Martin Schwartz, president and CEO of Montreal-based Dorel
Dorel Industries Inc. increased its fourth-quarter profit by 4 per cent to $25.2-million (U.S.) even though the company was left with unsold inventory in the United States due to consumers pulling back on spending.
U.S. retailers reduced their replacement orders and also cut back on in-store inventory, chief executive officer Martin Schwartz said Thursday.
"Therefore, at year end, we were left with inventory we had anticipated selling in the fourth quarter," he said during a conference call to discuss the company's quarterly results.
But Mr. Schwartz said the company, which makes such products as bikes, car seats and home furnishings, is making headway with its extra inventory and expects to introduce new products this year to boost sales.
Dorel's juvenile division, which also makes strollers and cribs, saw its revenue in the fourth quarter drop 5 per cent from the same quarter last year, largely due to a slowdown in retail sales in the United States.
The Montreal company also said it was a tough quarter for sales of home furnishings in the U.S., but added the situation was reversed last month.
Mr. Schwartz said Dorel is still facing higher freight and raw materials costs and will have to increase prices, but was optimistic about 2011.
"Looking ahead, we foresee continued growth in our bike business through 2011," he said. The company sells bikes under the Cannondale, Schwinn, GT, Mongoose and IronHorse names.
"We are on track to improve year-over-year performance."
Mr. Schwartz also said Dorel will suspend importing drop-side cribs due to new legislation banning them until the impact of the legislation has been assessed. He said the impact of crib recall on its 2010 earnings was approximately $5-million.
"There will be much less of an impact this year."
In its financial results, its fourth quarter profit amounted to 76 cents per diluted share, versus 73 cents in the same period a year ago. Revenue fell about one per cent to $539.5-million from $545.3-million a year ago.
For the full year, the company earned $127.9-million, or $3.85 per diluted share, compared with $107.2-million or $3.21 last year.
Revenue for the full year rose 8.1 per cent to $2.3-billion, compared with $2.1-billion in 2009.