Kwong Lung Enterprise Co (光隆實業) yesterday forecast its revenue in the first quarter of next year would improve from the same period last year, driven by its fast-growing clothing business.
Known as a manufacturer and supplier of down materials, the 50-year-old company has diversified its product portfolio in the past few years into manufacturing garments for clothing brands.
“Clothing products have higher gross margins than down and home textiles,” company chairman Hebert Chan (詹賀博) told an investors’ conference in Taipei yesterday, adding that the sector is seen as a catalyst for the company’s profits.
Its clothing business has contributed nearly 42 percent of the firm’s total revenue this year, compared with 26 percent in 2013, company data showed.
The company expects sales from its clothing business to reach more than 50 percent of its total revenue in 2018.
Asked about Kwong Lung’s plans for its clothing arm, Chan said the company has formed a strategic alliance with Taiwan FamilyMart Co (全家便利商店), the nation’s second-largest convenience store chain, to expand its customer base.
The strategy reduces the risks of launching direct sales stores and helps the company reach more customers quickly, Chan said.
Last week, Kwong Lung launched a collection of down vests at FamilyMart’s 3,000 outlets across the nation under the convenience store’s brand, which Chan said should generate sales of NT$100 million (US$3.14 million) this year.
The company plans to launch another line of functional clothing in the first quarter of next year, Chan added.
Kwong Lung also has plans to expand the capacity of its clothing business in an effort to meet rising demand from both domestic and overseas customers, Chan said, adding that the company is to add five production lines to its plant in Vietnam.
Kwong Lung currently uses 130 production lines at its five factories in Vietnam for its clothing business, with a production value of nearly US$150 million.
In the first three quarters of this year, the company saw its net profit plunge 26.6 percent year-on-year to NT$304.8 million, with revenue sliding 4.2 percent annually to NT$6.63 billion, company data showed.
The company attributed the declines to falling average selling prices for down material and the appreciation of the yen.
Gross margin during the same period increased from 15.44 percent to 15.74 percent on a yearly basis, due to the company’s product mix adjustments, Kwong Lung said.
Kwong Lung shares advanced 1.33 percent to NT$45.7 in Taipei trading yesterday, ahead of the company’s conference.
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