Tough retail conditions impact cycle maker Tandem
BIRMINGHAM cycle manufacturer Tandem Group saw turnover fall 10% in the first 11 months of last year and has warned the tough trading conditions are set to continue.
In a pre-close trading update ahead of its annual results for the 11 months ending December 31, 2011 the firm, which designs, develops and distributes cycles and sports equipment, said trading in the last five months of the year had been impacted by the uncertain economy.
It said for the 11 months to year-end turnover was around 10% lower than the same period in 2010 at approximately £29m.
“Following an encouraging start to the year, performance from our bicycle businesses in the second half of the period was behind last year,” it said.
“Although turnover was similar to last year, strong retail pressure and heavy discounting in the high street resulted in a reduced margin during the Christmas trading period.”
However, it said a strategy to uphold brand values and customer service had enabled profit for the bicycle businesses for the full 11 month period to be significantly ahead of the comparative period. The firm’s cycle brands include Dawes and Falcon.
Revenue from the sports, leisure and toys business remained lower than last year with a number of national retailers remaining cautious on their buying strategies.
While the Ben 10 products remained the group’s strongest licence, revenue was behind the exceptionally high levels of previous years. As a result, profitability for the sports, leisure and toys business was significantly behind the same period last year.
On a more positive note, Tandem said trading in January 2012 had been strong with bicycles and accessories and sports, leisure and toys ahead of January 2011 by approximately 8% and 9% respectively.
Nevertheless, in outlook, it said it expected 2012 would be another challenging year with further input cost pressures, high levels of macroeconomic volatility and a tough retail environment.
“In our cycles businesses we expect the intensive product design and development undertaken for our 2012 bicycle ranges will further enhance both our flagship Claud Butler and Dawes brands and also our other popular brands including Falcon, Townsend, Scorpion and Dirty,” it said.
“In our sports, leisure and toys business, the initial reactions to our new licences including Peppa Pig, Octonauts and Mike The Knight have been positive and we also expect Thundercats and our well established licences, including Ben 10, Fireman Sam and Thomas & Friends, to perform well in 2012.”
As the official licensee of 2012 Olympic bicycles, bicycle accessories and wheeled toy products, it said it was hoping the London Games would create a sales boom.
Full year results are expected in April.
