Dorel said its first quarter across its businesses was impacted by the Toys”R”Us bankruptcy.
For the first quarter ended March 31, Dorel Industries reported net income of $4.7 million, or 14 cents per diluted share, compared with $8.8 million, or 27 cents per diluted share, in the period a year prior. Adjusted net income was $5.5 million, or 17 cents per diluted share, versus $22.7 million, or 69 cents per diluted share, in the quarter the year before.
Total revenue was $642.3 million versus $646.7 million in the year-previous period.
According to Dorel, the Toys“R”Us bankruptcy resulted in a first quarter impairment loss on trade accounts receivable of $12.5 million, or 29 cents per diluted share, with $2.1 million within Dorel Home, $3.8 million within Dorel Juvenile and $6.6 million within Dorel Sports. The first quarter losses came in addition to the $3.8 million loss Dorel recorded in the fiscal 2017 fourth quarter.
In Dorel Home, which operates the furnishings business, first quarter revenue decreased 5.8%, to $192.3 million versus the year-prior period. Although e-commerce continued to grow and represented 50% of total segment revenue, the digital gains did not fully make up for a shortfall in brick and mortar sales, compounded by the Toys“R”Us bankruptcy.
“As we reported in March, all of our business units are being affected by the Toys”R”Us situation,” said Martin Schwartz, Dorel president and CEO. “We estimate that company-wide sales were reduced by approximately $7 million in the quarter. The Toys“R”Us liquidation in the U.S. may cause a market disruption in the short-term, but we believe this situation will stabilize, and both the juvenile and sports business will shift to other retailers or other channels during the second half. While we were anticipating a slower start to the year, the first quarter was more difficult than originally expected at Dorel Juvenile and Dorel Sports. Dorel Home had a solid quarter with a slow start in January, followed by revenue acceleration in the rest of the quarter and into April. Their warehouse network processed a record number of packages in the e-commerce channel in March. There are numerous exciting new products being launched through 2018, and we feel that these introductions, coupled with our strong brand recognition, will find traction with consumers.”