AndrewPhx wrote:
Although different than PE and without the 2 and 20 model, the goal is the same: maximize return on investment. Perhaps they will have a longer time frame than PE, which is rarely more than 10 years.
Also, a post said that net profit at Enve is about $5 million on $35 million in sales. That seems high to me. That would mean an operating profit before tax of between 15% and 20%. I would expect operating profit in this highly competitive and currently stagnating market to be much lower - 10% or less.
ENVE products tend to be priced at the very high end of range, so if anyone has a decent profit margin it would probably be them.
Honestly I don't see how this works. The successful model in the bike biz seems to be to buy a number of smaller comapnies and create an ecosystem. So PON buys about 8 majpr bike brands and controls a huge chunk of the high-end market for just about any discupline. This probably allows them to combine/share some of the engineering, advertising, distribution,... functions. The bike brand Triopoly of PON/TREK/Specialized also helps keep prices higher. The other example is SRAM, which has aquired their way to being able to provide everything but the frame and tires on just about any bike.
How ENVE fits into any successful business model is beyond me, Building out their frame line would require a number of different bikes to compete with other brands. That would require a decent investment with an uncertain return (can they really build up the volume with the all the current competition?). Seems to me that the most likely result is that they close down the US design and manufacturing, move as many function to China as possible and hope they can maintain their reputation as a premium brand.