Mergers and acquisitions could once again be on the table for one growing Chinese apparel manufacturer.
Lever Style Limited, reported its 2023 earnings last week and outlined its strategy for what its executive chairman has, on multiple occasions, deemed a tumultuous apparel market.
The Hong Kong-based garment manufacturer, which supplies for brands like Ted Baker, Helly Hansen, Columbia, Spanx, Ministry of Supply, Stitchfix and more, reported its revenue had declined year over year by about 4 percent, from $217.2 million to $208.5 million. Despite the decrease in revenue, total profit increased by 7.6 percent from $14.5 million to $15.6 million.
But the forecast ahead could be stormy for Lever Style, with Szeto citing uncertain consumer demand.
“Our unique, asset-light production platform has enabled us to outperform the industry in recent years. However, soft global demand this year will make it difficult for us to organically replicate the outsized growth rates from 2021 and 2022,” he wrote in his chairman’s statement.
Szeto said that concern, along with a desire to expand further into the athletic apparel and outerwear markets, will dictate Lever Style’s interest in financial gain via mergers and acquisitions.
“With the industry continuing to face headwinds in 2024, we hope to derive more growth from business combinations in 2024 and 2025 than in 2022 and 2023. With a healthy net cash balance, we are in strong financial position to accelerate our acquisition strategy,” Szeto said.
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The Peter Manning instigator acquired Elegant Team Development for $4.8 million toward the end of 2023, its first acquisition in about two years after a series of five acquisitions in the years leading up to 2021. The company supplies retailers like Mammut and primarily manufactures outdoor apparel.
As it continues to refine its strategy, the company also announced that William Tan, its chief operating officer, will become CEO on April 1, replacing current CEO Eddie Chen.
Szeto called this part of the company’s “plan to attract and promote the next generation of leaders.”
Tan will be tasked with making progress toward the ultimate goal of “becoming the Uber of apparel supply chain.”
That in mind, Lever Style has begun to prioritize its digitalization and platformization efforts, completing the construction of a data warehouse that aggregates insights from its operations last year.
The platformization side of the business is still a work in progress, Szeto noted.
“To ‘platformize’ the business and make production portable amongst factories and countries, we are building out our centralized product development model that can issue clearly-defined work instructions to our production partners,” he said. “And to make production [costs] brand agnostic, we are working with our production partners to standardize the calculation of product [costs] based on labor content, order volume and other key factors.”
Szeto said the company will invest in both technology and personnel to further those efforts this year, but noted that it expects those additions will become cost neutral by 2025 because of the benefits they wil provide.