Quang Viet to scale back its capacity expansion in Vietnam and Romania
Quang Viet Enterprise Co, which owns the Romanian down jacket producer Biancospino in Breaza, reports its gross margin should increase year-on-year, but it is scaling back on its plans to expand capacity in Vietnam and Romania.
Quang Viet Enterprise Co, which makes down jackets and garments for sportswear and outdoor brands including Adidas AG, Patagonia, North Face and others, yesterday said that revenue might drop 5 – 10% annually this year as some customers trimmed orders in response to the COVID-19 pandemic. That would mark its first revenue decline since 2016.
Quang Viet posted revenue of US$ 537.45 million last year, up 22% from 2018. Down jackets made up 40% of it revenue last year.
North Face Inc and Patagonia Inc are this year likely to reduce orders by 20 – 30% from a year earlier, Quang Viet president Charles Wu told a teleconference. Orders from Nike Inc have not been affected by the pandemic, he said.
Adidas and Patagonia contribute to nearly 50% of the revenues
Outdoor clothing brand Patagonia is Quang Viet’s second-biggest client after Adidas, contributing 23% to the company’s total revenue last year. Adidas contributed 26% to the company’s total sales last year, Quang Viet data showed.
Adidas, Under Armour to increase orders this year
Adidas would continue to show strong momentum this year by placing 20% more orders than last year, Wu said. Under Armour Inc would also increase orders by 50% this year from last year as the sportswear brand is tapping into the down jacket segment, Quang Viet said.
However, to cope with slackening customer demand, Quang Viet plans to scale back its capacity expansion in Vietnam and Romania, Wu said.
The company now plans to build 14 new production lines this year, rather than the 50 lines it had planned in December last year, he said. Quang Viet plans to speed up its expansion of capacity next year by adding 28 new production lines mainly in Vietnam to support customer demand, according to a company press release.
Credit foto: Quang Viet