Eclat Textile Co (儒鴻) yesterday said its operating performance was stable in the first three quarters of this year, but forecast a “very challenging” fourth quarter, citing the potential impacts of inflation in the US during the holiday season.
The garment and fabric supplier has a six-month order visibility and has secured 80 percent of forecast orders, but the remaining 20 percent would depend on holiday sales in the US this quarter, Eclat chairman Richard Wang (王樹文) said on the sidelines of the Taipei Innovative Textile Application Show.
The fourth quarter would be “challenging” mainly because of reports in the US last week showing prices had risen sharply, he said.
Photo: CNA
“The price of food and beverages has almost doubled, which is terrible,” cable TV station USTV quoted Wang as saying.
Rising inflationary pressures could reduce consumer purchasing power, and force them to postpone spending on nonessential items, he said.
If holiday sales fall short of expectations, it could affect the company’s first-quarter orders, he added.
Photo: Ritchie B. Tongo, EPA
“Under inflationary pressure, people might postpone purchases of cars and homes, but they still need to wear clothes,” meaning that overall demand for clothing would remain rigid, but not necessarily for high-priced brands, Wang said.
Such a scenario would affect sales momentum in retail channels and also impact the orders of downstream firms, he added.
The company’s order backlog remains at a reasonable level, but the challenge lies in whether it can ship the goods smoothly this quarter, he said.
Eclat, which counts global brands such as Nike Inc, Gap Inc, Target Corp, Lululemon Athletica Inc and Under Armour Inc among its top customers, last week reported that revenue for last month fell 3.25 percent from August to NT$3.24 billion (US$105.33 million).
However, it increased 1.59 percent from a year earlier, marking a record high for September.
Third-quarter revenue was NT$9.63 billion, down 0.87 percent from the previous quarter and 3.97 percent from a year earlier, the company said.
Cumulative revenue for the first three quarters totaled NT$28.73 billion, up 5.39 percent year-on-year, it said.
So far this year, the company’s monthly revenue has been more than NT$3 billion except for February, when it was NT$2.63 billion.
“This year has been a good year for Eclat, especially given the difficult macro environment,” Wang was quoted as saying. “The impact of tariffs on the company is limited.”
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