Sales of all Lakeland branded product lines up in Q3

12 Dec '11

4 min read

"A more challenging endeavor has been our nitrile glove manufacturing operation in India. As nitrile gloves have increasingly become a commodity item, with resulting intense price competition and low margins, we have determined that making them ourselves is not a strategic use of our resources. Nitrile gloves will continue to be an integral part of our product line, but we will source them for essentially the same cost from a private label manufacturer who has much greater scale than we could achieve.

"Meanwhile, by taking this action, we eliminate what had been a significant operating loss, and after sale of the facility, can redeploy the capital to operations that afford better opportunities for product differentiation and higher margins.

"Therefore, we have reclassified the business as a discontinued operation and, among the more likely options, intend to sell the business or close it by the end of FY12. Furthermore, we recorded a pre-tax loss on disposal of $880,694 for write-downs and other expenses relating to the ultimate elimination of this business. However, we will continue to maintain and grow a sales and marketing presence for our full range of products in India, where we see significant long-term upside as India's economy continues to develop at a rapid pace, sourcing products from our global manufacturing facilities.

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