Dorel Industries Inc.

Dorel reported second-quarter revenue of $249.4 million, down $42.9 million or 14.7% year over year; organic revenue declined 16.9%. Reported gross profit fell by $9.3 million, and gross margin decreased to 16.1% from 16.9%. Excluding restructuring costs, gross profit declined by $5.1 million but improved to 23.1% from 21.5%. Operating loss was $24.3 million versus $37.2 million last year; excluding restructuring, operating loss was $5.3 million, and excluding FX impact management said the result would have been positive by $1.5 million. In Juvenile, revenue was $209 million, down 3.9% year over year, with organic revenue down 6.8%; gross profit declined by $4.7 million and gross margin fell to 27.9%; operating profit was $3.6 million versus $6.5 million, or $5.1 million adjusted. In Home, revenue fell 46.4% and the segment posted an $11.3 million operating loss versus $23.9 million; adjusted operating loss was $6.5 million. Finance expenses increased by $8.6 million to $17.0 million, including $11.1 million of cash interest. Looking ahead, management expects improved earnings in both the U.S. and Europe in Juvenile, helped by new product launches and better U.S. sales in July; for Home, Costco is expected to remain profitable, Notio is expected to be profitable in the second half, and the go-forward Home business is described as being in the sub-$200 million annual revenue range.

Martin Schwartz framed the quarter as a transition period centered on simplifying the business, improving profitability, and strengthening cash generation over time. He emphasized that Juvenile’s international markets are showing resilience and that new products, not just promotions, will be the main driver of meaningful growth going forward. On Home, he said the company has reshaped the segment around Costco products, youth furniture transferred to Juvenile, and selected Notio opportunities, and sounded more confident that the business now has a viable structure.

Jeffrey Schwartz highlighted the main financial drivers: revenue down $42.9 million, reported gross margin down to 16.1%, and operating loss reduced to $24.3 million from $37.2 million. He said excluding restructuring, gross margin improved to 23.1% from 21.5%, and excluding FX the company would have been slightly positive at the operating line. He also pointed to $17.0 million of finance expense, of which $11.1 million was cash interest and $5.9 million was noncash, and noted that Home’s sales declines were largely intentional as non-core SKUs were exited.

Analysts focused on the timing of U.S. Juvenile sales recovery, whether second-half improvement would come from promotions or retail program timing, and how much new product launches would matter. Management said some programs shifted later in the year, July sales improved quickly after increased promotion, and new items—especially a major stroller launch—are the real drivers that will move the needle more meaningfully than promotions alone. On Home, management said Costco is about 70% of sales, youth furniture transfer is not expected to be material, and legacy costs such as warehouse leases will continue to pressure the segment in the second half until exits are completed. They also said covenant relief tied to noncash write-downs should not recur and that tariff exposure remains variable, with more than 50% of Juvenile business still imported.