(Filed Under wholesale Sleepwear News). In a stark reversal, iFabric Corp. sales plunged 33% in its fiscal third quarter while earnings sank from a profit of Can$269,154 (Canadian dollars) (about $207,000 at current conversion rates) last year, to a loss of Can$171,701 (about $132,000) in the three months ended June 30, 2018.
The two main sources of revenue for the Toronto-based public company are its Coconut Grove intimate apparel segment and its Intelligent Fabric division. A portion of the decline in sales, from Can$4,888,400 (about $3.8 million) to Can$3,291,659 (about $2.5 million), was due to “the phase-out of our sleepwear offerings which will result in a short term drop in apparel revenue,” according to CEO Hylton Karon. A decline at the fabric division was “caused by a major customer moving a substantial amount of its production from one of its major mill’s in Asia to an alternate set of mills in Asia,” the company stated.
Earlier this year iFabric said it had decided to discontinue using, by the end of 2018, the Maidenform license it had be signed for sleepwear in 2015. Karon noted at the time, “the sleepwear market is becoming increasingly crowded with new major manufacturers entering this market. This will inevitably lead to ever increasing pressure on sleepwear margins, which makes this an unattractive market for us in the future. We have had a good run on sleepwear to date, with excellent profitability and we will now be redeploying these resources to other areas of our business.” The company continues to use the Maidenform name on other intimate apparel products, which include adhesive bras and bra accessories.
Three months ago Karon admitted that the loss of sleepwear will hurt overall sales, but claimed, “We are particularly excited about new innovative products that we have recently designed in our core bra and accessories business.” He added, “We have and will be registering a number of patents in this regard. Whilst sleepwear was a significant contributor to our sales in the last few years, initial response to our new products has been exceptional and I am confident that the revenue from these offerings will exceed lost sleepwear sales over time, and at better margins.”
In discussing the most recent quarter, the CEO said he is particularly excited about “a new body solution product,” claiming, “in my opinion, this is one of our most exciting new products and will take us from servicing a limited niche market to having mass market appeal and opportunities.”
Discussing the fabric division, Karon stated its “business has shifted focus from being a pure chemical supplier, to providing customers with finished product performance apparel and other textile products that integrate combinations of our textile technologies. The main benefit to selling finished product is the increase in the unit sale by being able to sell the finished product at a significant premium over making purely a chemical sale. The first programs for a major Canadian retailer saw its preliminary shipments commence at the end of the current quarter, and will continue for the next year as these are 12 month replenishment programs. Based on the excellent retail sell-through to date, we expect further programs to be added in the future. We are also negotiating with a number of major US retailers to provide similar programs for the U.S. market.”
iFabric said it believed that certain orders from a major customer had not been lost, noting that the change of mills by this customer merely “resulted in a delay in shipping chemicals due to the time required to train and certify the new mills in the integration of the company’s products into their production. Accordingly, chemical deliveries that were scheduled for this customer in Q2 and Q3 2018 are now anticipated to take place in Q4 2018. A written commitment to purchase these chemicals has been received from the customer.”
The company detailed the quarterly declines at its two divisions: “revenue decreased by 25% or Can$879,077 in its Intimate Apparel Division and revenue decreased by 53% or Can$728,915 in its Intelligent Fabrics Division.” — NM
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