Thu, Feb 13, 2014 - Page 14 News List

Makalot outlines plan to expand business, revenue

AIM HIGH:The apparel supplier’s strategy for this year involves conquering mid-level sportswear and growing its Vietnam venture to profit from expected preferential tariffs

By Camaron Kao  /  Staff reporter

Makalot Industrial Co (聚陽), a supplier for global fashion powerhouses such as H&M Hennes & Mauritz AB, yesterday said that it aims to increase its revenue by 15 to 20 percent this year by expanding into the mid-tier casual sportswear segment.

“We aim to increase our orders of apparel with higher prices and gross margins this year,” company chairman Frank Chou (周理平) told reporters yesterday.

“As a supplier for low-level sports brands, we are particularly focused on increasing our share in the mid-level sportswear market to benefit from the strong growth of that sector,” Chou added.

The clothing supplier has forecast that its shipments will grow about 19 percent this year to 12.5 million dozen from the 10.51 million dozen that it shipped last year, he said.

Through its strategy of selling more functional sports apparel, Makalot expects the average selling price of its products to rise 2 percent annually this year, it said.

The Taiwanese firm also said it thinks the tactic will raise its gross margin by 1 percent to 20.9 percent this year from the previous year.

As part of this strategy, Makalot has become part of the supply chain of Under Armour Inc, which distributes sports clothing and athletic accessories in the US, and the Taiwanese company is scheduled to start supplying shirts to the US distributor in June, Chou said.

According to the apparel maker, Under Armour is a mid-level sports brand in the US whose products have an average price of US$60 per dozen.

Last year, the Taiwanese enterprise registered revenue of NT$17.91 billion (US$592 million), a rise of 12.88 percent from the NT$15.87 billion it recorded the previous year, according to its filing with the Taiwan Stock Exchange.

Makalot is also planning to carry out capital expansion at Vietnam-based Namtex Co Ltd, a fabric-making, dying and finishing company that is a joint venture between Makalot and yarn maker Tainan Spinning Co (台南紡織).

The expansion is aimed at increasing Namtex’s capacity by 20 to 30 percent in anticipation of Vietnam’s likely inclusion in the Trans-Pacific Partnership free-trade bloc, which would see the country enjoy zero tariffs in apparel exports to the US.

Vietnam’s membership in the trade group would allow Namtex to sell apparel in the US without paying the North American country’s 5 to 10 percent tariff on cotton imports, or its approximately 30 percent tax on synthetic fibers, Makalot said.

Vietnam is Makalot’s second-largest production base, hosting 30 percent of the company’s capacity and trailing only Indonesia, where the apparel supplier has based 33 percent of its production.

Makalot said it also expects subsidiary Ecolot Textile Co (聚益), which trades and purchases fabrics for its parent company, to register 40 percent growth in revenue this year to US$25 million, compared with US$18 million last year.

Makalot’s shares dropped 0.64 percent in local trading yesterday to close at NT$155, underperforming the TAIEX, which went up 0.95 percent.

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