Mainland Headwear, a Hong Kong-based manufacturer and retailer of headwear, said favorable market consolidation of the manufacruting sector, growth in orders and the revival of the retail market in mainland China helped boost sales 19.3% during the first fiscal half ended June 30, 2010 to HK$292.9mm (US$37.7 mm) the operates under the Lids name in China and holds headwear licenses for FIFA, reported a surge in gross margins of 23.5% from the year-ago period to 29.7%. Management said the group has “strived to produce high value-added headwear, streamline organizational structure and adopt stringent cost control during the period.”
By business segment, the company said improving market conditions led to a 20% improvement in orders for the company’s manufacturing business. The company’s manufacturing business generated HK$238.2 mn (US$30.6 mm) and accounted for 78.9% of the company’s revenues. Gross margins for the manufacturing segment increased seven percentage points to just over 23%.
For the Retail business, “continued strong consumer sentiment” in China led to 9.7% surge to HK$49.3 mm. The company also cut operating losses by more than 50%.
The company’s Sanrio business, which includes the Hello Kitty line of merchandise, among others, was up 12.4% to HK$38.4 mm (US$4.9 mm) due to cost cutting and “optimizing its brand image to attract more franchisees in second- and third-tier cities.” Lids recorded sales of HK$10.5 mm (US$1.4 mm,) comparable to it’s year-ago numbers. Operating loss for LIDS narrowed to HK$1.4 mm (US$182,000) from HK$2.1 mm (US$265,000) a year ago.
For the Trading business, sales increased 41.6% to HK$14.3 mm (US$1.8 mm) with an operating loss of HK$1.4 mm (US$184,000) The Trading business recorded an operating profit of KH$41,000 (US$5,000 last year.
