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Home furnishings buoy Dorel sales, profit

Company reports gains in fourth quarter

Michael Knell -- Furniture Today, March 12, 2010

MONTREAL — Canadian consumer goods giant Dorel Inds. reported gains of 13.6% in sales and 26.3% in profit in the fourth quarter over the same period a year ago, driven in large part by gains in its home furnishings segment.

Sales were $545.3 million and net income was $24.2 million or 73 cents per share for Dorel, which reports in U.S. dollars.

For all of 2009, sales were $2.1 billion, off slightly from the $2.2 billion in 2008. Earnings were down 5% to $107.2 million or $3.21 per share, from $112.9 million or $3.38 per share the previous year.

The company said organic revenue growth, excluding acquisitions, was about 7% in the fourth quarter. For the year, there was a decline of slightly less than 3%.

Currency exchange rate fluctuations affected profits, since Dorel operates in several countries. They accounted for an after-tax loss of $10 million or 30 cents per share in 2009, but a gain of $7.4 million or 22 cents per share in 2008.

Dorel said its home furnishings segment, which includes ready-to-assemble specialist Ameriwood and importer and distributor Cosco Home & Office, enjoyed sales growth of 18.4% in the fourth quarter. Sales of $121.1 million were up from $102.3 million in the comparable 2008 period.

Earnings from operations in the segment jumped to $12.1 million from $1.5 million a year earlier.

For the full year, revenue in the segment grew 2.7% to $463.7 million, compared to US$451.4 million, while earnings from operations rose to $36.7 million from $8 million in 2008.

"The fact that sales increased in a difficult economic environment is due to Dorel's focus on reasonably priced furniture sold primarily to mass merchants," the company said in a statement. "The turnaround at Ameriwood's domestic ready-to-assemble furniture operations, which began in 2008, led the way to profitability for the segment as a whole."

Dorel also said that Cosco Home & Office has refocused on its core competency of metal folding furniture and step stools, and has cut costs considerably.

Sales in the company's juvenile segment fell 7.3% in 2009 to $995 million, while its leisure segment - mainly bicycles and other sporting goods - reported a 3.8% uptick to $681.4 million.

CEO Martin Schwartz said Dorel expects the home furnishings performance to continue improving this year. But he said the company doesn't expect any significant improvement in the economy or in consumer buying habits in 2010, and expects the recovery will be a slow one.

"Dorel is not immune to these conditions," Schwartz said, "but as 2009 demonstrated, the nature of the great majority of the company's products, and the customers to which Dorel's products are sold, will protect us to a certain extent."

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Dorel sales, profits climb

Mar 22, 2010

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