RECOVERY in the United States market saw spectacles-maker Swank International Manufacturing's net profit jump to $60.06 million last year on turnover of $764.17 million. This compared to $40.87 million net profit in the previous fiscal year, covering 13 months because of a change of fiscal year-end, on turnover of $733.60 million. No annualised figures were provided. Earnings per share was 20.5 cents and shareholders will be given a final dividend of 4.5 cents with a scrip option, taking the total payout to 7.5 cents. Chairman Lam Yin-sang said the recovery of the US market for the company's wholesale and OEM (original equipment manufacturing) business bolstered earnings growth. Despite general sluggishness in Europe, he said the company was able to open many new accounts last year. Swank has recovered from the troubles in Europe and the US after suffering a plunge in net profit in 1991. During the period, the company also improved its operating profit margin to 8.5 per cent from six per cent a year ago. Mr Lam said the major theme of the company now was to vertically integrate its Chinese operations. Director Sam Tong said the US was still the company's biggest market, accounting for more than half of sales last year. China only accounted for a small percentage of sales, but the new emerging market in China was expected to contribute up to 20 per cent of profit this year, with an aggressive plan to beef up its retail presence. In China, Swank has already established six regional offices, and 93 retail counters for sunglasses have been set up at department stores to capture the mass market. Swank plans to have a total of 200 to 300 retail outlets selling sunglasses on the mainland by the end of this fiscal year. Mr Tong said Swank posted a more generous net profit margin of more than 20 per cent in China as a result of integrating its manufacturing and retail operations. Along with rising living standards, Mr Tong said Chinese consumers were demanding higher-quality sunglasses. For instance, its retail kiosk in the Dickson Department Store in Shenzhen selling expensive pairs at more than 1,000 yuan (about HK$885) sold a few pairs a day. Swank had also embarked on the optical chain-business in China by offering a range of optical services, from eye examinations, eye-care products to assisting customers in selecting optical frames, contact lens and sunglasses. It opened one shop in Shanghai last month, while another bigger store of 8,000 square feet will be opened in May. In Guangzhou, its optical store inside the Nan Feng Department Store will be opened by the end of this month and Swank plans to have more in various Chinese cities later this year. A new metal frames factory in Dongguan will be on stream in August in a bid to cope with the increasing demand in China. Last year, Swank undertook a series of measures to strengthen its capital structuring which would position the company for long-term growth, said Mr Lam. It raised $113 million in a share placement and another $60 million in an issue of convertible bonds. The measures were to improve the company's liquidity, working capital position and debt-equity ratio, he said.
