Apparel sales to fall, says Top Form boss

PUBLISHED : Tuesday, 24 February, 2009, 12:00am
UPDATED : Tuesday, 24 February, 2009, 12:00am

Global demand for apparel was expected to shrink as much as 30 per cent this year due to the financial crisis, said Willie Fung Wai-yiu, the chairman of listed brassiere-maker Top Form International.

'Customers are delaying purchases or cutting back on production needs for 2009,' Mr Fung said after announcing the company's earnings yesterday. 'At this stage, we still haven't seen any indication when the current crisis will be over or when we can walk out of the long tunnel.'

As for Top Form, the world's largest contract manufacturer of brassieres, he forecast a drop of 10 per cent in revenue for the six months to June. The United States and Europe, where consumer spending has fallen, account for 88 per cent of the company's sales.

'Our customers are still placing orders, but will defer timing of the orders till the last minute. That makes it difficult for manufacturing companies because they can't plan and must rush operations,' Mr Fung said.

For the fiscal first half to June last year, Top Form's revenue rose 5.47 per cent to HK$719.87 million, but it suffered a net loss of HK$10.47 million compared with a net profit of HK$36.13 million a year earlier.

The net loss was from provisions of HK$21.95 million for exiting the brand business. The loss in this segment rose to HK$27.14 million.

Mr Fung said that in light of these challenges, the company had decided to close the brand business to conserve resources.

To save costs, Top Form would allow less efficient plants to shrink by natural attrition, but add staff to more efficient factories, he said.

Top Form has two factories in Guangdong province, one in Jiangxi province and a plant in Guangxi Zhuang Autonomous Region.