Hela Clothing moves to 6 day work week amid increase in demand
Hela Apparel Holdings, a leading apparel manufacturer, has announced a strategic shift to a six-day work week across all its manufacturing facilities in Sri Lanka from July onwards. This decision comes in response to a significant uptick in demand for its private label manufacturing division (PLMD), as outlined in their Q1 FY 2024/25 earnings report and recent investor presentation.
The company’s move to increase capacity utilization aligns with its efforts to optimize operations and enhance profitability amidst a challenging yet opportunistic market landscape. Hela reported that its PLMD’s revenue for Q1 FY 2024/25 was LKR 14.8 billion, reflecting a year-over-year decline of 12.8%. However, this dip is partially attributed to seasonal factors and an appreciation of the Sri Lankan Rupee against the US dollar, which impacted the financial results.
Despite the revenue drop, Hela’s underlying performance metrics have shown resilience. The PLMD has demonstrated a strong recovery trend, with a notable improvement in gross margin, which rose by 390 basis points to 10%, the highest level recorded since the FY 2022/23 financial year. This improvement is attributed to a high capacity utilization rate of approximately 95% for PLMD, supported by increased demand and a more efficient alignment of the company’s production capabilities.
In a statement, the company explained that transitioning to a six-day work week would allow it to better manage overhead costs while expanding its production capacity to meet growing demand. “This shift is a strategic move to flexibly boost our capacity in response to the significant increase in orders and to optimize our cost structure,” said Hela Corporate Affairs & Investor Relations Manager Adam Collins. Collins was speaking on August 21 at the Hela Clothing Investor Relations webinar following the release of Q1 results. (DP)
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