Dorel sees first quarter uptick in sales and earnings
MONTREAL – With all three of its business segments contributing improved sales, consumer goods giant Dorel Industries reported a solid uptick in overall revenue for the first three months of 2021 and reversed the net loss recorded for the first quarter of 2020.
Revenue for the three months ending March 31, 2021 was US$708.9 million, up 22.1% compared to the US$580.8 million rung-up a year ago.
Reported net income was US$2.7 million or eight cents per diluted share, reversing the comparable period’s net loss of US$57.8 million or US$1.78 per diluted share.
“Dorel had an excellent first quarter, exceeding our expectations and ending with a superb month of March as U.S. government stimulus cheques were an added catalyst to the growth in revenue,” Dorel president and chief executive officer Martin Schwartz said in a statement. “COVID-19 related store closures persisted in a number of Dorel Juvenile’s markets, notably parts of Europe, South America and Canada, yet the segment posted another quarter of improved adjusted operating profit.
“Both Dorel Sports and Dorel Home continued to benefit from strong consumer demand for their products, with further growth limited only by available supply,” he continued, adding, “Our solid quarter is a tribute to our teams who did an excellent job of mitigating severe supply chain difficulties. Continuing cost increases in all segments for freight and commodities, as well as ocean container availability, will continue to create significant pressures. We will have to offset this with price increases through the rest of this year.”
Dorel Home had first quarter revenues of US$228.7 million, up 15.8% from US$197.4 million for the same period of 2020. Operating profit was up 44.2% to US$14.8 million from last year’s US$10.3 million.
“E-commerce sales increased, but as a percentage of total gross sales represented 57% of revenue, compared to 64% in 2020 with brick-and-mortar sales up markedly versus last year,” the company told shareholders. “Sales increased in most categories and branded sales continued their increase as Little Seeds, QE, Cosmo, Novogratz and the new Mr. Kate collection all combined to exceed prior year sales substantially. Though not significant for the segment as a whole, sales in Europe continue to increase and resources have been added to expand opportunities outside of the U.K. into mainland Europe.”
The segment – which includes ready-to-assemble specialist Ameriwood Home, Signature Sleep and Cosco Home & Office, among others – said its higher operating profit was by growth in most of its categories, a positive product mix and lower warehouse and operational costs versus last year.
Meanwhile, Dorel Juvenile saw its sales improve 7.5% to US$209.9 million although it reported an operating lost of US$7.6 million, which were attributed for the most part to supply chain and other operational difficulties caused by the COVID-19 pandemic. This segment produces car seats and other products for the baby and youth market.
The company’s largest segment, Dorel Sports, which specializes in manufacturing bicycles and related goods, saw its revenue jump 43.6% to US$270.3 million as its operating profits reached US$21.8 million, reversing the comparable period’s operating loss.
Looking ahead, Martin Schwarz warned shareholders that “higher input costs and supply chain issues are expected to pressure earnings for all our businesses.”
While demand for Dorel Home’s product assortment is expected to remain strong, he noted the company expects “earnings to be lower than prior year second quarter as higher input costs will pressure margins until we are able to implement needed price increases.”
Although a Canadian company that is traded on the Toronto Stock Exchange, Dorel Industries reports its financial results in U.S. dollars.