In a letter to dealers sent late Friday, Diamondback has said it will close its fitness division's long-time offices in Southern California to consolidate it with parent company Raleigh America's headquarters outside of Seattle, Wash.
Steve Meineke, president of Raleigh's bike division in the Kent, Wash., offices, will also oversee the fitness segment. Steve Lindenau, president of Diamondback Fitness for two years, left as of March 31. He told SNEWS® he and Diamondback "decided to part ways and go in different directions." In February, he told SNEWS® in response to rumors about a pending bankruptcy that the division was not going away although he said business has been tough. (Click here to read that Feb. 4, 2008, story.)
Raleigh chairman Bill Austin wrote in the March 28 dealer letter, "Steering our way to success in today's home fitness market and challenging economy is taking some careful maneuvering around a curving course."
When asked for additional comments about the move and its meaning to the brand, to the industry and to the brand's financial status, Meineke through a spokeswoman said, "We will experience cost efficiencies and bolster brand equity from the combined synergies in Seattle."
A Diamondback spokeswoman declined to discuss numbers of employees in the Camarillo, Calif., offices that would be affected, how many had been offered jobs in Washington, or if there had been layoffs, noting the company needed some time to figure out the details. The move will be completed gradually over the next few months and be final by summer.
Greg Ford will take over as national sales manager, the letter stated, and Eric Gottesfeld will become director of operations. Retailers in different parts of the country told SNEWS® their reps are no longer with the company.
Raleigh America bought the 30-year-old Diamondback brand in 1999. Since then, the fitness line, per Meineke through a spokeswoman, has relied on Raleigh for its finance, credit and IT operations. He also said that the development of the coming 2009 line was a joint effort in brand and product merchandising.
"…We've decided to rejoin the two (divisions) and integrate the Diamondback Fitness division into Diamondback Bicycle headquarters in Kent, Washington," Austin said in the dealer letter. "It makes sense, especially in today's market,…"
Reasons for the consolidation, Austin stated, are that the fitness line was an extension of the bike division and that Meineke is the right person to manage fitness.
"Since we're returning to our roots, this transition will be seamless for you," Austin reassured dealers in the letter. "For us, it's a smart and efficient reorganization of a division, and the right thing to do to stay strong in today's marketplace. Raleigh America's Kent headquarters and operations infrastructure will assure future growth."
Diamondback management noted in the letter and in an accompanying release that it is in the throes of finalizing its 2009 equipment line to debut at the Health & Fitness Business Show in Denver July 18-19 with the theme "Meet your new Diamondback."
SNEWS® View: Indeed all signs point to a fine financial situation at Raleigh America's bike division, based outside of Seattle. With the current economic slowdown, a week doesn't go by that we at SNEWS® don't hear rumors of somebody's bankruptcy, financial straits or pending closure -- rumors that are fueled by the tiniest spark of information, such as the layoff of a rep. No, the layoff of a rep doesn't mean the financial demise of that company. But, today, it can be one signal that somebody is counting pennies a little more carefully to survive. None of this means that Diamondback Fitness is going away, yet consolidating to one office -- i.e. closing an office, decreasing employee numbers and giving one person the job of two presidents -- does imply the need for "cost efficiencies," as the company put it. How far-reaching are those needs? We can't say for sure. But we do know that a lot of companies better be pretty darn efficient these days to be around to talk about them a year from now.