Manufacturing Space Increases Sevenfold

Seven Cycles Completes Second Year with Success

Bicycle Retailer and Industry News

by Jill Janov Watertown, MA Despite a sluggish market, Seven Cycles rode strong sales of its high-end bicycles into 1998. The company, which produces some of the most expensive production frames in the industry, reported more than $1.25 million in revenue last year, with sales climbing 244 percent in 1998 over 1997. The young company, in its second year, is already showing profits and growth continuing in the first quarter of this year.

"We started the business at the hardest time to start a new business, when the market was in a downturn. But it hasn't hurt us to be in the high end. Certainly the high-end is doing better than the rest of the market," said Rob Vandermark, president and founder. The company's frames retail for between $1,495 and $2,975, with the most popular model selling for $2,595. Vandermark also attributed his company's early success to a focused mission, extensive frame-building experience, a hard-working staff and a connection to its customers.

Last year, the first full year of production, the company expanded its product line from 16 to 33 models, moved to a larger factory and cut operating costs. While the company doubled its production, the staff only jumped from 11 to 15 employees--a 36 percent increase. This made it possible for operating expenses to dip by more than 55 percent per frame sale, slicing overall operating expenses by 60 percent in 1998. This happened even as Seven moved to a new factory, seven times larger.

The number of retailers selling Seven's bikes jumped from 75 to 125 last year, as sales per dealer increased nearly 50 percent. The company's top five retailers are in Boston, Los Angeles, New York, Palo Alto and San Francisco.

"We could have taken on more dealers, but we wanted to make sure we were supporting our current dealers and giving them good territory bases. We thought more about the revenue per dealer rather than our expansion of dealers," Vandermark said.

International sales for 1998 amounted to about 10 percent of the company's revenues and increased by 8 percent, up from 2 percent in 1997. The company expects the number to jump to 16 percent this year. With 13 distributors worldwide--up from 7 last year--those in Canada, Japan and Italy handle the bulk of Seven's international business.

The company nearly quadrupled its revenue per dollar spent on advertising in 1998. Internet sales, which links shoppers to retailers, have increased 7 percent.

Seven's 1999 line has a straight-gauge titanium frame at a lower price point, a steel tandem, a redesigned rear suspension mountain frame and short-travel suspension road and cyclocross frames. In 1998, Seven introduced the Odonata, a custom, titanium and carbon-fiber frame that weighs 2.48 pounds; a custom short-travel suspension frame; a titanium tandem and custom titanium stems.