NEWS WRAP: Goodbaby grows up on strong sales for Cybex brand

The children’s products maker said its revenue rose 11.8% in the first nine months of this year

By A. Au

Children’s products maker Goodbaby International Holdings Ltd. (1086.HK) reported on Friday its revenue rose 11.8% year-on-year to HK$6.49 billion ($832 million) in the first three quarters of this year. Revenue from its Cybex brand of children’s car seats, furniture, and baby strollers led the growth, rising 21.2% to HK$3.31 billion, accounting for more than half of the company’s total in the period.

Goodbaby said along with strong demand for Cybex products, a wind-down of the negative impact from customer destocking further drove its revenue growth in the third quarter of the year. That allowed Cybex’s key products to gain additional market share and Goodbaby to continue strengthening its leadership position in the global children’s products industry, the company said.

While Cybex did well, that positive momentum was partially offset by a 22.3% decline in revenue from the company’s gb brand to HK$696 million during the nine-month period, as that brand downsized as part of an overhaul in its key China market. Revenue for the company’s other core brand, Evenflo, rose 7.4% to HK$1.78 billion.

The latest results marked an improvement from the first half of this year, when Goodbaby’s overall revenue rose just 7.7% to HK$4.19 billion, while revenue from Cybex brand products grew 18.9% to HK$2.16 billion. That suggests that Cybex sales growth accelerated in the third quarter, leading the company’s overall revenue to expand significantly for the latest nine-month reporting period.

China’s retail industry is experiencing fallout from a “consumption downgrade” due to a weakening economy and resulting reduced spending by consumers. However, a series of official measures aimed at encouraging births could benefit Goodbaby and other makers of children’s products if China’s falling fertility rate bottoms out and begins to rise.

In its latest report, Goodbaby said that rising ocean freight costs and longer cargo transportation times due to regional geopolitical conflicts, coupled with continued container shortages, have continued to hamstring its exports. Nevertheless, its management remains confident in its vertically integrated brand-driven strategy and expects its revenue trends to remain positive throughout the year.

Founded in 1989 in Kunshan in East China’s Jiangsu province, Goodbaby listed on the Hong Kong Stock Exchange in 2010, and went on to acquire the Evenflo brand from the U.S. and Cybex from Germany to expand its global footprint. It now has nine R&D centers in Asia, North America and Europe, with operations in 11 countries.

Following the news, Goodbaby’s shares rose 4% in early Monday trade in Hong Kong, and are now up about 16% year-to-date.

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