by Company also narrows net loss by $13.9 million, while also increasing its gross margin through lower freight and raw materials costs
MONTREAL — Dorel Industries reported a 5.4% increase in revenue for its first quarter ended March 31, while also narrowing its net loss.
The company said revenue totaled $351.1 million, up 5.4% from $333.2 million the same period last year. Its net loss for the quarter was $17.6 million, or 54 cents per share, down from a net loss of $31.5 million or 97 cents per share last year. It reported an adjusted net loss of $16.9 million, or 52 cents per share compared to $31.5 million, or 97 cents per share last year.
The company’s Home segment, which includes furniture sales, reported revenue of $138.4 million, up 3.9% from $133.2 million the same period last year. The company noted that brick-and-mortar gross sales rose 23.3% from last year and that there was also an increase in replenishment orders as store inventories came down. Meanwhile, e-commerce gross sales decreased by 6.1%.
“The current high inflationary environment as well as an increase in U.S. mortgage rates continue to constrain consumer spending on home furnishings,” the quarterly report said, adding that “attendance was excellent at Dorel Home’s booth at the recent High Point furniture market with customers enthused about the segment’s new product lineup.”
Gross profits in the segment totaled $11.7 million, or 8.5% of revenue, compared to $1.9 million, or 1.4% of revenue last year.
The segment reported an adjusted operating loss of $3.4 million compared to $13.9 million last year.
The report noted that gross margin in the Home segment rose by 710 basis points from last year largely because of lower freight and raw material costs and “a slight increase in factory volumes which helped overhead absorption. Efficiencies have improved and operating costs have been reduced through the segment’s restructuring plan initiated in the fourth quarter of 2023. Inventories were down $27.8 million from a year ago.”
Revenue in the Dorel Juvenile segment totaled $212.7 million, compared to $200 million last year, a 6.3% increase. It noted that revenues increased 6.2% after removing the impact of various foreign exchange rates. The growth, the report noted, was mainly from the U.S. and European markets “where the brick-and-mortar distribution channel rebounded strongly.” Brazil and certain other export markets also contributed to the year-over-year increase in revenue.
In the U.S., car seats led increases in the segment, and “Safety 1st did particularly well, the result of new product placements and a recent rebranding of this iconic brand.”
The segment reported gross profits of $56.5 million, or 26.5% of revenue, compared with $44.8 million, or 22.4% of revenue last year. It reported adjusted operating profits of $1.1 million, compared to an adjusted operating loss of $8.9 million last year.
“The U.S. dollar strengthened against most major currencies since the start of the year and if it had remained at the levels at the end of 2023, this would have added an additional $2 million to earnings in the quarter,” the report said. It added that both Dorel Juvenile USA and Dorel Juvenile Europe significantly increased operating profit compared to the comparable period last year with gross margin for the segment being 410 basis points higher than the prior year.
“While a significant portion of the improvement was due to lower cost inventories to start the year, improved pricing, a better product mix and better cost absorption at the U.S. manufacturing facility also contributed to the quarter’s improvement,” the report said.
“Dorel Juvenile posted significant gains year-over-year, with adjusted operating profit improving by $10.1 million versus last year’s first quarter,” said Dorel President and CEO Martin Schwartz. “Internal optimism is high as the segment is capitalizing on its introduction of a diverse selection of exciting new products. Both our retail partners and consumers have reacted well to the new offerings, with in-store sales rebounding nicely, driving growth through market share gains.”
“Through a combination of higher sales and by further reducing Juvenile costs we are more comfortable than ever that this business will continue its year-over-year earnings improvement,” Schwartz added. “Dorel Home also made substantial progress during the first quarter, narrowing its adjusted operating loss by $10.5 million. 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. Savings are expected to be $4 million annually. 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.”
