Dorel Furniture announces another quarterly loss and lowers its outlook
MONTREAL – Canadian home furniture manufacturer Dorel Inds. reported first-quarter revenue of $211.5 million, down $17.2 million, or 7.5%, from the same period last year, marking the third quarterly loss consecutive of the company.
“Supply chain issues, high inflation and its impact on prices and our consumers and uncertainty in Europe all contributed to lower earnings in the quarter,” said the president and chief executive. Martin Schwartz management. “Dorel Home sales were down from a year ago as consumers made fewer purchases of home office furniture as COVID-19 eased and retail prices increased.
“At Dorel Juvenile, retail prices also increased, but demand remained strong in most markets,” Schwartz said. “We have implemented price increases in both segments which should improve results throughout the year. Despite the current environment which is driving lower earnings than the prior year, we remain confident in our ability to improve earnings going forward as we do what we can control and the fundamentals remain strong.
In its earnings report, the company said internet and physical market sales were weaker as the erratic supply chain situation persisted, reducing the availability of containers to ship products. Schwartz cited higher ocean freight costs, increased particleboard prices, higher warehousing costs and increased inventory.
“Our earnings volatility is expected to continue given rising inflation around the world and its direct impact on input costs and the potential for slowing consumer demand,” Schwartz said. “Furthermore, the uncertainty surrounding the war in Ukraine and China’s COVID containment strategy has caused the value of the US dollar to surge against most currencies and created new concerns about supply from China A positive development is that we are currently seeing an improvement in the supply chain situation from Asia with improved container availability and price stabilization.
For its Home and Juvenile divisions, the company said its outlook was in question.
“Dorel Home’s outlook remains challenging given the decline in consumer demand for furniture overall. Additionally, with changing attitudes towards the COVID-19 pandemic, home shopping has slowed. Despite this data, we continue to focus on “proximity to supply” with our newly installed machinery, the integration of our recently acquired European business and our branded furniture ranges. This will put us in a leadership position as demand for our products picks up in a more stable environment.
“At Juvenile, the market most impacted by uncertainty is Europe. The devaluation of the euro to its lowest level in more than five years against the US dollar and cautious retail orders mean that our outlook for the second quarter is less positive than before,” Schwartz said.