Ever-Glory Q2 income rises 31.4%

Chinese apparel company Ever-Glory International Group posted second quarter net income up 31.4% year-over-year to US$1.3m, thanks to strong growth in Europe and Asia.
The company said that total net sales increased 70.7% to $24.1m, primarily resulting from overall increases in Europe, Japan and China, where sales grew 80%, 103% and 118%, respectively.

Sales to the US increased by 18% as the company adjusted its customer structure there and moved away from lower-cost products. Sales from the company's new branded retail division, launched in early 2008, accounted for 1% of net sales during the quarter.
"We achieved solid top line growth during the second quarter, particularly in our European and Asian markets," said Edward Yihua Kang, chairman and chief executive officer of Ever-Glory. "We also improved efficiencies and product mix and increased value-added service offerings, which helped to improve our gross margin substantially, despite the continued appreciation of the Chinese renminbi and rising labour costs."

Its 18.1% increase in gross margin was attributed to better control of manufacturing overhead, improved production efficiency and higher margins from customers in Japan, the US and China.
Total sales for the first six months of the year were $43.8m, up 43.6% from the same period the prior year, while net income for the first six months was $2.5m, compared to net income of $2.3m in the same period a year ago, Ever-Glory said.

For the 2008 fiscal year, the company continues to expect revenues of $90 to $100m and net income of $8.0m to $8.6m.

"We have made great progress in our branded and retail expansion strategy in China during the first half of 2008, and we look forward to furthering that success in the second half of the year," Kang added. "We have already opened 44 La Go Go retail stores this year, and we are on track to achieve our goal of between 80 and 100 La Go Go stores in China in 2008. We remain optimistic about La Go Go's prospects, and we believe our retail business could account for 4% to 5% of total revenues for the full fiscal year."
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