Mainland Headwear Holdings Limited (Group), a Hong Kong-based headwear manufacturer for major brands including New Era, Dickies, and Oakley, reported a 69.9 percent profit increase for the six months ended June 30, driven by a 23.1 percent rise in sales. The company attributed this growth to the acceleration of orders ahead of U.S. tariffs.

Sales reached HK$845.6 million ($109 mm), up from HK$687.1 million a year ago. Earnings reached HK$59.9 million, up from HK$35.3 million. Profit from operations was HK$84.7 million, up 30.3 percent from HK$65.0 million. Gross margins eroded to 30.2 percent from 31.9 percent.

Mainland Headwear reports in Hong Kong dollar (HK$) currency.

Mainland Headwear said in its report, “In the first half of 2025, geopolitical tension persisted, economic growth in major markets remained sluggish, and the repeated adjustments to tariff policies by the United States further heightened uncertainties in the international trade environment. Faced with these challenges, the Group actively optimized its global production layout and timely seized market opportunities brought about by the tariff turmoil. The Bangladesh factory undertook vast orders transferred from regions affected by high tariffs, which significantly boosted the growth of the manufacturing business. Complemented by cost control measures, the Group further enhanced operational efficiency. Furthermore, the newly acquired Dutch company has been instrumental in expanding the Group’s global trading business. Although it recorded a loss during the period, its robust design capabilities, extensive experience, and established network in trading licensed products across Europe, the Middle East, and Africa region provide considerable advantages to the Group. By integrating the resources of other subsidiaries in the trading segment, it is expected to provide fresh impetus for the growth of the trading business. Overall, the Group has demonstrated outstanding operational resilience amid a complex environment. In the future, it will provide solid product support for the trading business based on its stable manufacturing business, while the trading business will promote market expansion of the manufacturing business through its global sales network. Both segments will complement each other and jointly drive Mainland Headwear towards brighter development prospects.”

Manufacturing Business
First-half sales from the Manufacturing Business segment climbed 20.6 percent during the Period to HK$537.7 million from HK$445.8 million a year ago. Segment operating profit increased 28.9 percent year-on-year to HK$120.2 million from HK$93.2 million.

Mainland Headwear said the results benefited from an increase in orders and the improvement in operational efficiencies.

Mainland Headwear said, “In the first half of 2025, successive revisions to US tariff policies severely impacted the global trade market. The cost of the cross-regional supply chain increased sharply, and the massive outflow of orders from high-tariff regions accelerated. The Group proactively overcame challenges with its strong adaptability. It negotiated with customers and suppliers to formulate response plans, and flexibly managed production from its factories in Bangladesh and Mexico to quickly complete order deliveries, which not only mitigated the risk of tariffs but also boosted the operating profit of the manufacturing business by over 30 percent. This fully affirmed the strategic value of a global production layout and efficient execution that the manufacturing business benefits from. During the Period, the Bangladesh factory performed particularly well, receiving a large number of orders transferred from high-tariff regions. At the same time, its production scale and profitability improved significantly through streamlining, improvement in production efficiency, and optimization of cost control measures. Regarding the Mexican factory, the operation has performed in a more stable manner through prior training and adjustments to production processes. It has also started producing high-end styles of headwear to enrich the product mix. The Shenzhen factory continues to focus on the design and development of headwear products and provides operational support for the Group. In addition, to alleviate geopolitical risks, the Group pushed forward the preparation work for headwear production at a leased facility in Cambodia during the Period.”

The Manufacturing Business segment manufactures headwear products for sale to its Trading Business and to external customers. The principal manufacturing facilities are in Bangladesh and Mexico.

Trading Business
Trading Business revenues reached HK$307.9 million, up 27.6 percent from HK$241.3 million. The segment reported a wider loss of HK$43.8 million, compared to a loss of HK$37.7 million in the same period last year.

Mainland Headwear said, “Throughout the period, global economic instability prompted consumers to cut back on non-essential spending, leading to a decline in demand for headwear and accessories. In response, retailers significantly reduced their purchases to manage inventory levels, intensifying market competition. Despite these challenges, the trading business has leveraged its brand portfolio advantage and rapid response to market changes to meet the needs of customers requiring quick orders, allowing for business stability as a whole.”

The Trading Business operates through H3 Sportgear LLC (H3), San Diego Hat Company (SDHC) and Aquarius Ltd. (AQ), which distribute to the U.S. market, and Drew Pearson International (Europe) Ltd. (DPI) and Difuzed B.V. (Difuzed), which focus on the Europe market.

Outlook
Mainland Headwear said, “Looking ahead, the international situation will remain complex and intertwined with geopolitical rivalry and a changing trading landscape. The Group will adapt to current trends and advance steadily within the framework of globalization, actively seizing opportunities while prudently managing risks, and striving to achieve sustainable growth amid change.

“With respect to the manufacturing business, the Group is further reinforcing the competitiveness of its global manufacturing network through precise deployment. Its production facility in Cambodia boasts an obvious geographical advantage, because it only takes three additional days to deliver products to the United States versus mainland China, enabling the Group to respond to customer orders swiftly. The Group is continuing preparatory work at the production line in Cambodia and expediting the training of workers to meet its planned production schedule. The production line is expected to commence operation in the third quarter of this year with a target annual production capacity of 10 million pieces. With an appropriate cost structure and ease of delivery, the Cambodia production line is expected to complement the Bangladesh factory, jointly optimizing the Group’s production network in Southeast Asia and enhancing the overall flexibility of the supply chain and resistance to risks.

“Subsequent to the completion of staff training and process adjustments, the Mexico factory has steadily improved its production efficiency. More importantly, the plant is close to the US market and can quickly respond to the needs of US customers. It is also entitled to zero tariff under the preferential US-Mexico-Canada Agreement (USMCA). In response to the growing number of orders from the North American market, the Group plans to expand its production capacity to consolidate its leading position in the North American supply chain.

“In regard to the trading business, the Group is advancing the planned duty-free zone project in the Mexican industrial park, leveraging the location and tariff advantages of the Mexican factory and aligning with the national directive to “develop cross-border e-commerce and optimize overseas warehouse network.” Warehouse construction will soon commence, with the strategic value of this project receiving strong market recognition. Many customers clearly expressed their intention to enter and cooperate. In the future, this project, coupled with the transformation of the Shenzhen factory into a cross-border e-commerce industrial park, is expected to fully harness the advantages of cross-border logistics and greatly enhance the operational efficiency of trading business.

“As for the Dutch company, it has an extensive portfolio of licensed brands. Since joining Mainland Headwear, it has not only helped the Group become one of the largest licensed product design and trading companies in the world but has also further expanded its trading business from Europe and the United States to emerging markets such as the Middle East and Africa, filling the gaps that the Group had not covered. Although the Group will incur integration costs associated with the Dutch company in the short term, the deep synergy among resources across regions will empower the Group to effectively tap into potential demand from different markets. This collaboration will drive steady growth in the trade business through global sales in the medium to long term.

“Separately, the Group will also continue to intensify efforts in risk control and cost optimization to ensure its healthy financial resilience in a complex environment.

“Over the past 39 years, Mainland Headwear has weathered various economic cycles and challenges in becoming a market leader in the headwear manufacturing industry. With its leading market position, global production layout, diversified product mix spanning headwear to accessories, and keen business acumen, the Group is confident in its ability to overcome various challenges, capitalize on business growth opportunities, and create long-term value for its customers and shareholders.”

Image courtesy Mainland Headwear/New Era