Utenos Trikotažas to concentrate investments on its most profitable activities

2022-01-28    |
Utenos Trikotažas to concentrate investments on its most profitable activities

As it continues its transformation, Utenos Trikotažas will concentrate its future investments on its core business – contract manufacturing and development of innovative materials. This strategic direction, which generates the highest revenues and profitability, has been approved by the company’s board. In addition, as part of operational refinement, investments in Utenos Trikotažas’ own brands, which generate a smaller share of revenue, will be significantly reduced or further development will be carried out by attracting investors.

Investments in a promising growth segment

“The move is timely and natural. For more than two decades, the majority of the company’s revenues have been generated from fabrics and knitwear products for global brands. This activity area generates the highest added value and requires continuous investment in the latest sustainable material technologies and production process innovation. The global demand for exclusive and sustainable textiles continues to grow, and this is our greatest strength. Therefore, by directing even more efforts and resources into further development of environmentally friendly innovations, we aim to strengthen our position in global markets and ensure long-term profitable growth of the company,”

says Petras Jašinskas, head of Utenos Trikotažas.

High-value-added production for global brands accounts for about 84% of Utenos Trikotažas revenues. The company has more than 50 foreign customers and its main export markets are Germany, Austria, Switzerland and the Scandinavian countries. According to Mr Jašinskas, being close to its customers – brand developers in Europe – allows the company to offer its partners quick customised solutions, shorten their supply chain, and become a reliable partner meeting the highest customer service standards. As a result, the number of such higher value-added orders continues to grow for Utenos Trikotažas. In the first nine months of 2021, Utenos Trikotažas’ sales of custom-made knitted products increased by 15% to EUR 16.4 million compared to the same period in 2020. However, during the same period, sales of the UTENOS and ABOUT brands owned by Utenos Trikotažas decreased by almost one fifth and amounted to EUR 3.3 million.

Demand for the production of global brands remains strong and the maximum utilisation of the production capacity of Utenos Trikotažas is expected this year.

ABOUT  Investors are being sought, the role of the UTENOS brand will change fundamentally

As part of brand reorganisation, the development of the sustainable and exclusive fashion brand ABOUT was launched last year by Aboutwear, a newly established company separate from Utenos Trikotažas. It is now actively seeking investors to develop the brand. The ABOUT brand already has strong international partners, from Le Bon Marché (France) to the highly popular shopping platforms Zalando and Bootz.com. According to Aboutwear CEO Giedrė Vilkė, innovative and sustainable materials made from food waste, coffee grounds or even banana leaves, which also have antibacterial, anti-allergic or even antioxidant properties and contribute to skin regeneration, are the hallmarks of the brand, giving it a competitive edge and a distinctive edge on a crowded market.

“ABOUT’s future prospects and possible rate of expansion will depend on the outcome of the search for new investors. We believe that this brand has everything to be one of the fastest-growing in the category in the near future. Investments are needed to develop the D2C platform further, to localise the countries and to increase the stock levels so that we can serve the needs of wholesale orders very quickly,”

says Aboutwear CEO Giedrė Vilkė.

With the growth of on-demand production, the contribution of the UTENOS own brand to the overall sales structure will change substantially. The separate department currently dedicated to the development of the UTENOS brand will become an integrated part of the organisation, while the brand itself, in line with the sustainable Zero Waste ideology, will be dedicated to clothing collections made from quality and sustainable materials that are not used in production. Statistics show that up to 30% of textiles inevitably go unused at various stages of garment production. These quantities are too small for mass production, but are suitable for the small customised batches that will be at the heart of the redesigned UTENOS brand. The reduction in volumes of UTENOS branded products following the redesign will lead to a review of the marketing channels. The e-shop will continue, but there will be a reduction in physical stores during the year. To what extent and in what timeframe will become clear in the first quarter of this year, following discussions with partners, which have already started.