by Move aims to substantially cut costs by reducing redundant positions that it said are not necessary to support anticipated sales levels and channels moving forward
MONTREAL — As part of a long-term initiative to further stem crippling losses moving forward, Dorel announced an additional restructuring plan on Monday that will merge various operations of its residential home furniture division into its Cosco division.
Without revealing specifics, the company said that a significant number of positions will be eliminated as the division’s entire sales, marketing and product development organization will be merged into its Cosco Home segment that also produces folding furniture, garage cabinets, workbenches and some outdoor furniture, according to the company website.
Major brands in the Home division include Ameriwood Home, Cosco Home & Office, Novogratz, Cosmo Living, Max & Finn, DHP and Signature Sleep.
The company said the new organization will design, develop and launch imported and domestically produced products for the entire Home segment, which also includes the brands LikeHome, Ren Home, Alphason Studio, Real Rooms, Mr. Kate and Ntense.
It said the positions will be eliminated during the second quarter as the company has determined they are “redundant and not necessary to support anticipated sales levels and channels moving forward.” It also noted that it will consolidate back-office functions that support the organization, which also aims to leverage resources from its 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 company said, adding that it already has seen benefits of a restructuring plan announced in January in terms of a lower run rate of operating expenses. Other cost-cutting measures have included the closure of its Montreal facility during the first quarter
In addition, the company is further exploring ways to reduce the Home segment’s footprint through SKU reduction and a smaller distribution footprint.
The company said that the additional consolidation was prompted by lower-than-expected sales and margin levels in its first quarter ended March 31.
The company reported first-quarter revenues of $320.5 million, down 8.7% from $351.1 million the same period last year. It also reported a net loss of $25.3 million, or 77 cents per share, compared with a net loss of $17.6 million, or 54 cents per share, the same period last year.
It also noted that the reported net loss for the quarter includes a total restructuring cost of $1.6 million and that its adjusted net loss was $23.6 million, or 72 cents per share, compared with $16.9 million, or 52 cents per share, last year.
The Dorel Home segment reported $104.6 million in revenue, down 24.4% from $138.4 million last year. It reported gross profit of $1.3 million, compared with $11.8 million last year and an operating loss of $11.5 million, compared with an operating loss of $3.6 million last year.
The company said the revenue decrease was because of declines in the e-commerce channel, compared with brick-and-mortar sales, which were flat with the prior year. It added that sequentially, brick-and-mortar sales rose by about 24% from the fourth quarter of 2024, and that e-commerce sales decreased by about 38%. It said that this decrease, combined with lower gross margins, accounts for the majority of the first quarter’s adjusted operating loss.
It added that 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.”
It added that the impact of U.S. tariffs on the Home segment was substantial as about 35% of all sales are sourced from China and about 40% are sourced from other suppliers in Asia.
“Current tariff rates on other countries at 10% are being actively managed in collaboration with both our supplier base and customer base,” the company said, adding, “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.”
The company’s Juvenile segment, which produces strollers, car seats and other baby and children’s products, reported first-quarter revenue of $215.9 million, up 1.5% from $212.7 million the same period last year.
Gross profit totaled $58.8 million, up 4.2% from $56.5 million last year. Operating profit was just over $3 million, up 450.8% from $549,000 last year. Adjusted operating profit was $4.2 million, compared with $1.1 million last year, a 272.1% increase.
The company added that Dorel Juvenile “continues to identify opportunities for cost reduction across the segment and in the quarter ended March 31 recorded US$1.2 million in restructuring costs, made up of severance and related employee costs.”
‟Dorel Juvenile had a strong start to 2025, with another quarter of organic revenue growth,” said Dorel President and CEO Martin Schwartz. “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.”
