Makalot Industrial Co (聚陽), a supplier for global fashion brands such as Zara, said yesterday that it expects its profit would grow more than 25 percent in the second half of this year on the back of rising sales for its functional apparel lines, which have a higher gross margin.
In addition to thermal and cooling underwear, Makalot started supplying yoga outfits to its clients this year, chairman Frank Chou (周理平) told reporters at the company’s annual general meeting yesterday.
“Fashionable clothes with a bit of functionality are the mainstream products on the market, and some global brands, such as Gap and Old Navy, have started providing yoga outfits to customers — despite not being as dedicated as Lululemon Athletica Inc in terms of the product,” Chou said. “After all, not everyone needs expensive, professional sportswear.”
Chou said as a supplier for these brands, Makalot can enter the fast-growing market segment with its existing clients.
From January through last month, the company posted profit growth of 25.5 percent from NT$704.76 million a year ago to NT$884.29 million (US$29.49 million), while revenue grew 16.62 percent to NT$8.08 billion from NT$6.93 billion over the same period, company data showed.
For this year, Chou said Makalot would maintain its target to report revenue growth between 15 and 20 percent from NT$17.91 billion last year, with sales of functional garments likely to increase between 20 and 30 percent annually, alongside a 10 percent increase for other garments, he added.
To achieve its revenue growth target, the company plans to expand its manufacturing capacity in Indonesia, Cambodia and northern Vietnam, where production costs are the lowest, Chou said.
In addition, Makalot is to issue 20 million new shares by the end of this year to raise funds for the capacity expansion, the firm said.
By the end of this year, its production capacity in Vietnam is likely to account for 30 percent of its total capacity, with 24 percent in Cambodia and 33 percent in Indonesia, it added.
Ecolot Textile Co (聚益), Makalot’s fully owned subsidiary that trades and purchases fabrics, is expected to report revenue of NT$800 million this year, up 40.35 percent from NT$570 million last year, as it started doing businesses directly with global brands such as Micheal Kors, Abercrombie & Fitch and Gap, Chou said.
“Global brands used to allow apparel makers to choose fabrics they need on their own, but there is a growing trend for global brands to pay more attention to fabric providers and require garment makers to cooperate with them,” Chou said, adding that with Ecolot, the company can provide integrated service to its clients.