Q1 furnishings sales fall for Dorel
MONTREAL (28 May 2012) - Even though its home furnishings segment saw its sales improve over the fourth quarter of 2011, sales fell on a year-over-year basis. This combined with its sagging juvenile segment, hampered profitability for consumer goods giant Dorel Industries for the first three months of the year.
However, its recreation and leisure segment - best known for bicycles and sporting apparel - continued to strengthen, contributing double-digit growth in both sales and operating profit.
For the three months ending March 31, Dorel had total revenue of US$621.1 million, a 2.2% gain from US$607.8 million for the same period a year ago.
Net income was US$29.2 million or US$0.91 per diluted share, compared to last year's US$31.2 million or US$0.94 per diluted share - a decline of 6.4% overall or 3.2% on a per share basis.
Dorel reports its results in U.S. dollars.
The home furnishings unit - which includes ready-to-assemble specialist Ameriwood as well as Cosco Home & Office, Dorel Asia and Altra Furniture - had first quarter revenue of US$130.7 million, a decline of 5.1% from the US$137.7 million for the comparable 2011 period. Operating profit fell 25.3% to US$5.8 million from US$7.8 million.
"In home furnishings, sales were up quarter-over-quarter, however product mix dampened margins," Dorel president and chief executive officer Martin Schwartz said in a statement. "The growing importance of the internet retail distribution channel for home furnishings has continued into 2012 and still offers even more opportunity for us."
Schwartz also noted that the first quarter of 2011 was the prior year's, adding that momentum thus far in 2012 is good after a tough 2011.
"Last year was characterized by a good start, difficult second and third quarters and a reversal of that negative trend in the final quarter. I am pleased that we are continuing to move in the right direction," he said.
The company attributed home furnishings' first quarter revenue decrease mainly to reductions in sales of imported ready-to-assemble and folding furniture. Dorel also pointed out, the prior year's quarter benefited from strong shipments of initial customer roll outs, which did not re-occur in 2012.
Partially offsetting these declines was continued growth in the internet-based retail sales channel.
Dorel added that while input costs were essentially flat with last year, operating profits suffered because of the impact of decreased revenues and a less profitable sales mix.
Dorel's recreational and leisure segment continued to be the company's star performer as revenue climbed 10.2% to US$221.0 million while operating profit rose 20.3%. The company noted it was the segment's "best quarter ever on the back of a strong 2011."
Meanwhile the juvenile segment - a producer of a wide range of baby and youth products including car seats and baby monitors - had revenue of US$226.5 million in the quarter, essentially unchanged from last year while operating profit fell 12.7%.
Looking ahead to the rest of 2012, Schwartz expects the juvenile segment will improve, especially in emerging markets such as Chile and Brazil. The bicycle business should continue on its current positive trend.
"The home furnishings segment experienced a challenging second quarter in 2011 and we are expecting this year's second quarter to be better than last year," Schwartz said, adding, "The segment is expecting continued growth in the already strong internet retail channel."