Lupo Buys Knitwear in Ceará to Anchor Production
Lupo, waiting for a market window to become public, bought a factory in Maracanaú, Ceará – an acquisition that will allow the century-old sock and underwear brand to move some of its production vertically, cutting costs and increasing margins. The factory – which is owned by Cotece – has the capacity to weave 600 tonnes of nets per month.
To date, Lupo has sourced knitwear from several different vendors to make her own underwear, sleepwear, and t-shirts. With the acquisition, you would expect to produce in-house all the network needed to operate it.
This would reduce the cost of production, which could result in an increase in the company’s margin or a decrease in the price for consumers, and in an increase in the volume of sales.
“We also intend to add more technology to knitting by using, for example, special yarns,” CEO Liliana Ofiero told Brazil Journal. According to her, the Maracanaú factory was operating well below its maximum capacity because the previous owner was more dedicated to his real estate business.
“We buy the machines and all the infrastructure is ready,” she said. “If we were to build a new factory like this from scratch, it would take a long time.” Lupo has three other factories: one in his hometown of Araraquara, São Paulo, and the other two in the northeast, in Itapuna, Bahia, and Bacatoba, Ceará, near the one acquired today.
Lupo earned 1.1 billion reais in the first nine months of last year, up 22.4 percent from a year earlier. EBITDA for the period was R$230 million and net income was R$172 million, with a margin of 15.5%. In late 2021, Lupo attempted an IPO to fund its growth while focusing on acquiring new brands – but ended up giving up when the market closed.
According to Liliana, the company is still interested in going public and has prepared everything for it. “We’re on standby, on call, waiting for the market to open,” she said. Lupo’s legal counsel was Demarest Advogados. Pinheiro Neto Cotis attended. There were no financial advisers.
