Dorel Reports First Quarter 2025 Financial Results

Dorel Juvenile reports strong performance

Dorel Home taking further steps to return to profitability

Dorel Industries Inc. announced its financial results for the first quarter ended March 31, 2025.

First quarter revenue was US$320.5 million, down 8.7%, from US$351.1 million a year ago. Reported net loss for the quarter was US$25.3 million or US$0.77 per diluted share compared to US$17.6?million or US$0.54 per diluted share a year ago. The reported net loss for the quarter includes total restructuring costs of US$1.6 million and as such, adjusted net loss  was US$23.6 million or US$0.72 per diluted share compared to US$16.9 million or US$0.52 per diluted share for the first quarter a year ago.?? 
 
?Dorel Juvenile had a strong start to 2025, with another quarter of organic revenue growth. Our new product introductions continue to resonate with retailers and consumers and our pipeline of upcoming launches is robust. Another positive, though out of our control, was the weakening of the U.S. dollar in the quarter against most other major currencies which helped earnings and should continue to do so going forward. Conversely, Dorel Home faced a challenging start to the year, with e-commerce sales much lower than expected. As we said in our last earnings release, brick and mortar success will be a key to our turnaround, but the change in the e-commerce landscape means we significantly underperformed. We have lowered our expectations on what the e-commerce channel can deliver and as a result will be taking further action to substantially reduce our footprint,” stated Dorel President & CEO, Martin Schwartz.

Dorel Juvenile

For the first quarter of 2025, revenue reached US$215.9 million, a 1.5% increase compared to the prior year. Adjusted for foreign exchange rate variations year-over-year, the organic revenue growth1 was 4.0%. This growth was driven by strong performances across most markets, with Europe being the most significant contributor. Adjusted operating profit1 was US$4.2 million, an increase of US$3.1 million compared to last year. Favourable currency movements contributed to the earnings increase.

The Juvenile segment’s strong performance was led by continued growth of the Maxi-Cosi brand, with its relevance increasing in all markets. Overall, Maxi-Cosi sales grew by approximately 9% over the prior year and now account for approximately 37% of total Juvenile segment sales. As a premium brand in the Juvenile segment portfolio of brands, this also improved earnings based on better margin mix. Partially offsetting this increase were lower earnings in the U.S. market versus the prior year due mainly to the timing of higher input costs in the quarter versus the prior year. 

The principal tariff impact on the Juvenile segment is the current 145% rate on imported items into the U.S. from China. The U.S. market accounts for approximately 45% of Juvenile segment sales, but reducing that exposure is the fact that approximately 40% of U.S. sales are car seats domestically produced at the Company’s manufacturing facility in Columbus, Indiana. The challenge on costs for China sourced product applies to the entire industry, primarily strollers, given the infrastructure required for production. While Dorel has moved some production of certain product categories to other countries like Vietnam and Mexico, there will be cost pressures, and price increases will be necessary in these categories. 

Given that Dorel’s competitors source products from China with limited exceptions, should current tariff rates continue to apply longer term, the Juvenile segment’s U.S. based manufacturing facility provides an advantage and an opportunity to capture additional market share and increase sales of car seats. Some Dorel car seats currently made in China can be transferred to the U.S. based manufacturing facility and at current capacity levels, up to US$50 million of revenue could be generated from additional production with minimal investment, with greater opportunity should the business case merit the investment.

Dorel Home

Revenue for the first quarter was US$104.6 million, a decrease of US$33.8 million, or 24.4%, from US$138.4 million last year. The decrease was due principally to declines in the e-commerce channel with brick-and-mortar sales being flat with the prior year. Sequentially, brick-and-mortar sales increased by approximately 24% from the fourth quarter of 2024, while e-commerce sales decreased by approximately 38%. The decrease in revenue combined with lower gross margins accounts for the majority of the first quarter’s adjusted operating loss1 of US$11.1 million compared to US$3.4 million last year. 

The lower gross margins were mostly due to lower e-commerce sales where the competitive environment and our current product offering meant that price reductions and promotions were necessary to move inventory. The Home segment was unable to deliver new product innovation in the quarter and this meant sales consisted of mostly older inventory through promotional pricing. The domestic manufacturing operations also underperformed versus expectations, despite the benefit of production now being out of one facility versus two in the same period last year. Operating costs decreased by approximately 15%, primarily due to reduced headcount and lower selling expenses. 

The U.S. tariff impact on the Home segment is substantial, with approximately 35% of all sales sourced from China and approximately 40% from other Asian-based suppliers. Current tariff rates on other countries at 10% are being actively managed in collaboration with both our supplier base and customer base. The primary challenge exists with China-sourced products due to the significant cost impact. Unlike the Juvenile segment where China is the clear leader in the industry for manufacturing capabilities, alternative furniture sources can be found in other regions of the world. However, price increases for consumers will be unavoidable at current tariff levels, potentially affecting consumer demand as furniture purchases are more discretionary compared to juvenile product essentials.
As in the Juvenile segment, the Cornwall, Ontario based Ready-to-Assemble facility benefits from tariff-free sales to the U.S. The facility is still increasing production but will eventually offer more capacity, making it competitive against imports.

Restructuring Update

The lower-than-expected sales and margin levels in the first quarter in the Home segment has prompted additional restructuring activities which will be communicated and subsequently implemented during the second quarter, over and above those previously announced on January 30, 2025. As a first step, the operations of the Home segment will be significantly altered, with the sales, marketing and product development organization being merged into the successful Cosco division. The new organization will design, develop and bring to market both imported and domestically produced product for the entire Home segment. A substantial number of positions will be eliminated as they have been identified during the second quarter as redundant and not necessary to support anticipated sales levels and channels moving forward. Back-office functions to support the organization will also be consolidated, leveraging resources from the Juvenile segment where beneficial. We are actively pursuing other opportunities that we believe can decrease our overhead and operating costs further and will communicate all meaningful developments by the end of June 2025.

The benefits of the restructuring plan announced in January are evident in the lower run rate of operating expenses. In addition, the manufacturing operations in Montreal, Quebec were closed in the first quarter. The ability to further reduce the Home segment’s footprint is being explored to deliver even more cost savings connected to the SKU reduction initiative and smaller distribution footprint objectives.

Dorel Juvenile continues to identify opportunities for cost reduction across the segment and in the quarter ended March 31, 2025 recorded US$1.2 million in restructuring costs, made up of severance and related employee costs.

Long-Term Debt and Financing Update

On May 9, 2025, the Company further amended its ABL facility and term loan facility whereby the lenders agreed to forebear from enforcing their rights and exercising their remedies under both the ABL facility and term loan facility further to a default by the Company relating to certain financial covenants. The forbearance period commenced on May 9, 2025 and will end on the earlier of (i) August 8, 2025; and (ii) the occurrence of any event of default, other than the current event of default, under the ABL facility or term loan facility. The Company must provide the lenders with additional forbearance reporting during the forbearance period. In addition, the total availability under the ABL facility was decreased to $200.0 million as part of the May 9, 2025 amendment.

It was announced on February 21, 2025 that the Company had entered into a sale-leaseback transaction for its factory and warehousing facility in Columbus, Indiana. The gross proceeds from the sale were US$30.0 million, of which approximately US$8.0 million was allocated to reduce existing debt, with the balance designated for funding the Company’s ongoing operations. In addition, the Company continues to actively work on additional financing opportunities to further enhance its financial position.  

Outlook

“Providing an outlook given the current tariff situation is obviously difficult as we do not have visibility on what will transpire with existing tariffs and possible changes going forward. We believe we are in an advantageous position relative to much of our competition, but the situation is difficult nonetheless. In the second quarter, in both of our segments, orders from customers have slowed, even stopping entirely for some customers for China sourced product. This will have a negative impact on our second quarter results, and in particular in the Home segment, but given that a long-term resolution on tariffs is impossible to predict, the exact financial impact cannot be quantified as of now,” commented Dorel President & CEO, Martin Schwartz.

“Longer term, our Juvenile segment is expected to continue to deliver improved earnings over the prior year. Though tariffs could challenge earnings in the short-term, the domestic manufacturing opportunity could more than offset this risk. For now, we continue to execute our business strategy that has been successful over the past several years, adjusting as necessary for external factors like tariffs and foreign exchange. In the Home segment, the focus is on transitioning to a new business model, to once again return to profitability. Predicting when that will happen is made even more difficult by the tariff situation, but this will not prevent us from making the internal changes necessary for success. We should have much better clarity soon and will be able to provide better guidance thereon in the near future.” concluded Mr. Schwartz.

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About Dorel Industries Inc.

Dorel Industries Inc. (TSX: DII.B, DII.A) is a global organization, operating two distinct businesses in juvenile products and home products. Dorel’s strength lies in the diversity, innovation and quality of its products as well as the superiority of its brands. Dorel Juvenile’s powerfully branded products include global brands Maxi-Cosi, Safety 1st and Tiny Love, complemented by regional brands such as BebeConfort, Cosco, Mother’s Choice and Infanti. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture. Dorel has annual sales of US$1.4 billion and employs approximately 3,900 people in facilities located in twenty-two countries worldwide.

Contact:

Jeffrey Schwartz – Media Contact – (514) 934-3034

Source: Dorel Industries Inc.