Dorel Industries announces ‘significant’ reduction in size of Home segment

Dorel Industries (DIIBF) is providing a business update on its on-going operations as promised in its first quarter financial results press release issued on May 12. The Company is announcing a strategic shift in its operations with a significant reduction in the size of its Home segment which is expected to return the segment to profitability in 2026. These changes will be facilitated by a reduced product line focusing on profitable categories and the elimination of the domestic manufacturing operations based in Cornwall, Ontario. As described in the first quarter earnings release, Dorel Home initiated a new round of restructuring in the second quarter founded upon the reduction of the size of the organization and its ability to merge the sales, marketing and product development organization into the successful Cosco division. A limited number of high-performing Dorel Home import SKUs will be transferred to the Cosco portfolio, focused on categories and customers driving the highest contribution with the least added complexity. Cosco has delivered consistent earnings and positive cash flow within the Home segment since 2010, including the period in which it was led by Troy Franks, current CEO of Dorel Home. The organization is built on a market-driven, customer centric approach that delivers innovative products with exceptional consumer value. For over 90 years, Cosco has been a trusted household brand known for reliable performance and quality. An additional contributor to improved earnings is the consolidation of certain Dorel Home back-office functions with the Juvenile North America operations based in Columbus, Indiana which will provide further synergies for Dorel overall. The decision to cease all Dorel Home manufacturing operations in North America was made after a further extensive review of on-going operations, supported by external consulting firm EY-Parthenon. This decision will result in substantial savings based on a smaller footprint and workforce and eliminate the losses from the domestic operation. It is expected that the wind-down of these operations will be complete by the end of the third quarter to minimize future losses and satisfy customer obligations. The Home segment is also actively working on exiting product categories that are now considered non-core, including a plan to significantly reduce inventory by the end of the year. This will also allow for the reduction of the current distribution footprint that is now too large for the new streamlined Home operations. The Company will be exiting from existing warehouses based on their scheduled lease termination dates this year. For facilities with longer termination dates, the Company is exploring sub-leasing opportunities which it is believed can be realized in the new year once the desired footprint is achieved. The reduction in size and simplification of the Home segment will eliminate the negative cash flow from these operations and facilitate focus on the Juvenile segment which continues on its path of increasing sales and earnings. The segment’s global footprint, with market leading divisions in Europe, Latin America and Australia, combined with domestic manufacturing operations in the United States makes Dorel Juvenile uniquely positioned in the industry to deliver above average earnings relative to its peers. The benefits of these changes are expected to improve earnings by the fourth quarter of this year. The estimated cost and run-rate savings of these activities will be provided in more detail in the Company’s second quarter earnings release to be issued in August 2025.