TORONTO-Noma Industries Ltd. said it is mulling what to do with its money-losing Christmas products business, which makes artificial trees, ornaments, lights and other seasonal products-and divesting the unit is one possibility. The Toronto firm expects the business this year to have an aftertax loss of about C$17.7 million (US$12.9 million) on sales of C$130 million (US$94.9 million). Noma President Catherine Beck said in a news release that her company's other businesses are performing satisfactorily.
Though selling the business is an option, Douglas Shields, Noma's vice president and chief financial officer, stressed in a telephone interview that his firm currently is not engaged in any such discussions with prospective buyers. It is trying to improve the business's operating performance while it develops strategic plans, a process that could take several months.
Shields said 1995 Christmas products sales were weak throughout the industry and retailers carried unsold stocks into this year. Sales continue to be soft this year, especially in Canada. The United States accounts for about 70 percent of the unit's sales and Canada represents most of the rest.
Imports, particularly for lights and ornaments, have provided tough competition. Noma foresaw that trend and has been trying to offset it by doing some offshore sourcing. Nonetheless, profit margins have eroded steadily for five years, he said.
Noma expanded its Christmas products business several years ago, but the business now accounts for a declining portion of sales. The unit's 1995 sales at C$146 million (US$106.6 million) represented 28 percent of Noma's total, down from 47 percent in 1993. Its industrial division, including wiring products, grew to 58 percent of sales last year.