Hatful of headaches for Mainland Headwear
Mainland Headwear Holdings' profit and turnover fell sharply in the first half, struck by its loss of the US Major League Baseball (MLB) brand licence, strike action by US hockey players and Sino-US textiles trade disputes.
The Hong Kong-listed headwear maker posted a 12.4 per cent drop in turnover to $233.74 million, while net profit dropped 17.4 per cent to $35.96 million.
Founding chairman Ngan Hei-keung said: '2005 has been full of struggle for the company.
'The fall in turnover was mainly attributable to the loss of the MLB licence, the NHL (National Hockey League) strike for the past season and a delay in orders from major retail customers in the US.'
During the last hockey season, strike action by NHL players disrupted orders, but orders should resume later this year, said deputy chairman Pauline Ngan Po-ling.
The NHL strike and the loss of the MLB licence this year caused turnover in the company's trading business to drop 25 per cent to $99.7 million, resulting in a loss of $4.39 million.
For the first half, large US retailers such as Wal-Mart and Target delayed orders due to uncertainty arising from Sino-US textile disputes.
There are now US quotas on 10 Chinese textiles items. Although hats were not affected by quotas, the accompanying apparel was, resulting in orders being delayed.
The company's fledgling retail sales of Hello Kitty toys and hats in China, which accounted for 3.7 per cent of revenue, posted a loss of $4.71 million in the first half.
Its core business of hat manufacturing contributed a profit of $49.57 million on a turnover of $172.38 million during the period.
Last month, Mainland Headwear won the exclusive rights to produce and distribute T-shirts, clothing and hats bearing the NYC (New York City) and NYPD (New York Police Department) brands, among others. The rights last four years, starting next year, and may be renewed for another three years.
Mrs Ngan said contribution from these items should make up for other losses.