3 revenue reports.
Vista Outdoor’s Action Sports Group
Vista Outdoor’s Action Sports group, including its bike brands, has seen sales reaching $151 million in the most recent quarter going against the industry trend with a 44% increase compared to the same time last year.
The collection of brands includes Bell Sports, Giro, Blackburn, Fox Racing, interestingly Vista Outdoor has said that sales of Bell's lower and mid-tier helmets have struggled in the recent quarter because of high levels of inventory at retailers.
Giant
Giant Group has also faired well in its first three fiscal quarters with a 14.4% increase over last year leading to net sales of NT$70.87 billion ($2.2 billion).
The Giant Group says its OE business has increased its contribution to the sales total this year which has seen rising costs of materials, logistics and labor affect profits. Giant has also said that the stock of bikes in Europe and North America is improving for entry and mid-level products. Higher-end products are still in short supply.
In its report Giants says demand has "cooled down compared to the past two years" but it "sees the great potentials for the cycling industry."
Fox
Going against the trend for other companies in Q3 Fox has recorded company-wide sales increasing by 17.8% compared to last year. The bicycle part of the business saw sales increase by 9.1% in the quarter to $174 million. In the first three quarters of the year, the bike-related Speciality Sports Group had a 25.2% jump in sales to reach $522 million.
Following the Q3 report Fox has increased its earnings forecast from $1,565 million to $1,585 million.
GoPro
GoPro has seen year-over-year revenue drop by 4% in Q3 despite increases in subscriptions.
For the quarter ending on September 30, GoPro saw revenue noted at $305 million, a decrease from the $317 million reported in the same period last year. The report did say that subscribers have increased by 55% year-over-year reaching 2.1 million. The subscriber increase has helped to grow subscription and service revenue by 48% compared to 2021 and achieved $21 million in Q3.
Shimano
Shimano's third fiscal quarter financial summary sees signs of consumer interest in bikes cooling but demand remains higher than it was before the pandemic.
In its Q3 report, Shimano has revealed that inventory for high-end bikes remains low with higher demands compared to lower-end bikes which have seen a drop in interest. Shimano did not note that in Europe despite some shortages inventory levels are reaching decent levels.
Shimano found in the first three-quarters of the year sales of components were up by 20.6% compared with the same time last year to reach 384,654 million yen ($2.59 billion). The companies operating income rose to 109,119 million yen, a 21.6% increase. Q3 sales saw a jump of 25.7% over this period last year.
Mips
MIPS has stated a reduction in demand for bike helmets has led to its third-quarter sales decreasing by 39% year-over-year.
Third-quarter net sales reached SEK 113 million ($9.9 million), a drop from the SEK 185 million achieved in the same period last year. It will not only affect this quarter as MIPS president and CEO Max Strandwitz has stated that it could continue for the rest of 2022 and into the new year.
"Bike retailers around the world have generally built up too high inventory levels of bikes and bike accessories and therefore helmet manufacturers pulled the hand brake in terms of helmet manufacturing ahead of next season.
"We believe that this sub-category (bike) will return to growth driven by strong trends in e-bikes, commuting and people wanting to spend more time outdoors. We still see a high interest from our customers wanting to launch new products within the bike sub-category. Therefore, we are confident in our continued investments in bike."
The lower third-quarter results were expected by MIPS as last month the company predicted a revenue decrease with Max Strandwitz stating this was because "we realized that we had underestimated the speed and the magnitude of the slowdown in the bike sector."
Garmin
Garmin has seen a 4% year-over-year decrease in its latest report with the Fitness segment dropping by 18%.
The decrease in revenue is said to be caused by lower demand for indoor cycling and advanced wellness products as the latest quarter reports a drop from $1.19 billion last year to $1.14 billion. The Fitness segment which includes GPS devices, power meter pedals, indoor trainers and more fell from $342 million to $280 million.
Thule
The Thule Group has seen net sales drop by 23% year-over-year as high stock levels lower demand for bike products.
Third-quarter net sales for Thule reached SEK 2.13 million ($196.3 million), a fall from SEK 2.77 million last year although this was in line with a mid-quarter financial statement from CEO and President Magnus Welander.
Following the report CEO and President Magnus Welander said: "The coming quarters, as already communicated, we will be facing a challenged market with a greater uncertainty in regards to how consumers' purchasing desire is impacted in an uncertain world as well as retailers that will strive to keep inventory levels low."
Earlier this month Thule's Americas division laid off 34 employees across management, product development, and manufacturing divisions.
We will continue to update this article as more revenue reports are released.
Vista Outdoor’s Action Sports Group
Vista Outdoor’s Action Sports group, including its bike brands, has seen sales reaching $151 million in the most recent quarter going against the industry trend with a 44% increase compared to the same time last year.
The collection of brands includes Bell Sports, Giro, Blackburn, Fox Racing, interestingly Vista Outdoor has said that sales of Bell's lower and mid-tier helmets have struggled in the recent quarter because of high levels of inventory at retailers.
 | Our consumers are still relatively healthy and well-employed... We’re of the belief that it’s more of an inflationary environment than it is a recessionary environment. |
Giant
Giant Group has also faired well in its first three fiscal quarters with a 14.4% increase over last year leading to net sales of NT$70.87 billion ($2.2 billion).
The Giant Group says its OE business has increased its contribution to the sales total this year which has seen rising costs of materials, logistics and labor affect profits. Giant has also said that the stock of bikes in Europe and North America is improving for entry and mid-level products. Higher-end products are still in short supply.
In its report Giants says demand has "cooled down compared to the past two years" but it "sees the great potentials for the cycling industry."
Fox
Going against the trend for other companies in Q3 Fox has recorded company-wide sales increasing by 17.8% compared to last year. The bicycle part of the business saw sales increase by 9.1% in the quarter to $174 million. In the first three quarters of the year, the bike-related Speciality Sports Group had a 25.2% jump in sales to reach $522 million.
| I am incredibly proud of our Fox team members and their unwavering commitment against a backdrop of growing economic headwind. |
Following the Q3 report Fox has increased its earnings forecast from $1,565 million to $1,585 million.
GoPro
GoPro has seen year-over-year revenue drop by 4% in Q3 despite increases in subscriptions.
For the quarter ending on September 30, GoPro saw revenue noted at $305 million, a decrease from the $317 million reported in the same period last year. The report did say that subscribers have increased by 55% year-over-year reaching 2.1 million. The subscriber increase has helped to grow subscription and service revenue by 48% compared to 2021 and achieved $21 million in Q3.
| GoPro's resilience during this challenging economic environment is testament to the meaningful role GoPro plays in the lives of the world's most active and creative people. |
| Now that we have crossed the two-million subscriber threshold, we are positioned to generate more than $100 million in annual recurring high-margin subscription revenue moving forward. |
Shimano
Shimano's third fiscal quarter financial summary sees signs of consumer interest in bikes cooling but demand remains higher than it was before the pandemic.
In its Q3 report, Shimano has revealed that inventory for high-end bikes remains low with higher demands compared to lower-end bikes which have seen a drop in interest. Shimano did not note that in Europe despite some shortages inventory levels are reaching decent levels.
Shimano found in the first three-quarters of the year sales of components were up by 20.6% compared with the same time last year to reach 384,654 million yen ($2.59 billion). The companies operating income rose to 109,119 million yen, a 21.6% increase. Q3 sales saw a jump of 25.7% over this period last year.
Mips
MIPS has stated a reduction in demand for bike helmets has led to its third-quarter sales decreasing by 39% year-over-year.
Third-quarter net sales reached SEK 113 million ($9.9 million), a drop from the SEK 185 million achieved in the same period last year. It will not only affect this quarter as MIPS president and CEO Max Strandwitz has stated that it could continue for the rest of 2022 and into the new year.
"Bike retailers around the world have generally built up too high inventory levels of bikes and bike accessories and therefore helmet manufacturers pulled the hand brake in terms of helmet manufacturing ahead of next season.
"We believe that this sub-category (bike) will return to growth driven by strong trends in e-bikes, commuting and people wanting to spend more time outdoors. We still see a high interest from our customers wanting to launch new products within the bike sub-category. Therefore, we are confident in our continued investments in bike."
The lower third-quarter results were expected by MIPS as last month the company predicted a revenue decrease with Max Strandwitz stating this was because "we realized that we had underestimated the speed and the magnitude of the slowdown in the bike sector."
Garmin
Garmin has seen a 4% year-over-year decrease in its latest report with the Fitness segment dropping by 18%.
The decrease in revenue is said to be caused by lower demand for indoor cycling and advanced wellness products as the latest quarter reports a drop from $1.19 billion last year to $1.14 billion. The Fitness segment which includes GPS devices, power meter pedals, indoor trainers and more fell from $342 million to $280 million.
| Revenue was negatively impacted by the strengthening of the U.S. Dollar. Despite this significant headwind, gross margin expanded and operating margin remained solid. Looking forward, we are lowering our revenue outlook for the remainder of the year consistent with the trends we are experiencing, while also raising our EPS guidance on an improving margin outlook. We believe that our strong lineup of innovative products and vertical integration strategy will allow us to remain strong in this challenging economic environment. |
Thule
The Thule Group has seen net sales drop by 23% year-over-year as high stock levels lower demand for bike products.
Third-quarter net sales for Thule reached SEK 2.13 million ($196.3 million), a fall from SEK 2.77 million last year although this was in line with a mid-quarter financial statement from CEO and President Magnus Welander.
Following the report CEO and President Magnus Welander said: "The coming quarters, as already communicated, we will be facing a challenged market with a greater uncertainty in regards to how consumers' purchasing desire is impacted in an uncertain world as well as retailers that will strive to keep inventory levels low."
Earlier this month Thule's Americas division laid off 34 employees across management, product development, and manufacturing divisions.
We will continue to update this article as more revenue reports are released.
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338 Comments
It was a perfect storm of temporary inflated demand clearing out stocks at a time when they couldn't be replenished, then as stock levels started to pick back up, the demand collapsed flooding the market again with 2nd hand stock after some businesses has upped production rates, and taken on those associated costs.
My only hope is that businesses interested in serving the cycling industry were smart enough to use those boom time profits to weather this storm, and the parasitic equity firm conglomerates get bit hardest and remove their price-gouging claws from our sport.
If you were a small company with the ability to continue production as high volume brands waited on mega shipments off shore, it may have helped. Other brands like Cane Creek, DVO & maybe Hope might have shown an increase?
@Ed Spratt it would be nice to know if that were true. A little light can't hurt
LOL, I can guarantee they used all of the profits to give their execs nice fat bonuses and for stock buybacks. Why hang onto extra cash that'll be taxed when they can give it to themselves? When things slow down, they'll simply fire their workers, reduce investments in racing/sponsorships, etc. instead of reducing costs by lowering their own pay or bonuses. Welcome to the real world.
Why not them.
Literally everyone.
It made me look. Cheapest base model on Trek's site is $650 & comes with front shock & disc brakes. Even a full rigid kids 24" is $550.
"...parasitic equity firm conglomerates get bit hardest and remove their price-gouging claws from our sport."
Even the OG mt bikes with shimano(18-21etc) of early 80s were few $100s.
Bike and part consumers SHOULD be seeing price drops now that they're selling large(r) volumes.
www.pinkbike.com/news/norco-pauses-its-dh-and-xc-factory-teams-for-2023.html
You mean those born yesterday?
COULD even see bike stuff coming down in price?
Also sale prices on any bike with headset routed cables?
Shops still seem to busy doing servicing, especially since so many of the new people don’t know how or care to work on their own equipment. Hopefully, that means local shops won’t need to look at layoffs.
This can sometimes be annoying for us customers (*cough* 12-Speed MTB *cough*). But it seems to serve them well as a company.
It's not that you need to hire only more people - you need a site + very specialized machines.
Not sure if they where just lucky enough that they couldn't react faster or if they where sure to be right but of course a mulit-million $ company having access to sales figures of pretty much the whole induscty has a better view on the market then small companies.
But as the owner of a small manufacturing business I can tell you right now that despite raising our prices by around 20% over the last 2 years our profit margin is not increased - profit may be up but we have sold more than pre covid so we have done more work, lots more work.
Things are now much slower and we expect profit to drop moving forward, but the amount of work we do will drop of course accordingly.
Now I worry bike brands and shops are gonna panic and dramatically reduce the inventory they have on hand and we’ll just repeat all this in a few years
Shops are probably in the worst position, as usual, they don't have the margin to clear out stock but at the same time probably cant hold onto too much if things severely slow down.
There had to be some element of guilt at play here, definitely and once it starts to contribute to inflation it can spiral out of control as all elements in the chain scramble to maintain their margin to compensate.
It would be interesting to see at what stage in the product life cycle they believe most of the cost is being added.
Sure, there are some regular constomers walking into a shop to buy $10k-$15k bikes. But I have to think that the large majority of those top-end bikes are bought under a pro-deal compared to a retail sale.
Pro deal or not, they are not buying the majority of high end bikes.
And when I say "industry", I mean to include those in affiliate industries that also get pro-deals (e.g. other Outdoor gear sectors, influencers, ski/bike patrol, bike park/ski resort staff, etc.).
Pretty much nothing over XT/SLX or GX/NX but nobody working in a shop is rocking full AXS XX, flight attendant with Zipp wheels unless they are a racer and sponsored.
As somebody in the industry, that's very much not true.
Us staffers definitely have nicer bikes than our peers earning similar wages elswehere (obviously), but as for us being the bulk of the people buying those $15+ bikes. No. Not even close. Not even CLOSE to close.
For a start the cost on a $10k bike is going to be of $6-7k, sometimes more so the shops essentially giving each employee about 4-$5k every year, nice bonus.
Or the whole story / your ‘buddy’ is full of bullshit which is more likely.
Why would I need to lie, if you notice I speak from my "real name" no need to hide from what I have to say unlike the majority of you on here. Easy to talk shit when you cowardly hide behind a fake name and/or country flag.
As for the shop giving their employee 50% off cost on one bike a year...that's a very generous shop. My shop only ever gave me cost, or access to all the pro-deals from all the manufacturers/distributors.
I have one buddy who is a rep for a big mountain bike brand. He gets 1 personal demo bike a year at 70% off. Sells it at the end of each season for ~30-40% off, makes a small profit, and rolls it into next years bike.
My original statement that the majority of the $10-$15k bikes are bought by industry may be off. I'm now seeing that you guys see a lot of regular joe's on the trails buying $15k bikes. But...in my area of the world...pretty much every outdoor industry employed person (shop, brand reps, distributors, corporate outdoor industry, etc.) is riding these $10k+ bikes (except maybe the 16 yr. old kid who just got their first part time job).
I didn't get any below cost, I am sure some brands may do this for certain people (see reps) but I have found it mainly to be component / accessories that do - Raceface recently had a decent sale through silverfish for staff for example.
Reps are a special case I think - they sell the brand to shops vs staff selling the brand to customers, I know reps get hefty discounts / freebies etc - why wouldn't you if you were a brand as after all they are selling for you, I suppose you could almost call it a bribe of sorts.
Here in the UK shop's are pretty tight - cost + vat is the usual from what I have seen which often is around a 20% discount from retail.
If it wasn't for microspline hubs on one of my bikes I would have given up on shimano altogether and gone over to Eagle.
(more than likely both)
Usually the worst recessions come from something largely unexpected but I think everyone with after a brain will have expected this so I don't think it will be as bad as 2007-2008.
I have worked with a few people in certain parts of the bike manufacturing industry and they have been altering forecast and having orders with them altered for the past 6 months.
If you have over-extended you may be in some trouble here, but its likely you can just liquidate stock and be back to it either way.
I do not think we will see a flurry of good bankrupt b
Now though, inflation is 10%, interest rates are rising & difficult to drop them due to inflationary pressure, we have a war in Ukraine and we are following a real spending boom / period of overconsumption - This downturn is going to hit the bottom up not top down.
I hope you are right but I think this ones going to hurt.
But I think it will hurt less than '08.
We are really feeling the energy prices here for example.
Some of these issues are not in the control of companies though - the war in Ukraine has meant food cost increases for example which are unavoidable and raw materials like the aluminium I personally purchase cost a lot more than before, partly due to Ukraine again and partly supply issues.
Its a complicated situation - not all companies are profiteering, not everything is Covid, not everything is Brexit, not everything is the goverment, etc etc - its bits of everything.
A war, just like COVID, is a perfect opportunity for greedy moralless people in power to make some coin. It's always been this way. Slap "Because of War in Ukraine" which insitagetes emotions and compassion - nobody gonna question that. Add bogeyman "Putin" to it so you have something to hate and job is done. You can hike these energy costs by 300%. As I said, the majority of costs such as food / energy / fuel for the majority of people are controlled by greedy conglomerates who are after profit and power only. The war is almost irrelevant.
The government and BOE are independent in terms of decision making - the government has no control over interest rates, this is the same for most countries with a central bank.
Get some basic knowledge before turning everything to conspiracy you nut job.
www.bankofengland.co.uk/knowledgebank/who-owns-the-bank-of-england
BoE is owned by the UK Government! It's a fact. Do you really think the government doesn't significantly steer their decisions?! Or that there is anything that's "independent" especially when it comes to money? If you do then we have nothing to talk about. Keep living in your version of reality, hope it serves you well.
Brexit was blaming the imigrants, now we blame Putin. Yet we get shafted by the same greedy bastards who call the shots. Greed has no limits that's the universal truth you can always apply.
I knew you would answer the BOE question by suggesting another conspiracy, it’s predicable to the letter - as you say it appears we have nothing to talk about and I would prefer it that way, there are so many occasions where people / companies are proven to be acting in nefarious ways without having to paint conspiracy everywhere.
I cant speak for other countries but here in the US, the government literally does control interest rates.
The Federal Reserve sets the rate at which banks can borrow money. They have enacted 4 consecutive, 3/4s of a point interest rate hikes in the past several months. For the first time in history.
This after they inexplicably let rates sit at the mid 2's (!!) during the pandemic even though people were buying houses like crazy, at any price, due to interest rates being lower than at any point in history.
Then, they gave out well over a trillion dollars in forgivable grants, including to airlines, pro sports franchises, churches, and politicians.
We personally benefitted from it also, greatly, but only because it felt foolish not to. But the writing on the wall was easy to read and we kept the money close to vest rather than buy new cars and vacations, like so many others did. Which only fueled further inflation.
AirBnB bookings were insane during Covid. People spent their stimulus money on vacations because, well, we Americans are stupid.
Somehow though, our dollar is higher against most currencies than at any point in my lifetime.
IMO, one result of the Feds financial malpractice is the gap between between haves and havenots (delineated primarily in terms of own home vs rent) increased exponentially in last two years. How younger people are ever going to be able to afford a decent house in a decent area, I do not know. Thats not good for a healthy society. Desperate people do desperate things, hence our crime rate increase.
Its a mess for sure
Do you realise that behind the brand are normal people trying to make a living, they aren't pushing drugs.
Some of you guys are super strange to wish hardship on others that are doing absolutely no wrong.
That old saying doesn't stand though if you are just a bystander rubbing your hands at the prospect of others failure.
And I’ll ask you the same question - list some of the dumb companies that don’t deserve to exist for me in the bike industry.
Random Pinkbike Commenters: No, not like that.
Everyone wants capitalism until it happens to their crappy business model.
Too many folks just buy that stuff from Asia, slap a "credible" brand name on it - no added value.
Name one of these brands you are happy to see disappear - go on, just give us a few brands you are happy to see go, nobody seems to want to say who they are happy to lose.
@Rokcore - Who said anything of the sort, I just questioned why people seem to get excited about it, failure is a fact of life, I just don't wish it upon people.
Personally I think some of them are great and I use products from a few of them.
You’re over here saying things about normal people just trying to make a buck. I’m saying that none of that matters if your business sucks
"many useless brands and companies will be swept away. not the worst news"
So I am asking which brands and companies do you find useless and would be happy to see disappear.
You are stating the obvious and completely avoiding the question, I am not asking you to make any claims about a companies finances.
youtu.be/rM7N26SF6Tc
Hint: Analysts are predicting a brief improvement followed by a general recession in 2023 when the reserve banks of various countries "blink" when financial headwinds get stronger in the face of already-high interest rates.
The only thing that hasn't change is our shortage in staff and a lot of pretty pissed and impatient customer due to staff shortage.
It's the mid-range, GX/SLX bikes that will drop in price before the top-end bikes as a result.
Many places in NZ are struggling to get rid of 2022 bikes now.... with massive sales happening.(even on some new 2023 bikes)
Have you completely missed the effect of inflation on almost every single thing we buy right now, from cheese to bikes to cars etc.
The question is....... do we think prices are going to go down when/IF gas,oil,raw materials shipping labour goes down
If we don't know what investments manufacturers had made prior to our current state of affairs or what contracts they had in place then we are speculating as to the degree they have been forced to raise prices.
Of course companies are going to say "We've only raised our prices because we had to." Some of them are telling the truth and some of them aren't. Is this really that contentious an idea???
To your point: It might be curious is to take comparable models of both small and large makers and compare the price jumps. I'd think less buying power should mean the smaller players would have to hike their prices more. If that turned out not to be the case then it "might" reveal who's been greedy....or it might not and it's an idea in need of refinement.
(even though percentage-wise the costs for large companies have probably increased the same as for small companies).
I was half joking comparing bikes to beanie babies in 2021. I witnessed many people new to the sport who had disposable funds and saw how scarce bikes were buying a new bike every month or two just because "nobody could get bikes" and they get to be That Guy. Most the people I know that were riding for years were upset about not finding brake pads and fork service parts, less about getting a new bike. Most outdoor hobbies saw the same thing.
Time to hire a PB financial editor?
Half these reports I hear go something like this.... Company X only made a 23% profit when forecasting a 30% increase.
So they sell it that profits are down 7% of expected revenues.
But you step back and look at it and go.... wait a second... the company still made $300 million dollars in profit this quarter... so what if you expected 345 million.
So to make up that "loss" they've got to cut staffing or benefits in one shape or another. And overwork those that are left. Why? So they can get back to the percentages that they forecast so the C sweet can get those bonus'.
It's a broken system. Everything to keep the stock market happy. 70% of it is bullshit.
Like these freaking cash crabbing oil companies.... oh we didn't make what we expected to make this quarter. We only made $34billion this quarter in profits....
Meanwhile, I bought a $500 freeride bike that was sick in 2008 and I’m having dangerous fun on it.
F*ck them, make MTB punk again.
Bicycles and bike parts arent forex, they dont go up and down every few months - pricing is what is it now, inflation is still at 10% in many european countries and usa, if anything prices may still continue to rise.
That has always been Yeti's market positioning but will be interesting to see how that plays out if in fact we're moving to a more recessionary environment.
You're right about the used market still being out of touch though. People want like $550 for a Rhythm take off but I can buy a new Lyrik Select for the same price with a warranty or be patient and find a factory for not much more..
spotbikes.com/collections/components/products/sram-xx1-eagle-axs-12-speed-rear-derailleur
spotbikes.com/collections/components/products/sram-eagle-axs-controller
Please invest some of those increased sales earnings into engineering a 36 CSU that doesn't fail the CSU creaking test EVERY time I've brought it in for service. I've owned the precursor to the 32, the 34 and the 36. Only the 36 has given me problems and I'm and Int/Adv 155 lb rider. It's time to start making reliable products, Mr. Dennison.
/S
Checkity check
Ive enjoyed riding my 17 and 19 model bikes and I’m going to throw some cut-throat offers on your high end bikes from your destressed wood and polished concrete showrooms.
I’m old enough to remember what bikes shops should be like!
Yeeewwww
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