Little tykes and bikes are big business for Dorel Industries, a top juvenile products and bicycle company. Dorel makes car seats, strollers, and high chairs under names such as Cosco and Safety 1st in the US and BéBé Confort in Europe. It also produces ready-to-assemble home and office furniture and other home items, including computer tables and microwave stands. North America accounts for nearly two-thirds of the company's sales, but Dorel also sells its products in Asia, Australia, Brazil, and Europe. Besides babies, 50-year-old Dorel counts cyclists among its customers and is growing its recreational products unit through acquisitions. It owns bike-maker Pacific Cycle, high-end Cannondale, and Schwinn.
Dorel's sales grew by about 8% in 2010 vs. 2009, reversing the 2% decline suffered in the previous annual comparison, when a 7% drop in juvenile product sales outweighed increases in bicycle sales and, to a lesser extent, furniture. The consumer products maker's recreational/leisure segment outperformed home furnishings and juvenile products, posting a nearly 14% increase in 2010. Juvenile products -- Dorel's largest segment, accounting for more than 40% of total sales -- grew by just 3.5%. The US market for juvenile goods (served by subsidiary Dorel Juvenile Group USA) continued to be sluggish and the company is looking to more promising overseas markets for a boost in revenue.
Its newer business in Brazil is helping sales of car seats and other kid-related items. Indeed, 2010 was Dorel's first year of full operations in Brazil, as Companhia Dorel Brasil Produtos Infantis (aka Dorel Brazil) was established in 2009. The country, which boasts the fifth highest population worldwide, contributed about $27 million to Dorel's coffers in 2010 despite a fire that destroyed a car seat assembly factory in Rio de Janeiro late in the year. The company's quick return to normal operations there underscores the attractiveness of the Brazilian market, where new car seat legislation in Brazil is helping to drive sales. To secure its foothold there, Dorel announced plans in late 2011 to increase the presence of its Juvenile segment in South America by buying a 70% stake in Silfa, which consists of an existing group of companies that own and operate the Infanti brand in Chile, Peru, Bolivia, and Argentina.
In another move to fortify its position in juvenile products outside the US, Dorel raised its profile in Europe through the 2009 acquisition of Baby Art, a maker of high-end specialty children's products. In Europe, Dorel sells juvenile products primarily across the mid-level to high-end price points.
Dorel's strategy is to offer broad product lines in diverse operating segments on an international scale, to hedge against weakness in a particular segment or geographic local. To realize this, in recent years Dorel has been actively expanding its product line in both the juvenile products and bicycle segments, while increasing its international presence. Dorel peddled further into the bike market with the 2009 purchase of a pair of UK-based cycle distributors: Hot Wheels and Circle Bikes, which have combined sales of about $22.4 million. The two companies distribute Dorel's Mongoose and GT brand bikes in Britain. Following the acquisition, Dorel created a new subsidiary -- Cycling Sports Group UK -- to drive the growth of its Mongoose and GT brands in Britain. The fall 2009 purchase followed Dorel's acquisition in August of Australia-based Gemini Bicycles, and Iron Horse Bicycles (out of bankruptcy for some $5 million) earlier in the year. Iron Horse is known for its downhill and extreme trail bikes.
Previous purchases include PTI Sports in mid-2008 for some $28 million. The acquisition was the result of a licensing relationship that Pacific Cycle and PTI entered in 2002 that had PTI making Schwinn and Mongoose bicycle helmets and other accessories. PTI is a top bicycle helmet maker in the US. Dorel also acquired Cannondale Bicycle Corp. in 2008 from an affiliate of Pegasus Capital Advisors. Dorel's purchase, for about $200 million in cash, extended its reach into Canada, Switzerland, Holland, Japan, and Australia, as Cannondales are sold in more than 70 countries. With the Cannondale acquisition also came Sugoi Performance Apparel, which caters to runners, cyclists, and triathletes.