Textile and garment manufacturer Eclat Textile Co (儒鴻) said it expects sales to pick up in the third quarter of this year, aided by orders from its five new brand customers.
“Eclat really had a difficult time over the past two years, but I think the worst is over,” company chairman Hung Chen-hai (洪鎮海) told a media gathering on Monday, citing major customers’ inventory digestion and cautious market sentiment last year in the global apparel industry.
E-SALES
In addition to new brand clients, Hung said that the company just won a large order from a US-based e-commerce platform operator, but declined to provide details.
The new customers, which mainly placed orders for high-margin functional and outdoor products, are expected to raise profitability and contribute revenue more significantly in the fourth quarter, he told the Taipei Times.
Computerized jacquard products and functional fabrics used for body-shaping apparel are seen as the company’s next sales drivers, Eclat said.
Eclat’s gross margin was 26.8 percent last quarter, up from 26.7 percent a year earlier, company data showed.
The increasing revenue contribution of higher-priced products is also anticipated to help average selling prices of garments increase by between 8 and 10 percent, the firm said.
PLANT POSSIBILITY
Eyeing growth momentum in high-end products, the company said it is considering construction of a new plant for digital textile printing in Taiwan or Vietnam this year, without elaborating.
Eclat’s sales increased 7.52 percent year-on-year to NT$1.99 billion (US$65.5 million) last month, ending four consecutive months of decline.
Yuanta Securities Investment Consulting Co (元大投顧) analyst Peggy Shih (施姵帆) said in a note last month that Eclat’s sales could achieve double-digit percentage growth in the second half of this year due to the recovery in the US apparel industry and higher revenue contribution from new clients.
Eclat counts several global brands — such as Nike Inc, Lululemon Athletica Inc and Under Armour Inc — among its top clients.
GROSS MARGINS
The firm’s gross margin is forecast to reach 28.9 percent this year, up from last year’s 28.4 percent on the back of increasing revenue contribution of jacquard products, Yuanta said.
Eclat held its annual general meeting in Miaoli County’s Houlong Township (後龍) yesterday, where shareholders approved a proposal to pay a cash dividend of NT$10.5 per share and 2 percent in stock dividends based on last year’s bottom line of NT$3.66 billion, or earnings per share of NT$13.67.
Last year, the company saw its net profit drop 12.3 percent from a year earlier, with sales decreasing 3.9 percent annually to NT$24.5 billion, according to the company’s filings with the Taiwan Stock Exchange.
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