The manufacturer Dorel has sold off excess stocks

(Montreal) Furniture and children’s products manufacturer Dorel Industries says it is starting to see the light at the end of the tunnel, but the situation remains difficult in the retail sector.

This is particularly the case for furniture in a context where households’ room for maneuver is limited by inflation, explains finance chief Jeffrey Schwartz during a conference call with analysts on Friday.

“It’s still a difficult time where people are not necessarily choosing to buy furniture,” he emphasizes. We focus on what we need to do to generate sales and reduce costs. »

The pandemic has brought many logistical headaches for Montreal society. She first had to deal with delivery times and rising transport costs. In response, retailers have stockpiled too many items at a time when consumers have changed their spending habits, prioritizing activities they were unable to do during the pandemic and essential needs amid high inflation.

The situation is improving regarding surplus items in inventory, according to President and CEO Martin Schwartz. “There is significantly less stock at retailers and our own stock levels are the lowest in two years. The vast majority of high-cost inventory from last year has been sold, contributing to improved margins throughout 2023.”

The reduction in inventories will also have allowed the company to generate positive cash flow of US62.1 million.

Asked about his clients’ stocks, Jeffrey Schwartz rules out the possibility of a surge in orders to restock retailers’ shelves. “I think everyone is concerned about the state of the consumer and I think they are trying to hold less inventory than they have in the past. »

The company also indicated that it is holding discussions with potential creditors in order to obtain more liquidity and finance its projects. Jeffrey Schwartz said he couldn’t give more details until a deal is reached, but he says the company “has made significant progress.”

If conditions are less favorable for the Home division, the Montreal company shows an improvement in its sales division of children’s products in the third quarter ended September 30. The division’s sales increased by 6.4% excluding the exchange rate effect.

For all of its activities, Dorel recorded a net loss of US$10.4 million, compared to a loss of US$36.7 million for the same period last year. Revenues, for their part, decreased by 3.9% to stand at US359.7 million.

Dorel shares were stable at $5.45 on the Toronto Stock Exchange late in the afternoon.

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