Stylecraft back to profitability after 18 months

• The company sees profit after 18 months of consecutive losses
• YoY revenue growth in FY23 Q1: 396%
• In 2019, Japan-based Uniqlo, which accounted for 60% of all orders, severed ties with Stylecraft
• At one point workers started to protest, demanding unpaid wages and Stylecraft was forced to close its factory
• Five months later, in December last year, the factories reopened 
• As per an agreement, the workers are being paid 20% of their arrears with their regular salary

Stylecraft Limited, an RMG manufacturer that has been incurring losses for the past 18 months, has finally bounced back to profitability.

From July to September, the first quarter of FY2023, its year-on-year revenue grew by 396% to Tk34.52 crore with a net profit of Tk8.48 lakh. It had incurred consecutive losses in the previous 18 months.

The company also declared a 2% cash dividend for the shareholders for the fiscal year 2021-22 despite losses incurred in that fiscal year. However, its sponsors and directors will not get the dividend. In the previous fiscal year 2020-21, it could not pay dividends to its shareholders.

In 2019, the company's major buyer, Japan-based Uniqlo, which accounted for 60% of its total orders, suddenly severed its business ties with Stylecraft. The global demand for clothing was low and then the Covid-pandemic struck, pushing the company into losses.

Meanwhile, workers protested, demanding unpaid wages. At one stage, Stylecraft was forced to close its Gazipur factory.

Later, the management and workers came to an agreement and the factory was reopened in December last year. According to the agreement, the workers are being paid 20% of their arrears every month in addition to their regular salary.

Stylecraft's Head of Operation Iqbal Faruk Milky told The Business Standard, "We started production with 9 lines out of our 42-line capacity. Currently 27 lines are in production."

He also said at the moment, they are producing 7 lakh pieces of clothing every month and of the total 60% are direct orders while the rest are sub-contracts.

Now the company is producing garments for Europe, America, India, Japan, South Korea, and the Middle East.

"Besides we are in discussion with buyers from South Africa, South America and Australia to expand the market," he said.

Stylecraft going for new recruitments

Stylecraft reopened the factory in December 2021 with about 1,000 workers, and currently 4,000 workers are working. The company is hiring more as they are looking forward to achieving full-scale production.

Md Mamun, who joined the company as a Supervisor, said, "The company has a reputation. They went through a rough phase but the work environment at present is very good."

SM Shakil, who has been with the company since 2011 as Senior Executive, said, "The company was always regular in paying salary. Since the company reopened, we are getting regular salaries plus 20% arrears each month."  

He added that currently, they are working 2 hours overtime in addition to the regular eight hours.

Laily, who has been working in the company for 19 years, is a supervisor now.

She said, "When the factory closed, I went to my village in Jashore. In November last year, I was informed that the factory would open. So I joined again in December."

Another supervisor, Mosharraf Hossain joined another factory during Stylecraft's shutdown phase. He later rejoined when Stylecraft reopened.

He said, "I have worked in this company for 12 years. I came back because I love working here."

Six years before Stylecraft closed the factory in mid-July of last year, it witnessed the highest annual turnover of Tk400 crore since its inception in 1983.

On condition of anonymity, a senior officer of the company told TBS that the company obtained loans from Agrani Bank as working capital to resume full-fledged manufacturing.

"It was very difficult to run a garment factory after a five-month closure. However, the board of the company has managed the crisis and reopened the factory," he said.

The rise and fall of Stylecraft

Prominent businessman Shamsur Rahman founded Stylecraft in 1983. To ensure good governance, he got the company listed on the stock exchange that same year.

He then employed his two sons in the company's production and marketing departments for them to learn the ropes of the business and take it forward.

Of the two children, Sharif Almas Rahman has been with the company since 1987 and Shams Almas Rahman since 2002. Later, the duo were promoted as directors of Stylecraft – Shams Almas in 2010 and Sharif Almas in 2017.

Shamsur Rahman served the company as its managing director till his death on 31 January 2016.

During this time, he had built a medium-sized factory at Gazipur. The business was going well. The year before his death, the company had had its best year in terms of profits. In the year, the company sold products worth Tk400 crore.

Shamsur Rahman's death was followed by his son Shams Alam becoming the company's managing director. In one of his first big moves, Shams increased the production of Stylecraft and made other investments.

Despite all initiatives to grow the business further, in the 2019-2020 fiscal year, the company's revenue fell to Tk200 crore, which was chalked off as a repercussion of Covid-19.

Company officials said that was the consequence of Uniqlo's business discontinuation. The downward trend, however, continued into the 2020-21 fiscal year. That year, its revenue fell 39% to Tk125 crore. And the company failed to pay dividends to its shareholders for the first time.