In the first quarter, as home division revenues continued to gain, Dorel Industries recorded a net loss of $8.3 million, or 26 cents per diluted share, versus $4.7 million, or 14 per cents per diluted share, in the year-before period.
When adjusted for one-time charges, the company reported, Dorel net income was $5.8 million, or 18 cents per diluted share, versus $5.5 million, or 17 cents per diluted share, for the 2018 first quarter.
Revenue was $625.6 million compared to $642.3 million in the year-prior quarter. Operating profit was $5.1 million versus $12.8 million and adjusted operating profit was $19.5 million versus $13.9 million in the period a year previous.
Dorel Home total revenues gained 9.6% to $210.8 million while operating profit decreased 11.2% to $14.5 million. The company noted that organic revenue increased 9.9% excluding the impact of foreign exchange rate changes year-over-year. E-commerce sales grew in the double digits, more than replacing reduced brick and mortar sales, and represented 59% of total segment gross sales compared to 52% in the year-earlier quarter. Branded product sales have continued to grow steadily. Home division gross profit was 14.1%, down 360 basis points from the 2018 quarter. A significant factor in the decline was distribution cost addition from carrying higher inventory that was stocked in anticipation of the January tariff increase in the U.S. A less favorable sales mix and more promotional activity also lowered margins, with the company adding that margins have improved steadily since January based on an improved mix and as the cost of carrying excess inventory declined. Still, as a result, first quarter operating profit slipped $1.8 million or 11.2%. Operating profit in the year-past period included a $2.1 million impairment loss on trade accounts receivable from Toys“R”Us.
“Despite not exceeding prior-year earnings, we are encouraged by the progress being made across our business segments. The wide-ranging actions we are taking to respond to the changing needs of our consumers and to rebuild shareholder value are gaining traction. Dorel Home continued its revenue growth trajectory and Dorel Juvenile rebounded strongly from its poor performance over the past three quarters. Dorel Sports’ Cycling Sports Group businesses had a very good quarter in all of its markets, with only Pacific Cycle showing declines at mass, a trend that already reversed in April,” said Martin Schwartz, Dorel president and CEO.
He added, “We are actively working on the restructuring program announced in March to optimize Dorel as a more focused global consumer products company. Decisive actions are either underway or under consideration at Dorel Juvenile which is restructuring operations in several markets in order to re-assert its position as the world’s leading juvenile products company. Plans include simplifying and streamlining the organization and further building competencies in an omnichannel world where consumers are increasingly digitally engaged. We are confident the measures this year and next will bring the desired results.”