Weak US consumption hurts Makalot, but yearly revenue set to rise: official

SURMOUNTABLE::Despite the obstacles posed by low consumption and key clients’ weaker-than-expected Q3, the firm’s revenue may grow by more than 10 percent

By Camaron Kao  /  Staff reporter

Thu, Dec 05, 2013 - Page 13

Makalot Industrial Co (聚陽), an apparel supplier for global fashion brands such as Gap, may miss its sales guidance of 11 million dozens of garments for this year because of weaker-than-expected consumption in the US.

Shipments this quarter are likely to fall in the range of 2.5 million to 2.6 million dozen, bringing the firm’s total shipments this year to between 10.58 million and 10.68 million dozen, said a Makalot official who declined to be named.

“Because of lower garment consumption in the US, some of our shipments have been delayed to the first quarter of next year,” he said by telephone yesterday.

Sales to the US are expected to account for about 80 percent of the company’s overall sales this year, Makalot said.

Despite the weak consumption, Makalot’s total revenue this year is still expected to increase more than 10 percent from the NT$15.87 billion (US$536.44 million) it posted last year, as sales to its US and Japanese clients saw annual growth, the official said.

Makalot’s revenue last month rose 18.7 percent year-on-year, but dropped 40.97 percent month-on-month to NT$1.13 billion, the company said yesterday in a filing with the Taiwan Stock Exchange.

From January through last month, its cumulative revenue increased 10.3 percent to NT$16.62 billion from NT$15.07 billion the previous year, the filing showed.

The firm expects to see a month-on-month increase in revenue next month as it is scheduled to deliver more spring season clothing.

Makalot aims to increase capacity by 1.2 million dozen garments a year in Vietnam, 600,000 dozen in Indonesia and 600,000 dozen in Cambodia, the official said, adding that it expects to sell a total of 13 million dozen garments next year.

Macquarie Capital Securities Ltd forecast the clothing maker’s revenue to hit NT$18.26 billion this year and NT$20.94 billion next year, according to a report it issued on Nov. 21. The figures are lower than its previous estimates of NT$18.67 billion and NT$21.9 billion for this year and next year respectively that it made on Aug. 13.

“We noticed that several of Makalot’s key clients, such as Kohl’s, Walmart and A&F, reported weaker-than-expected results [for the third quarter this year]. We also noticed that the inventory days of such key clients increased [by 6 percent annually last quarter] on average,” Macquarie analyst Corinne Jian (簡秋萍) said in the report.

Makalot shares dropped by 0.9 percent to NT$165.5 yesterday, underperforming the TAIEX, which rose 0.3 percent.