Eagle Nice (International) Holdings Ltd. (Group), a Hong Kong-based apparel manufacturing partner for Nike, The North Face, Puma, Lululemon, Columbia, and Converse, released its annual report for the fiscal year ended March 31, 2026, indicating that growth for the first half of the year, which was said to be “driven by its deep cultivation in outdoor functional sportswear.” The results for the second half of the fiscal year were reportedly affected by the combined impact of tariff uncertainty and the low season for the industry, but the Group said it showcased “outstanding resilience with the benefit of flexible allocation among its regionally diversified manufacturing facilities.”

“As a result of the unanticipated trade barriers, the Group adopted a balanced cost-sharing plan, whereby short-term pressure on profit was transformed into a strategic opportunity for mutual growth with the brands,” the company said in its report released on June 11.

The Group said it continued to deepen its strategy of regional diversification, in a bid to enhance the efficiency of capital deployment and achieve strategic optimization of its asset structure.

Eagle Nice has established five production bases in overseas regions in Indonesia and Vietnam and has reportedly been “enhancing their efficiency by upscaling process automation.”

“This has not only strengthened the Group’s capabilities in vertical integration but has also enabled the Group to address geopolitical risks in a more effective manner, thereby cementing the Group’s position as a preferred partner for leading international brands in sportswear,” the company said. It was an interesting note in the report after a year when brands talked about the diversification of manufacturing locales in response to the Trump Tariffs. This was seen by SGB Executive as another example of how the manufacturers themselves were taken on that aspect of their relationship with brands to ensure lower pricing and steady margins during a difficult period by building new or acquiring established factory locations.

“Over the past year, global geopolitical tensions have been volatile and unpredictable, with trade barriers interwoven, and the macro-economic environment has encountered major headwinds,” Eagle Nice wrote. “Against the dual challenge of fluctuating consumer confidence and increasing market caution, industry competition has escalated from a mere inventory race to a comprehensive test of supply-chain resilience and operational efficiency.”

The Group said it successfully met the demands of high-market global brands during the year by leveraging the capacity freed up through optimization in Chinese Mainland and adopting a forward-looking development model. With brands like Nike, The North Face, Lululemon, and Columbia in the mix, the ability to not only shift production but to also ensure meeting technical specs and maintain innovation standards was seen as critical to the Group’s business model.

“To match the exacting standards in process techniques and quality required for high-end products, the Group enhanced investment in the procurement of production equipment and recruitment of specialized technical personnel,” The company highlighted in its report. ”While increased investment has resulted in pressure on financial performance in the short term, the higher gross profit margin and stronger customer loyalty of the high-end businesses, compared to traditional operations, make the long-term growth benefits clearly visible. This represents a necessary strategic investment for the Group to navigate the industry cycle and build core competitive advantages, laying a solid foundation for its long-term profitability.”

The report said that while seeking flexibility in the allocation of production capacities, the Group also committed to the reshaping of production processes through intelligent manufacturing.

“During the year, the first ‘Intelligent Factory’ built at the Jingmen production base in Hubei (pictured below) officially commenced operations,” the Group said. “Through automated systems, the production line was equipped with the ability for instant response and precise decision-making. While fixed costs for the short term have risen as a result of initial capacity ramp-up at the commissioning of the new intelligent plant and re-allocation of manufacturing orders, the Group considers this a necessary strategic investment for optimising its global presence and enhancing its competitiveness for the long term.”

Fiscal Year Summary
Eagle Nice reported “record-high” total sales of HK$5.02 billion for 2026 ended March 31, increasing 4.4 percent from HK$4.81 billion in fiscal 2025. The increase was attributed to new production bases in Long An Province, Vietnam, which were acquired in the previous year, attained “operational sophistication” and the Phase I new plant in Bandung, Indonesia, commenced production in the fourth quarter of 2025.

Still, the company said growth in sales did not contribute to profit growth for the Group, as its operating cost rose substantially under the combined impact of the U.S. tariff policy, the significant appreciation of the Chinese RMB during the year, as well as the Group’s increased investment in the development of new customers and the high-end consumer market to cope with the economic downturn.

Eagle Nice Holdings Ltd. reports in the Hong Kong dollar (HK$) currency.

Top 3 Customers

Segment Summary
The Group reports through operating segments, based on the locations of customers (the destinations of sales), including the Chinese Mainland, the U.S., Europe, South Korea, Japan, and Others. These segments are said to be managed separately as each segment is subject to risks and returns that are different from one another.

Management said it monitors the results of the Group’s operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit, which is a measure of adjusted profit before tax. The adjusted profit before tax is measured consistently with the Group’s profit before tax, except that interest income and other unallocated income and gains, and unallocated expenses are excluded from such measurement.

The Chinese Mainland, the U.S. and Europe remained the three major markets for the Group’s sales, accounting for 85.3 percent of its sales, up from 84.6 percent in fiscal 2025.

For the year, sales to the Chinese Mainland market accounted for 50.9 percent of the Group’s total sales in fiscal 2026, down slightly on a share basis from 51.4 percent in fiscal 2025, while the U.S. and European markets together accounted for 34.5 percent of the Group’s total sales for the year, compared to 33.2 percent in fiscal 2025.

To support its business development, the Group has established ten production bases, including five in the Chinese Mainland, three in Vietnam and two in Indonesia.

“The Group’s production bases in the Chinese Mainland have attained sophistication in terms of production technology and labour skills with the capability of producing high-end products and providing sufficient and stable capacity to meet the requirements for domestic sales,” the company wrote in its report, while also clearly defining the tariff dust-up between the U.S. and China as a trade war.

“The ongoing China-U.S. trade war in recent years has compelled the Group to engage in active expansion of its overseas production capacity, which enables the Group to flexibly utilise its regional production capacity and allocate purchase orders to cope with the rapidly changing political and economic landscape.”

The new production bases in Long An Province, Vietnam, which were acquired in the previous year, reportedly contributed to the Group’s sales growth, while the Group’s overseas production capacity has been further increased with the commencement of production at the Phase I new plant in Bandung, Indonesia, in the fourth quarter of 2025.

To mitigate the adverse effect arising from an unstable consumer market brought about by the global economic slowdown, the company said management has in recent years intensified its efforts to actively develop new customers. At the same time, they stressed that management is well aware that high-end products not only enhance the Group’s strengths in the intensely competitive sportswear manufacturing market, but also improve its profit margin.

The Group said it has, in recent years, committed to increasing its sales of high-end products by investing additional resources in the high-end consumer market, which “commands higher thresholds, to lay a solid foundation for the Group’s future development,” while still acknowledging that the rise in operating costs is inevitable for the Group at the initial stage of investment and development.

The company wrote, “Moreover, the China-U.S. trade war escalated as the U.S. government introduced tariffs in the first quarter of the year against certain Southeast Asian countries where the Group’s production bases are located, leaving an adverse impact on the Group’s supply chain and production chain between the Chinese Mainland and the Southeast Asian production bases that resulted in a further increase in production costs. Cost pressure imposed by the aforesaid U.S. tariff policy, coupled with changing consumer demands and intensive competition in the sportswear manufacturing sector, compelled brand customers to adopt a more conservative and cautious approach in selling price negotiations with the Group, which directly resulted in a decline in gross profit margin.”

Profitability & Expenses
Aggravated by the ongoing appreciation of Chinese RMB during the year, the Group reported rising raw material procurement costs and production costs for its production bases in the Chinese Mainland.

As a result, gross profit decreased 9.9 percent to HK$696.1 million in fiscal 2026, compared to HK$772.7 million in fiscal 2025. Gross profit margin decreased 202 basis points from 16.1 percent of sales in fiscal 2026 to 13.9 percent in fiscal 2025.

The Group’s profit before tax decreased 21.6 percent to HK$253.8 million in fiscal 2026, compared to HK$323.8 million in fiscal 2025, and its profit before tax margin decreased 160 basis points from 6.7 percent of sales in fiscal 2025 to 5.1 percent in fiscal 2026.

The Group’s selling and distribution expenses for the year did not increase in line with the increase in sales but decreased 38.9 percent year-over-year to HK$24.3 million. This was said to be primarily due to one of the Group’s major customers taking the responsibility of arrangement and payment of export logistics matters during the year, which had previously been borne by the Group, in order to make the handling of logistics matters more efficient and cost-effective.

Profit attributable to owners of the company amounted to HK$173.6 million for the year, representing a decrease of HK$43.6 million, or 20.1 percent, compared to HK$217.2 million for the prior year.

Net profit margin attributable to owners of the company decreased 100 basis points. from 4.5 percent of sales in fiscal 2025 to 3.5 percent in fiscal 2026.

Basic earnings per share attributable to owners of the company for the year amounted to HK30.2 cents compared to HK38.5 cents for the prior year.

Dividend Proposal
The company’s Board of Directors proposed a final dividend of HK2 cents (2025: HK4 cents) per share. Together with the interim dividend of HK24 cents (2025: HK22 cents) per share paid during the year, total dividend for the year amounted to HK26 cents per ordinary share, compared with HK26 cents for last year. The dividend payout ratio for the year was 86.0 percent (2025: 68.7 percent).

Outlook
Looking to the future, the Group said it will consolidate the dual foundations of production and business operations.

“On the back of its flexible and dexterous strategy of capacity allocation across different countries, the Group will actively expand into promising emerging sportswear brands with solid potential whilst deepening its strategic collaboration with the leading brands, with a view to imparting new driving force for business growth,” the company wrote.

The Group also said it will remain committed to the “people-oriented” philosophy and devote its effort to achieving shared prosperity with society. While delivering value to shareholders, the Group will join forces with all sectors to build a caring and sustainable future.

Employees
At year-end, the Group employed a total of approximately 18,400 employees, including the Directors (2025: approximately 18,800). Total employee benefit expenses for the year under review, including emoluments of the Directors and the company’s CEO, were HK$1.30 billion in fiscal 2026, compared to HK$1.23 billion in fiscal 2025.

Images courtesy Eagle Nice Holdings, Ltd.