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Bicycle Racing News and Opinion,
Saturday, November 18, 2017

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2017 Tour de France | 2017 Giro d'Italia

An eye for an eye only ends up making the whole world blind. - Mahatma Gandhi

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Bicycle Industry updates

Let's see what the people who make and sell our bikes are up to.

Loss of Dick's Sporting Goods contract forces major adjustments at Accell Group

Bicycle Retailer and Industry News sent this to me:

KENT, Wash. (BRAIN) — Accell Group is enacting a major restructuring of its North American operations after the business's sales through the sporting goods channel collapsed when it failed to win a contract to supply bikes to Dick's Sporting Goods. The loss of the Dick's contract left Accell NA with a large amount of inventory it will have to close out, at an estimated loss to the company of close to $6 million.

Senior managers at the company's North American headquarters outside Seattle have been let go, or are in the process of leaving the company. Accell Group, based in the Netherlands, has brought in a reorganization specialist as an interim leader during the transition to a new management team.

A newly formed executive committee consisting of five managers from across the company is working with the interim leader, an American who the company is not naming publicly. The company expects to announce a new team and other changes in the next 30 to 60 days, possibly before year's end. Besides the staff changes, the reorganization will likely involve integrating some of Accell North America's divisions.

Dick's has bought bikes from Accell, primarily Diamondbacks, for about 18 years, but lost the contract this fall to Dorel's Pacific Cycle, the parent of Schwinn and Mongoose. Combined with the bankruptcies of Sports Chalet and Sports Authority last year, the Dick's loss leaves Accell NA's sporting goods distribution channel almost high and dry. Accell does continue to sell Diamondbacks to REI and EMS. REI also is the exclusive U.S. retailer for Accell's Ghost brand.

You can read the entire story here.

And here's Bike Europe's take on the Accel situation:

Accell hit by troubled US market

HEERENVEEN, The Netherlands – This morning Accell Group warns for a lower than anticipated 2017 operating result due to a strong sales decline in North America. The holding company for numerous bike companies located in Europe, Asia and North America also points to higher than anticipated costs related to the implementation of its new omni-channel strategy.

Accell’s new CEO Ton Anbeek, appointed on 1 November, will have wished for a better first message to bring to his shareholders than what he had to publish this morning. The holding company announces that it is “Further adapting the North American organization to the changed market conditions”. This adaptation comes with declining results and profits.

How much the decline in Accell’s operating result will be this year compared to 2016 is indicated in today’s statement with: “The underlying operating result for 2017 will be affected by the strong sales decline in North America. The restructuring of the American organization and the scale-down of inventories will have an impact of around € 5 million. As a result of the above, the underlying operating result for the full year will be lower than in 2016.”

Accell’s 2016 operating result stood at €65.9 million. Due to other higher costs than anticipated it is likely to drop below the 60 million mark as today’s statement furthers with “The operating result (before interest and taxes) for 2017 will in addition be influenced by higher costs in the second half of the year related to the implementation of the new group strategy. We do not anticipate to fully complete the reduction of inventories in North America during the remainder of 2017, which will have a negative effect on working capital at year-end.”

Along with Accell, Dorel’s Sports division including its Cycling Sports Group is faced with the troubled North America market. Dorel’s first nine months bike sales of 2017 were down by close to 11%. What substantially affected Dorel’s revenues was last September’s Toys ‘R’ Us bankruptcy filing. Accell says about its North American sales “Next to an overall tough market for bicycles, sales via the traditional distribution channels (dealers and MultiSport) have been under pressure for a longer period of time in North America. As such, we also recently saw an unanticipated contract termination by a large MultiSport chain.”

Here's the entire Bike Europe story on the Accel situation.

Trek asks court to dismiss Farley trademark suit

Bicycle Retailer and Industry News sent me this interesting piece of news:

LOS ANGELES, Calif. (BRAIN) — In a legal motion that contains more A-list names than a TMZ episode, Trek Bicycle's lawyers have responded to a trademark infringement case filed by a company that claims to own the rights to the late actor Chris Farley's name. The company, Make Him Smile Inc., objects to the name of a Trek fat bike model, the Farley. Make Him Smile's president is Chris Farley's brother, Kevin Farley.

Trek says the suit is groundless and, in a motion filed Monday in the U.S. District Court in Los Angeles, asked that it be dismissed at the next scheduled court hearing, on Dec. 18.

Not surprising for a motion filed in L.A. that revolves around the rights of a public figure, the motion cites cases involving well-known names from Marilyn Monroe to Béla Lugosi, Tom Waits to Princess Diana, Vanna White to Bob Marley.

Trek's motion first claims that Make Him Smile has no standing under California law. It notes that in a 1966 case, Lugosi v. Universal Pictures, California's Supreme Court ruled that a dead person has no right to their likeness, and that any rights that existed did not pass to his heirs. The California Legislature later passed a "Right of Publicity" act allowing descendants of dead celebrities to retain rights, but, Trek pointed out, the law only applies to California residents and Chris Farley lived in Illinois at the time of his death in 1997. Trek noted that in 2005, the estate of Marilyn Monroe was unsuccessful in using this law to stop a company from marketing images of Monroe, because the actress, although she died in California, was a legal resident of New York. Trek also notes that Illinois did not have a right of publicity statute at the time of Farley's death, although the state enacted such a law in 1999.

Trek's motion also argues that Make Him Smile cannot claim that the bike company used "a distinctive attribute" of Chris Farley in naming or marketing the fat bike. The federal Lanham Act prohibits misuse of a celebrity's persona to suggest an endorsement. Musician Tom Waits won a landmark case against Frito-Lay, which had used a jingle sung by a Waits imitator in a commercial. "Wheel of Fortune" hostess Vanna White used a similar argument in a case where Samsung used a robot that imitated White in an ad. The company that owns rights to Bob Marley's image was able to shut down a competing T-shirt brand under the same precedent.

But Trek said its bike did not borrow any distinctive attribute of Chris Farley.

"Plaintiff is unable to identify any such distinctive attribute that could support its claim. Plaintiff does not allege that Trek used the name "Chris Farley," his likeness, or anything unique to his career. Plaintiff also does not allege that any attribute of Chris Farley appears on Trek's bikes or in advertising in a manner that suggests Chris Farley's endorsement. That explains why Plaintiff chose not to include any visual representations of Trek's fat bike or promotional material in its complaint," the motion reads.

Here's the entire story.

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