Makalot Industrial Co (聚陽), a supplier for global fashion brands such as Zara, said yesterday that it expects revenue next quarter to show low double-digit growth from last year, despite the declining price of cotton.
Due to declining cotton prices, the company’s average selling price next year should remain the same as this year, but its revenue next quarter would still increase from the previous year on the back of rising sales volume, a company official, who declined to be named, said by telephone.
The official said Makalot’s revenue this quarter would also post low double-digit growth from NT$4.32 billion (US$138.62 million) a year ago.
From January through last month, Makalot posted revenue of NT$19.26 billion, up 15.87 percent from NT$16.62 billion the previous year, according to a company filing with the Taiwan Stock Exchange.
The company’s pretax profit of NT$90.82 million for last month was 55.67 percent lower than the previous month’s NT$204.88 million.
The official attributed the decline to the impact of a traditionally slow month, with shipments of winter apparel almost completed, but those for spring apparel not started yet.
Also, Makalot’s customers do not want to increase their inventory levels at the end of the year, the official added.
However, pretax profit last month was 13.8 percent higher than NT$79.83 million for the same month last year.
Overall, cumulative pretax profit from January through last month totaled NT$1.9 billion, up 25.9 percent from NT$1.51 billion a year ago, the company’s data showed.
SinoPac Securities Investment Service Corp (永豐投顧) on Wednesday forecast that Makalot’s revenue would rise 12.2 percent next year to NT$23.32 billion from an estimated NT$20.79 billion for this year on the back of rising orders, with net profit of NT$2.07 billion next year, compared with NT$1.72 billion predicted for this year.
The growth will come from Makalot entering the supply chain of Gap Inc’s Banana Republic in the second half of this year, which would allow orders from Gap to rise 15 to 20 percent next year from this year following an annual increase of 70 percent this year from last year, SinoPac Securities said.
Sales to Gap are forecast to account for 21 to 22 percent of Makalot’s revenue this year and next year, up from 14.5 percent last year, according to SinoPac Securities.
Meanwhile, orders from US-based Target Corp, the Taiwanese apparel maker’s second-largest client last year, are expected to grow by between 5 and 10 percent next year from this year on the back of better market sentiment for retailers in the US, SinoPac Securities said.
Sales to Target would account for 21 percent of Makalot’s revenue this year, down slightly from 23 percent last year, it said.
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