If you’ve been following this substack for any period of time, you know my December predictions piece laid out what I thought 2026 would look like. Three months in, I wish I could say I was wrong, but it appears things may in fact be worse.
The Winter That Wasn’t
Perhaps the biggest story in the outdoor space is the winter. Or rather, the lack of one.
For most of the Western US, the 2025-26 season was the worst in modern memory. Colorado and Utah resorts recorded the lowest snowfall in more than 30 years (or ever) combined with warmer temperatures that destroyed terrain well into February. The downstream effects were swift and predictable.
Vail Resorts reported Q2 FY2026 revenue of $1.08 billion, down 4.7% year-over-year, missing analyst expectations. CEO Rob Katz called it “the most challenging winter across the Rockies that we have ever experienced.” The stock trades around $135 and the full-year EBITDA guidance came in below the Street. Katz did emphasized the stability of the advanced commitment model (read: Epic Pass), which held up reasonably well even as visitation fell off a cliff. But when your CEO is leading with “worst-case weather scenario” language, that tells you everything about the operating environment. As an aside, it does seem all but certain that Vail has backed them into a corner, where even a good winter yields an awful skier experience, but that’s a whole substack post in and of itself.
Over at Alterra, CEO Jared Smith announced his departure on March 10th. No reason was given. The company installed an interim “Office of the CEO” staffed by ownership reps from KSL Capital Partners and Henry Crown, along with former CEO Rusty Gregory. Read into that what you will. When the guy running a 70+ destination portfolio steps down during what should be peak season with no successor named, the narrative writes itself.
The hangover from this winter will be felt well into the 2027 buying season. Consumers who spent a season staring at brown mountains are going to be reluctant to commit capital to new hardgoods, softgoods, or trips next fall. A cold September and early snowfall would be the best marketing campaign any winter brand could ask for. Let’s hope.
The Preliminary Numbers: A Canary in the Coal Mine
An early spring might seem like a tailwind for warm-weather brands (bikes!) but the indications from the OEM side say otherwise. Three notable Taiwanese frame (and complete bike) manufacturers reported January 2026 revenue numbers roughly 50% below January 2025, which was already a down year.
This might be a structural tell.
The publicly traded Taiwanese manufacturers confirmed the picture when they released full-year 2025 earnings this month:
- Giant Group: Full-year revenue of NT$60.3 billion (~$1.93B), down 15.5% year-over-year. EPS of NT$1.84, down from NT$3.22 the prior year. Gross margin improved slightly to 19.8% from 19.0%, mostly because they stopped taking the massive inventory write-downs that plagued 2024. The real alarm bell: January and February 2026 preliminary revenue was down 31.5% from the same period in 2025, with February alone down 40%.
- Ideal Bike: Revenue of NT$2.19 billion, down 17%. Gross margin went negative at -3.02% versus +4.56% in 2024. Loss per share nearly doubled. January 2026 revenue? Down 53.2%.
- Merida: Also reported declines, with the Taiwan dollar appreciation compounding the pain.
For the uninitiated, much of the bicycle industry revolves around manufacturing in Asia. While it can be challenging to know exactly which OEM is affiliated with which contract manufacturer, what we do know is the order book is light. The hypothesis is straightforward: previously, every company made more product than they could sell in a given period, clogging balance sheets with excess inventory. This created cash problems, forced discounting, and hammered margins.
This year, the big players appear to have drawn a line in the sand. Everyone has found religion around what it really takes to control inventory and protect margin. They are making less stuff. What this translates to is a much leaner order book, and in some cases a significant reduction in capex. The downstream effects are large: any company that supports the OEMs is unsurprisingly receiving fewer orders, which becomes a forcing function around opex too.
What’s plausible, maybe even likely, is an overcorrection. Inventory ends up so light that bikes actually sell out for the first time since COVID. Will it happen? It depends on how deep the supply cut really goes and what demand looks like when the dust settles.
Canyon: The D2C Bellwether
Speaking of demand, Canyon’s full-year 2025 numbers deserve their own section.
The German D2C brand reported full-year sales of EUR 738 million (~$850M), down 7% year-over-year. Fourth quarter showed some life with a 6% uptick, but full-year EBITDA declined 34%. The company blamed oversupply and aggressive discounting across the industry, particularly in e-MTB, MTB, and urban categories. Road and gravel remained “robust,” which at this point is the industry’s version of “at least something isn’t on fire.”
What’s notable about Canyon is what their results say about the D2C model under stress. Canyon built its brand on an unbeatable quality-to-price ratio by cutting out the dealer. But when everyone else is fire-selling inventory at 40% off, that structural price advantage evaporates. The brand has been reducing headcount (up to 320 positions in January, plus US layoffs last April), founder Roman Arnold came back as executive chairman, and the majority owner GBL wrote down its investment by 43% to EUR 261 million.
The D2C model isn’t broken (it still holds water), but the environment has erased the moat. When your competitor’s $6,000 bike is on sale for $3,600, your $4,500 D2C price doesn’t look so revolutionary anymore, even if your competitor’s pricing isn’t sustainable.
The Body Count
The last few weeks brought a smattering of restructurings that underscore just how real this is.
Knolly Bikes announced it is evaluating all restructuring options after Royal Bank of Canada called in its loan. Founder Noel Buckley said the company “was making progress” on cost cuts before the bank pulled the plug. He made a pointed observation: RBC posted $20.4 billion in annual profit last fiscal year while choosing to write down a small business loan rather than work through it. Whether you agree with his framing or not, the end point is the same. When capital providers tighten up on small businesses in the outdoor space, there’s no alternative (maybe private credit depending on your AR/willingness to make a personal guarantee). The Canadian banking landscape is already concentrated, and the options are narrowing.
The Lycra Company, yes, that Lycra, filed for Chapter 11 bankruptcy on March 17th, seeking to eliminate $1.2 billion in long-term debt. The filing blamed a “confluence” of factors: pandemic fallout, tariffs, increased competition, and legal issues dating back to its 2019 acquisition by Chinese textile firm Shandong Ruyi. The company expects to emerge in 45 days with creditors wiping out most of its $1.53 billion in debt in exchange for control. When one of the most recognizable brand names in performance textiles files Chapter 11, it tells you something about the depth of stress running through the entire supply chain, not just the brands you see on the shop floor.
What we have not seen or heard are any success stories. The bad is staying bad, for at least a little while longer.
The Macro Squeeze: Dollar, Tariffs, and Oil
If the industry-specific dynamics weren’t enough, the macro picture is piling on.
The Dollar
The US Dollar Index (DXY) has been on a wild ride. It peaked above 109 in January 2025, crashed nearly 11% through the first half of the year (the steepest H1 decline since 1973), bottomed around 96.5 in September, and has since bounced back to roughly 99 on safe-haven flows from the Iran conflict.
For the bike industry specifically, what matters isn’t the DXY (which doesn’t even include the Taiwan dollar). It’s the bilateral crosses:
- USD/TWD: The dollar has actually strengthened about 4% against the Taiwan dollar since early 2024. This means goods priced in TWD are marginally cheaper in dollar terms. Good news for anyone sourcing frames and components out of Taiwan.
- EUR/USD: The dollar has weakened about 4.5% against the euro over the same period. European-sourced goods cost more.
The net effect for a globally sourced bike company: Taiwan procurement got slightly cheaper, European procurement got more expensive, and the spread between the two has diverged by nearly 9 percentage points on FX alone. For companies with both Asian and European supply chains, transfer pricing and sourcing decisions just became a lot more consequential.
Tariffs: The New Operating Reality
The tariff landscape has undergone yet another metamorphosis. The Supreme Court struck down the IEEPA tariffs in February, but the administration immediately replaced them with a 10% global surcharge under Section 122 of the Trade Act. This stacks on top of existing Section 301 duties on Chinese imports and Section 232 tariffs on steel and aluminum (which now covers e-bikes).
At the Bicycle Leadership Conference this week in Dana Point, SRAM CEO Ken Lousberg, Revelyst’s Amy Koch, and PeopleForBikes’ Matt Moore made it clear: tariffs are no longer a temporary disruption. They are a permanent operating reality reshaping costs, sourcing strategies, and supply chains. The total tariff burden on Chinese-origin bicycles currently sits around 56%, with e-bikes at roughly 45%.
For the already-more-expensive bike (thanks to production discipline and FX), tariffs add another layer of cost that eventually finds its way to the consumer.
Oil and the Iran Premium
And then there’s energy. The US conflict with Iran has pushed crude oil prices up roughly 30% year-to-date, briefly topping $115 per barrel in early March. Gas at the pump has hit $3.50/gallon, up 19% in two weeks. Energy is an input in just about everything: manufacturing, shipping, raw materials, retail operations. The already-more-expensive bike just got even more expensive.
CPI is running at 2.4% headline, but that doesn’t capture the energy spike that hit in March. EY estimates the March print could come in at 3.3% on gasoline alone. If the Iran situation escalates further, analysts project oil could average $100/barrel for the rest of the year, pushing inflation toward 3.5% by year end.
For the consumer, this means less discretionary income for bikes, skis, and snowmobiles.
The Consumer: Still a Tale of Three Cohorts
I remain steadfast in my breakdown of the US consumer from December:
The bottom 50% appears out of credit and struggling with basic expenses. The middle class is increasingly pinched and worried about externalities. The top 10% has an outsized amount of wealth but an undersized impact on industry volume. You can only buy so many bikes per person.
What’s new since December is the Iran conflict, which is functioning as a regressive tax via energy costs. It hits the bottom 50% and middle class hardest, which are exactly the cohorts the outdoor industry needs spending to recover.
The upgrade cycle remains lackluster. There are no shiny new things forcing consumers to buy the latest and greatest. Does 32” wheels show promise as a catalyst? Maybe. But I’m not betting on it.
So What Do You Do?
If you’re operating in the outdoor industry going into the next three quarters, here’s my framework:
Control what you can control. That usually means operating expense, first. It’s incredibly hard to know where demand will land, and the last thing a beat-up business can handle is another year squatting on excess inventory when you really need cash heading into winter. Oh, and capex? Yeah…put that on the backburner.
Use 2025 as a baseline, and cut from there. Do not budget for growth. If growth happens, have a plan for it, but it’s better to know what breakeven really looks like and target that than to put yourself in a corner with no way out.
Lean, agile, and tight. If you are banking on a growth initiative to save your year, rethink that. Now.
Understand your cost structure through the macro lens. FX, tariffs, and energy costs are not abstract. Run the numbers on your specific sourcing mix. Know what a $100/barrel oil environment does to your landed cost. Know what the Section 122 surcharge does to your margin on Chinese-origin components. These are knowable things, and knowing them gives you the ability to act before your competitors do.
At some point, the supply and demand dynamics will stabilize. It almost feels like there’s a correction underway, and the companies that come out the other side may find themselves in a healthier, less crowded environment. The shakeout is the process, not the problem.
A Reminder
The sport is just fine. People love riding bikes, and will continue to ride bikes. People love skiing, and they will ski again when it snows. The dynamics fueling the businesses within these sports are what’s changing. Responding to those changes will separate the winners from the losers.