(This story was updated on 7/21/2023)
Hilary Hartley, Americas president for Sweden-based Thule Group, anticipated the first half of 2023 would be challenging, and he was right.
Sales for the maker of bike racks and other outdoor products declined 31.4% in constant currency in the first quarter compared to the prior-year period.
The company then reported another challenging quarter as sales fell 15% in the second quarter.
Last year was fueled by the “pandemic surge of people buying whatever they could get their hands on,” Hartley said. “We know now that there was too much product put into the pipeline.”
That inventory overhang led the company to reduce its workforce by about 30% from peak COVID-19 numbers.
Bike Market Picture
Anything bike-related, including bike racks, trailers, and seats for kids, has been challenging.
“The exciting news is we had anticipated that by the end of the first half of 2023, inventory levels would be in general back to where they should be,” Hartley said. “And that’s what we’re seeing.”
Thule has been getting more orders from customers, both national and independent accounts.
“I wouldn’t say it’s perfect out there yet. I don’t want to put too rosy of a picture out there,” he said. “But we are seeing some nice demand, seeing nice orders coming from our partners, our retailers.”
That includes both specialty retailers and national department stores, Hartley added.
Thule expects the second half of 2023 to be well above that of 2022. Hartley hopes to end the year about flat compared to 2022.
“We’ll have another chat in six months to see if I was right or wrong,” he said.
Thule manufactures its own products, which allows it some flexibility in reacting to market conditions. They slowed down manufacturing when demand softened last year.
“That helped us,” Hartley said. “There’s no doubt we have some products where we have too much inventory. But we’re not panicking.”
The company has made some price adjustments.
“But we try to avoid the panic sell,” Hartley added. “We have deals like everybody else where we feel that it won’t hurt us long-term.”
During the peak pandemic sales period in 2021 and early 2022, Thule’s employee count was more than 3,000. That has dropped to around 2,100.
That was partly because Thule manufactures its own products, Hartley said, and the incredible demand for sport and cargo products during the pandemic led to hiring more employees.
As volume has decreased, the amount of needed labor has also declined.
The company has also invested “heavily” in automation, which allows it to use some equipment differently and requires fewer manual laborers.
New Thule Products
Thule is seeing its higher-end products selling well, with good sell-through and repeat sales.
“Our more entry-level price points are the ones that are struggling more,” Hartley said. That includes selling fewer rooftop-mounted bike racks and hanging bike racks. To move those, Thule has offered some margin opportunities for retailers.
Another product, Thule’s Approach rooftop tent, which retails at around $2,800, is an example of a premium item that’s doing well, according to Hartley. The soft-shell tent comes in three different sizes.
Hartley highlighted three new products that Thule is promoting this season. The company has targeted the growing e-bike market by offering sturdy racks that can bear the heavier weight.
The first is the Epos bike rack, which launched about a month ago with a limited release and has sold out. The hitch-mounted rack has grown in popularity along with the rise in e-bikes because people aren’t as keen on lifting heavy e-bikes.
The other convenient element of the Epos is that you can take each bike on and off separately without having to unload the whole rack. It also offers several different options for securing the bike to the rack, and it’s foldable for storage.
The Epos has been well received, and Hartley said Thule had to double its initial forecasts for the number of units it is making. The rack will be widely distributed next spring.
“Everybody’s talking about some of the challenges in the bike market, but it shows us that there’s plenty of room for innovative, exciting new products,” he added. The Epos retails for $999-$1,250 depending on the version. The racks will be available to all retailers starting in January.
Along with e-bikes, electric vehicles have led Thule to release a cargo box that’s hitch mounted.
“If you have an EV and you want to be careful with the wind resistance and the drag on your battery, putting something behind your vehicle is going to be more efficient,” Hartley said.
Other users might not have the overhead clearance for a rooftop box in their garage.
Another new product, the Caprock, caters to the growing overlanding segment as a rooftop platform that can accommodate a wide variety of accessories, including a rooftop tent or cargo box.
“You can really tailor it to the vehicle and the setup you’re looking for,” Hartley said.
While the decline in the bike category has driven much of the headwinds for Thule, other categories such as packs, bags, luggage, juvenile, and RV have helped ease the pain.
“We’re fortunate that if one category is struggling a little bit, at the same time, our packs, bags, and luggage business has done really well,” Hartley said. “Nobody likes to start the year off at minus 30% in sales.”
The company performed better in the second quarter, according to Hartley, and he expects Q3 and Q4 to show substantial growth over last year.
“At this point, we are staying on track with our business plan the way we laid it out,” he added.
He points to the overall growth in the outdoor industry, especially when compared to 2019. For example, if he contrasts his cargo box sales for 2023 to 2019 levels, Thule is “way, way up.”
“Overall, I think the new benchmark, the new baseline will definitely be above the 2019 number,” Hartley said. “Anybody that’s in the outdoor industry is going to benefit long-term from real behavioral changes from the consumer. People want to be outside. I strongly believe this is not a short-term thing. This will be a long-term benefit for all of us.”