Minimum Wage hike in Vietnam Children’s place net sales up 0.6% to $373.6 mn in Q2 2017
The forthcoming spikes in the region-based minimum wages are expected to improve workers’ incomes but production costs in labour-intensive industries will certainly pick up. The Ministry of Labour, has proposed a wage increase of 6.5%, or VND 180,000-230,000 a month, which would go into force early next year. This is also what the National Wage Council, and representatives of employers and employees have agreed upon after three rounds of negotiations. The current inflation rate of 4-4.5% is taken into account to guarantee a real wage rise for workers and labor productivity growth of 2-2.5% in a bid to meet 92-96% of their minimum living needs, according to the ministry. Given the 6.5% rise, production costs might move up 0.55-0.6% but the increase could be 1.15-1.2% in labour-intensive industries like textile-garment and leather-footwear. In addition, the Government has proposed the National Assembly Standing Committee lower the rate of the unemployment insurance fund for employees by 0.5%. According to Vietnam Textile and Apparel Association the 6.5% pay raise would make life more difficult for companies in the sector. They would be compelled to cut production costs, improve productivity, and invest in new technologies to use less labour.
The Children’s Place Inc, the largest pureplay children’s specialty apparel retailer in North America, has announced that its net sales increased 0.6 per cent to $373.6 million in the second quarter of 2017. Its comparable retail sales increased 3.1 per cent in Q2 2017, and gross profit was $128.4 million, compared to $123.9 million in Q2 of 2016.
This $0.87 increase in adjusted net income per diluted share includes a $0.68 benefit resulting from the new accounting rules for the income tax impact on share-based compensation.