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EisnerAmper Q&A with Arnold Kamler, CEO, Kent International

Jun 10, 2019

Kent International is an American bicycle supplier based in Parsippany, New Jersey that imports and distributes bicycles and bicycle parts. EisnerAmper sat down with Arnold Kamler, CEO of the company, who shared the company’s story and how it has been instrumental in importing bikes from China, bringing manufacturing back to the U.S., adapting to Chinese tariff increases, future plans and more.

EisnerAmper: Tell us about Kent International.

Kamler: My family has been in the bike business since 1907 when my grandfather, Abraham Kamler, who emigrated from Poland, opened a bike shop in New York City. In 1915, he and the family moved to Newark, New Jersey where they opened up a new shop.

My father, Philip, grew up in the apartment located on the second floor right above the bike shop. Unfortunately in 1946, his father had a heart attack and he left his job at Price Waterhouse to help the family business. He quickly realized he didn’t like the retail bike business and therefore opened up a wholesale bike business called Philkam Cycle Supply Company in Newark, New Jersey in 1950. In 1958, he decided to take a chance and import bikes from Europe to take advantage of the low cost of labor and that was when Kent International launched. Kent International has imported bikes and bike parts since then.
In 1978, we also began manufacturing bikes in Kearny, New Jersey; which we did until 1991 when it became cost-prohibitive. Ultimately, we became one of the largest bike suppliers in the U.S and currently we produce between 2.5 and 3 million bikes a year.

In 1992, we relocated to Parsippany, New Jersey, our current headquarters. In 2014, we opened up our bike factory in Manning, South Carolina. Approximately three years ago, we acquired a custom designs bicycle cruiser company called Villy Customs in Dallas. In addition, we own our own brand of prestigious bikes called Van Dessel Cycles specific for racing. Kent International has 205 employees across all branches.

EisnerAmper: For many years Kent imported bikes from China. Please tell us how your company has been instrumental in bringing bike and bike accessories manufacturing back to the U.S. through your location in South Carolina.

Kamler: We started manufacturing in South Carolina in 2014 following a conference we attended where Walmart was pushing to bring manufacturing to the U.S. At the conference, former South Carolina Governor Nikki Haley was a strong advocate for Kent to launch a location in the State. After we conducted a feasibility study in other states including Georgia and Florida, and considering the fact that we wanted to stay on the East Coast, we came to the conclusion that South Carolina presented an attractive opportunity to open a location. Today, our production there accounts for approximately 15% of our business.

EisnerAmper: Discuss Kent’s success selling bikes on Amazon and at Walmart and other well-known places of commerce.

Kamler: We try to sell to all of the large companies, although there are not that many left. Walmart sells 60% of the bikes sold in the U.S. Having a substantial business at Walmart is critical to become a big player in the business. It’s a lot of hard work getting to know the businesses of Amazon and Walmart. Bicycles and bike accessories are price sensitive and we do our hardest work to create products at various price points. With Amazon and and other retailers, business is changing quickly and you have to be constantly innovating; what you did last year probably won’t work this year. We act as a drop ship vendor (DSV) where the customer sends his or her order to us and we bill them and ship it to the consumer, even though the consumer thinks it is coming from Amazon or other e-commerce platform. In 2018, we shipped more than 3,000 shipments per day from mid-November to mid-December and this year we are ready and expecting the number to be in the neighborhood of 7,000-8,000 shipments per day.

EisnerAmper: With President Donald Trump’s recent Chinese tariff increases, how has Kent International had to adapt and change its immediate and longer-term plans?

Kamler: This is the most challenging period in our company’s history. We have been able to deal over the years with price increases but with the tariff increases, we don’t know if they are temporary or permanent. For the long term, the cost in China will become prohibitive; therefore, we will expand our U.S. production and are working with our supplier in China to develop a bike factory in Cambodia. Meanwhile, in the short term, we have to pass the increased price of bikes and bike parts onto our customers. This trade war is painful at times, and it doesn’t seem to be going away anytime soon.

EisnerAmper: What is needed to help stimulate manufacturing and distribution in the United States?

Kamler: I have met with the Department of Commerce to discuss this exact topic. The idea was the U.S. bike industry was wiped out by China in 1990s. Now, we have to import bike parts from various countries. As a result, we have an aggressive plan and have formed a coalition called the American Bicycle Reshoring Coalition. The concept is duty free treatment of all imported parts for five years which would give any company in the U.S. a big advantage. It would further stimulate competitors to follow suit and open up here and also would be the motivation for companies to start manufacturing bicycles parts again in the U.S.

EisnerAmper: Innovation is a key to continuing successful businesses. Are there are any new product lines you are working on to evolve and grow your business?
Kamler: We have entered in an agreement with Panasonic to grow the pedal-assisted bike market in the U.S. Panasonic has been doing this in Japan for 40 years and the idea would be to do this in our South Carolina location by the fourth quarter.

Earlier this year, we launched a higher end line called Univega USA, featuring lighter materials for the frames and parts.

EisnerAmper: Talk about your company’s succession plan and what you hope for the future.

Kamler: I’m planning to live until 148! But in all seriousness, my son, Scott, joined the company in 2010 and is now president. We are poised to continue the growth but the challenge is dealing with an environment where retailers are condensing. We will have to revamp our marketing plan and leverage social media to get consumers to purchase directly from our website so we can sell at retail profit margins instead of wholesale. It will be up to Scott to take it to another level and I am confident we are in a good position for the future.

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Elana Margulies-Snyderman

Elana Margulies-Snyderman is an investment industry reporter and writer who develops articles, opinion pieces and original research designed to help illuminate the most challenging issues confronting fund managers and executives.

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