Dorel Industries Q2 Earnings Call Highlights

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Mon, August 10, 2026 at 1:03 AM GMT+3 7 min read

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Dorel's Q2 revenue fell 14.7% to $42.9 million lower year over year, but the operating loss improved to $24.3 million from $37.2 million. Excluding restructuring and foreign-exchange effects, management said the company would have posted a $1.5 million operating profit.
Dorel Juvenile revenue declined 3.9% amid weaker U.S. demand, while international markets such as Australia, Brazil and Canada delivered double-digit growth. Management expects U.S. sales and earnings to improve in the second half, supported by increased promotions and new product launches.
Dorel Home revenue plunged 46.4% as the company exited non-core products, but its operating loss narrowed substantially. The reshaped business is centered on Cosco and Notio, with both expected to be profitable during the second half of 2026, although legacy warehouse and inventory costs will continue to weigh on results.

Dorel Industries (TSE:DII.A) reported lower second-quarter revenue as the company continued to reduce non-core operations in its Home segment and faced softer demand in the U.S. juvenile-products market. Management said international growth and a restructuring of the Home business are intended to improve profitability and cash generation over time.

For the quarter ended June 30, 2026, total revenue declined $42.9 million, or 14.7%, while organic revenue fell 16.9%, according to Chief Financial Officer Jeffrey Schwartz. The company reported an operating loss of $24.3 million, compared with an operating loss of $37.2 million a year earlier. Excluding restructuring costs, the operating loss was $5.3 million; Schwartz said that excluding foreign-exchange effects as well would have resulted in operating profit of $1.5 million.

Juvenile Segment Sees International Growth

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Dorel Juvenile revenue totaled $209 million in the second quarter, down 3.9% from the prior-year period. Organic revenue declined 6.8%, primarily due to weaker U.S. sales. Schwartz attributed the U.S. decline to softer category demand, reduced promotional activity, changes in the timing of customer programs and aggressive promotions by competitors.

Those pressures were partly offset by double-digit revenue and organic growth in international markets, including Australia, Brazil, Canada and export markets. Schwartz said Australia's growth helped Maxi-Cosi reach the No. 1 position in car seats with leading retailers in the country. In Brazil, he said growth extended across major product categories and brands.

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Juvenile gross profit declined $4.7 million, while gross margin fell 110 basis points to 27.9%. Management cited negative foreign-exchange effects and lower U.S. sales, partially offset by higher sales volumes and improved product mix in other markets. Operating profit in the segment was $3.6 million, compared with $6.5 million a year earlier. Excluding restructuring costs, adjusted operating profit was $5.1 million.

President and CEO Martin Schwartz said the segment continued to invest in innovation, consumer engagement and retail execution. During the quarter, Dorel Juvenile presented product launches and category initiatives across Maxi-Cosi, Safety 1st, Little Seeds and Tiny Love at the ABC Kids Expo in Las Vegas. He also pointed to recognition for Safety 1st home-safety and connected-nursery products, as well as Maxi-Cosi's Embraced Forms crib and dresser.

Management Expects U.S. Juvenile Improvement

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Management said U.S. sales improved in July and expects the trend to continue in the second half. Schwartz said greater promotional activity contributed to the improvement, but added that new-product introductions will be more important to driving meaningful growth.

"Promotions are great, and they drive some big numbers, but you really move the needle when you've got new products introduced," Jeffrey Schwartz said.

The company expects products to launch in the U.S. during the third and fourth quarters, with additional introductions planned for the first half of 2027. Management also expects improved earnings in both the U.S. and Europe during the second half, supported by new products. Schwartz said nearly all markets other than the U.S. and Chile were expected internally to meet or exceed plans.

Home Business Reshaped Around Cosco and Notio

Dorel Home revenue declined 46.4% during the quarter, largely reflecting the intentional reduction of active non-core stock-keeping units. The company has reshaped the segment around three platforms: Cosco products, youth furniture transferred to Dorel Juvenile, and selected furniture opportunities managed through European furniture distributor Notio.

Management said Cosco represented about 70% of the current Home business, with Notio accounting for the remaining 30%. Schwartz said Cosco was profitable in the second quarter under its new operating model and is expected to remain profitable for the rest of 2026. Notio is expected to be profitable in the second half as it adds U.S. distribution activities to its existing European operations.

The youth-furniture transfer is not expected to create a material reported revenue shift between segments, according to Schwartz. The company previously moved crib products to Juvenile, and is now incorporating a limited youth-furniture offering, including bunk beds and children's beds, into that segment.

Dorel Home recorded an operating loss of $11.3 million, improving from a $23.9 million loss in the prior-year quarter. Excluding restructuring costs, adjusted operating loss narrowed by $6.3 million to $6.5 million. Management said the segment remains affected by legacy costs, including warehouse leases and inventory associated with businesses being exited.

Management estimates the go-forward Home business could generate annual revenue of just under $200 million over the next 12 months.
Legacy costs are expected to continue weighing on Home profitability through at least the second half of 2026.
The company is seeking to sublease warehouse facilities and sell remaining inventory, which could help offset some exit-related costs.

Foreign Exchange, Financing Costs and Tariff Exposure

At the consolidated level, gross margin declined 80 basis points to 16.1%. Excluding restructuring costs, however, gross margin improved to 23.1% from 21.5% a year earlier. The company said foreign-exchange comparisons were unfavorable because the prior-year quarter included significant gains as the euro strengthened against the U.S. dollar.

Finance expense rose $8.6 million to $17 million. Schwartz said $11.1 million represented cash interest expense, while $5.9 million was non-cash.

During the question-and-answer session, management said Dorel Home has no manufacturing operations and that much of Cosco's business is direct import. Dorel Juvenile operates a large production facility in Columbus, Indiana, as well as assembly facilities in Portugal and Brazil. Schwartz said more than half of the business remains imported, with China continuing to play a significant role in the juvenile-products industry.

Management also cited rising freight and other costs, though it said contracted freight arrangements have reduced exposure to spot-market volatility. The company has implemented some price increases and said the premium positioning of Maxi-Cosi provides greater flexibility to pass through higher costs than lower-priced products sold in discount channels.

About Dorel Industries (TSE:DII.A)

Dorel Industries Inc (TSX: DII.B, DII.A) is a global organization, operating two distinct businesses in juvenile products and home products. Dorel's strength lies in the diversity, innovation, and quality of its products, as well as the superiority of its brands. Dorel Juvenile's powerfully branded products include global brands Maxi-Cosi ®, Safety 1st¿, and Tiny Love ®, complemented by regional brands such as BebeConfort ®, Cosco Kids ®, Mother's Choice, and Infanti ®. Dorel Home, with its comprehensive e-commerce platform, markets a wide assortment of domestically produced and imported furniture.

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