Gene`s BMX News

[BMX-News]

*** Dorel To Sell Iron Horse In SG ***

Montreal, Canada -- 09/29/2009



Dorel Industries will leverage the recently acquired Iron Horse brand
to gain market share in the sporting goods channel where the company
hasn’t previously had a position, according to Martin Schwartz, chief
executive officer of Dorel.

Schwartz spoke of plans to reintroduce Iron Horse branded bicycles
to the market during an August conference call with analysts to
discuss the company’s second-quarter earnings.

“We’re talking to several sporting goods chains who are working
very closely with us and we’re working with a couple chains in Canada.
We’re very optimistic about this Iron Horse project,” Schwartz said.

Dorel Industries bought Iron Horse for $5.2 million on July 13 during
an auction in bankruptcy court. The brand hasn’t been sold in the
specialty channel since last September when its former president,
Cliff Weidberg, opted to sell high-end bikes only through Randall
Scott Cyclery, his son’s online retail outlet.

Low- to middle-end Iron Horse bikes remained in the sporting goods
channel in stores like d**k’s and Sports Authority. Iron Horse pulled
in $25 million last year, but Dorel doesn’t expect the brand to generate
much revenue this year.

Iron Horse ended operations in January after its secured lender,
CIT Group, stopped funding the company. Iron Horse was forced
into bankruptcy by three of its Asian suppliers in March.

“We’ve designed new products, we’re showing the product to the
customer. They’re ordering. Are we going to ship it before the end
of the year? Maybe. But really it’s a 2010 play,” said Jeffrey
Schwartz, Dorel chief financial officer.

Dorel Industries also recently purchased Gemini Bicycles, an
Australian distributor, for $2.2 million. Plans are to combine those
assets with Cannondale’s existing Australian operations to form a
new division: Cycling Sports Group Australia. This, along with the
addition of a new vice president to drive growth in Asia and a new
manager to oversee Cannondale sales and marketing in Canada,
is part of Dorel’s ongoing strategy to transform its bicycle business
into a global force, Martin Schwartz said.

For the first six months of 2009 Dorel’s bike division, which includes
Cannondale, GT, Mongoose, Schwinn, Sugoi, Pacific Cycle and PTI,
reported revenue of $335.5 million, up 7.4 percent from the same
period last year. Excluding the impact of foreign exchange variations
and the acquisition of PTI, organic revenue dipped 4 percent year-to
-date.

Earnings from operations declined 19 percent. Gross margin was
down 140 basis points due to a less profitable product mix as
consumers shifted to lower price point products.

Sales fell in the Cycling Sports Group, home to the company’s
IBD brands, as consumers purchased fewer high-end bikes.

“We’re carrying a lot of bikes now given it’s the end of summer.
So is the whole industry. We’re watching that and trying to deal
with that,” Jeffrey Schwartz said.

Although 2009 has been a challenging year, Dorel expects high-end
sales to pick up next year with the publicity garnered from two
Liquigas riders finishing the Tour de France in the top 10.

“Early reaction to our new IBD product line has been outstanding
and our pre-delivery order level is up significantly from last year.

We believe we will increase our bike sales next year to the IBD,
regardless of the economic situation,” Martin Schwartz said.
_________________
BMX News Reporter, An Array Of People
Reporting The BMX News & Information
For And With ( www.genesbmx.com )