Hela Clothing records $ 2.2 m PAT for Q2
Cotton prices and freight costs are increasing very quickly amongst other unprecedented challenges in the apparel industry, but it is doing better than ever.
The price rise in these products can be attributed to the growing demand for apparel as countries recover from the COVID-19 pandemic due to rapid vaccinations, especially in the developed and developing countries, Dilanka Jinadasa, Group CEO Hela Clothing Pvt Ltd told the Business Times recently.
A lot of growth in Hela Clothing during the past year came from existing customers, he said adding that international brands are selling at their full price as demand is more than supply. The vaccinations, financial stimulus given by governments during the last few quarters etc. have seen citizens in the West shoring up on their savings. “The pent-up demand during these times is now unleashed,” he added.
The industry has noted changing spending patterns in their consumers. “Most are working from home. In this scenario, we noticed some behavioural spending patterns in our customers. Loungewear, innerwear etc. are more in demand as opposed to formalwear,” Mr. Jinadasa added.
He said the global US$ 3 trillion industry is doing very well and not too negatively impacted by the pandemic owing to these multiple reasons.
Hela Clothing, planning an Rs.4 billion ($20 million) public listing this year, has seen penetration with new customers growing during the past 20 months as are their markets.
Mr. Jinadasa noted the entire pandemic situation was navigated by the company without a single casualty, a remarkable feat for any company across industries in these unprecedented times. He said there was a rapid vaccination drive not only in Sri Lanka but in their global units. Now 91 per cent of the employees are fully vaccinated in Sri Lanka. All deferred salaries were paid by the company and COVID-19 relief bonuses were paid to all employees, Mr. Jinadasa added.
“We told the staff that if anyone becomes positive with the virus we will send them to a private medical facility. We sent food rations to houses where employees had contracted the virus. We ensured all employees were vaccinated in Africa.” In their African operation, the company had to foot the bill for 8000 staff to get vaccinated.
“Despite the costs, we wanted to give the staff the confidence to work in a safe environment and we found that these people feel very loyal.”
Despite all these overhead costs the company was still able to hit the numbers fetching a revenue growth of $74.6 million for the second quarter. “On a quarter-to-quarter basis, it is the highest revenue recorded in the company’s history,” Mr. Jinadasa said. The company posted a gross profit of $11.1 million in the same quarter which is a 43.9 per cent year-on-year growth. Although the company had to incur additional costs related to the pandemic and logistic challenges the profit after tax upturned to $ 2.2 million in the second quarter showing a 58.2 per cent year-on-year growth.