Dorel Optimistic for Upcoming Year Following Strong Q1 Results

Consumer goods specialist Dorel Industries has reported improvements to its overall sales and earnings for the first quarter of 2024, driven by a combination of new product introductions across both of its operating segments and the publicly held company’s tighter cost controls.

For the three months ending March 30, total revenue was $351.1 million US, up 5.4 per cent from $333.2 million US a year ago. The net loss was $17.6 million US or 54 cents US per diluted share, compared with $31.5 million US or 97 cents US per diluted share last year — a 44.3 per cent improvement on a per share basis.

While headquartered here, Dorel reports its quarterly and annual financial results in U.S. dollars, as it operates in a number of countries outside of North America.

Dorel president and CEO Martin Schwartz noted Dorel Home made substantial progress during the first quarter, narrowing its adjusted operating loss by $10.5 million US. This was despite on-going softness in the furniture market, where industry sales continue to lag all other consumer product categories.

“The previously announced plan to simplify and combine certain key areas of the home segment has made the combined operations more effective and cost-efficient,” said Schwartz. “Savings are expected to be $4 million US annually. (Dorel) Home is making all the right moves with new customers and new product listings growing. The meaningful benefits will come once industry volumes increase to more traditional levels.”

The smaller of the company’s two operating segments, Dorel Home restructured its management framework during the fourth quarter of 2023, by combining several key positions that led to the elimination of certain redundant roles. This resulted in the reduction of its overall North American headcount by approximately five per cent, which Schwartz said will result in improved operational efficiencies, simplified decision-making processes and reduce costs overall.

Dorel Home’s revenue for the first quarter of 2024 was $138.4 million US, up 3.9 per cent from $133.2 million US a year ago. Sales to brick-and-mortar retailers grew 23.3 per cent, driven by strong sales of hand trucks, step stools and folding furniture. There was also an increase in replenishment orders as in stock store levels continued to come down. However, e-commerce sales fell 6.1 per cent.

“The current high inflationary environment as well as an increase in U.S. mortgage rates continue to constrain consumer spending on home furnishings,” the company said.

Despite this, the company noted attendance was excellent at Dorel Home’s booth at High Point Market this past spring, with customers enthused about the segment’s new product line up.

Meanwhile, the segment’s operating loss shrunk 74 per cent to $3.6 million US.

Dorel Juvenile, which produces car seats and a wide range of products for the baby and youth market, reported first quarter revenue of $212.7 million US, up 6.3 per cent from $200 million US a year ago. It generated an operating profit of $549,000 US, reversing the comparable period’s operating loss of $8.9 million US.

Looking ahead, Schwartz told shareholders he’s optimistic about Dorel Home’s prospects for the balance of the year.

“The traction at brick-and-mortar experienced in the first quarter is expected to continue. As we gain new listings and our product begins to sell through, we expect the segment’s ongoing quarter-over-quarter earnings to continue to improve,” he said. “However, given the sales cycle process is naturally longer at brick-and-mortar versus e-commerce, we will only see the benefits of our successes in that channel during the second half of the year. In the meanwhile, we continue to focus on cost reduction and on re-igniting our e-commerce business.”

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