Dorel’s results jump after layoffs

Company slashed losses to $3.8M from $41.4M

Dorel Industries Inc. laid off workers last quarter as part of a cost-reduction strategy amid ongoing losses, even as it reported its best financial results in two and a half years.

The maker of children’s products and home furniture cut its employee tally in the latter segment by about five per cent, according to financial filings Tuesday.

“We basically restructured in a way where we’ve combined a couple of our operating units under one operating unit and reduced staff,” CEO Martin Schwartz told analysts on a conference call Tuesday.

Montreal-based Dorel also “initiated head count reductions” at its juvenile segment, which sells car seats and strollers in scores of countries.

The total cost of the layoffs amounts to $4.6 million (U.S.), mainly in severance and termination benefits, the company said. The move will likely yield $6.5 million in savings this year, Schwartz said.

“We’re expecting a return on that right away,” he said.

The company reported a net loss of $3.8 million for the quarter ended Dec. 31, a big improvement from its $41.4-million loss in the same period last year.

Adjusted earnings of $200,000 also marked the first time Dorel avoided an adjusted loss since the second quarter of 2021.

A 12 per cent boost in revenue from the family-run company’s juvenile segment helped offset an eight per cent drop in revenue from home furnishings, which account for 40 per cent of sales.

“We are well on our way to getting juvenile back on a solid footing,” said Schwartz, adding the segment notched its best quarter since 2017.

Product development helped drive market share gains, particularly at Dorel’s Maxi-Cosi brand. Its higher-end rotating car seats now boast a sliding technology to “slide your child towards you, getting them easily in and out of the car,” said Schwartz, whose father founded the firm in 1962 — the year the car seat was invented.

At the home segment, which sells items ranging from sofas to step ladders, Dorel felt the ongoing slump in spending on consumer products that followed the COVID-19 splurge.

In its fourth quarter, Dorel said revenues rose 3.1 per cent to $350.7 million from $340.3 million a year earlier.

On an adjusted basis, net income from continuing operations reached one cent per diluted share versus a loss of $1.22 per diluted share the year before.

The result beat analysts’ expectations of an adjusted loss of seven cents per diluted share, according to financial markets data firm Refinitiv.