Coats’ apparel & footwear business hit by slower demand as zips go out of fashion
Coats, the London-based industrial thread company, has said its apparel & footwear business experienced flat growth last year due to currency headwinds, a slower demand for zips and a 15% decline in Latin America Crafts business.
Revenue at the company’s apparel & footwear business remained flat at $1.8m in the year ended 31 December 2018, but grew by 2% at constant currency, according to Coats’ unaudited full-year results released on Friday.
The industrial threads giant said its core thread business had strong growth in key Asian markets but that the headline figure was altered by the addition of the Latin American Craft business, which was previously reported within the Crafts division.
The apparel & footwear business, which includes the sale of high quality, polyester corespun thread for the manufacture of jeans, shirts, lingerie, swimsuits and blouses, makes up for 75% of the group’s revenues. Coats also sells zips and trimms.
In 2018, the firm opened its first global innovation hub in North Carolina, US which is expected to provide opportunities to collaborate with customers and brands to create innovative new products. Two further hubs are planned to open in Turkey and China in the first half of 2019.
Despite the flat growth of the apparel division, total revenues grew by 4% to $1.4m last year thanks to strong growth in the performance materials division (up 20% to $0.33m). Total revenues were up 6% at constant currency.
Adjusted operating grew 21% to $195m and adjusted operating margin improved by 200 basis points to 13.8%. Following the strong performance, the company announced a full-year dividend per share of 1.66 cents, which represents a 15% increase on the previous year.
“Coats delivered a strong performance in 2018. Our Apparel and Footwear business delivered continued market share gains by providing ongoing high service levels, and we saw increased momentum in our Performance Materials business. In an environment of rising input costs, we were able to grow our operating margins, through realising price increases, delivering productivity and procurement gains, as well as keeping tight control of our cost base and delivering significant savings from our Connecting for Growth programme in its first year,” commented Rajiv Sharma, group CEO.
The company said it is entering 2019 in a “strong position”, and that it will continue to explore further acquisitions after buying cloud-based software solution Threadsol and investing in Twine Solutions last year.
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