Discounting boosts Canyon’s sales – but squeezes profits

Canyon, the Germany-based direct-to-consumer brand whose bikes are ridden by star riders including Mathieu van der Poel, has seen strong turnover growth in the first nine months of 2023 driven by discounting prices to boost sales, although profits are down due to the impact of tighter margins and investment in the business. The company added that in 2024, it expects what it terms the “challenging environment for the bike industry” to continue. 

In the nine months to the end of September, the brand grew sales by 23 per cent to stand at €621 million.

Some outlets, including Bicycle Industry & Retailer News (BRAIN), have reported that during the period Canyon made a €1.3 million loss, with the US cycle trade publication citing a report Canyon’s controlling shareholder, the investment bank Groupe Bruxelles Lambert, as its source.

Whether that number relates to an operating loss, a net loss, or something else was not clarified in the BRAIN article.

A spokesman for Canyon told road.cc that he was unable to confirm that figure, and said that the company preferred to state its profits as earnings before interest, tax, depreciation and amortisation (EBITDA), which he said “is a generally accepted measure of operating profitability and financial health, ignoring non-cash factors.”

He added that EBITDA for the first six months of the year stood at €37.5 million, a 25 per cent decrease on the €50 million recorded in the first half of 2022.

‌In a statement, Canyon said: “Overall our sales grew by 23 per cent for the first three quarters of 2023.

“This performance is remarkable given the challenging and promotional market across categories and geographies. It underscores the continued solid demand for Canyon premium bicycles and it is proof of the strong bond and value of our relationships between our athletes, our fans and our customers around the world.”

The statement said that Canyon’s decision to cut prices, as other brands within the market have done, had boosted sales, including to people new to the brand.

“We saw most companies in the bicycle industry responding to inventory challenges with large discount campaigns in 2023.

“When we also decided to do so, it not only led to increased sales, but also inspired new and existing customers to interact and engage with Canyon, and ultimately to enlarging our cycling community.”

The discounting strategy, as well as other investments in the business, meant however that while sales grew, margins were tighter, resulting in reduced profit.

‌“Our 2023 nine-month result did not grow at the same rate as our sales,” the statement explained.

“This was due in part to discounts and supply chain issues but also due to planned and significant investments in the company such as our new Koblenz headquarters, expansion of local service and brand experiences, the substantial growth in our workforce and other investments in innovation, our brand and in customer services.”

‌The company expects to continue to grow next year, although it anticipates that market conditions will remain tough, as they have been across the sector for the past year or so with the boom the cycling industry experienced worldwide at the height of the coronavirus pandemic in 2020 and 2021 proving unsustainable.

“In terms of our outlook for 2024, we now have an already improved inventory and supply chain situation,” the statement said. “Our customers know that Canyon bikes have an enormous price-performance advantage and we are doubling down on that approach for 2024.

“For 2024 our expectation is that it will still be a challenging environment for the bike industry,” it added. “With our ambitious plans, based on performance, innovation and doing our best for the customer, we expect Canyon to continue on its growth trajectory.”