Wednesday, August 4, 2004

Huffy trying to steer around bumps in road

Bike sales up, but so are corporate losses

By James Hannah
The Associated Press

DAYTON, Ohio - Nancy Thickel has fond memories of the Huffy bikes she has bought over the years.

She used the first one to get around as a student at Ohio State University in the 1970s. Another was an anniversary present for her husband, and two more were birthday gifts for her children.

One reason to buy Huffy bikes was to patronize a local company that had grown up in the city known for two famous bicycle makers - Wilbur and Orville Wright.

"It was all about brand awareness," said Thickel, 53, of suburban Oakwood. "It was the Dayton brand."

But Huffy Corp.'s recent financial bumps in the road have Thickel concerned about the future of the Huffy name. Over the past few months, Huffy has seen its stock plummet, has sold some units and has talked about strategic options, including the possible sale of the company.

President and CEO Paul D'Aloia said in the latest annual report that Huffy's 2003 performance was "not acceptable." The company lost $7.5 million in 2003 after losing $1.4 million in 2002.

The suburban Miamisburg-based company's stock dropped from $6.80 a share in December - when Huffy announced fourth-quarter earnings would be below expectations because of sluggish sports equipment sales - to about $1.

Huffy recently sold its basketball backboard unit and part of its Gen-X business, which makes equipment for golf, snowboarding, inline skating, skiing and hockey.

Despite its losses in 2003, Huffy had sales of $438 million, an 18 percent increase from the $370 million it earned in 2002. And the number of bicycles it sold worldwide was the second highest in company history - at a time when sales in the United States were down. Last year, about 18.5 million bikes were sold in the United States compared with 19.5 million in 2002.

Bill Smith, Huffy's general manager and executive vice president, said Huffy's bicycle division is performing solidly and has increased its share of the U.S. market in the past two years. It holds about 30 percent of the market.

Huffy employs about 1,000 workers and has offices or warehouses in Miamisburg and nearby Springboro, as well as Toronto and Carson, Calif.

Huffy imports its wheeled products from Asia, including China and Taiwan, and sells them through high-volume retailers.

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