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Avery Dennison Sees Strong Momentum in RFID
The company's CEO says its RBIS division is significantly expanding existing programs with seven major retailers across multiple market segments.
Oct 30, 2013—
Avery Dennison expects its RFID-related revenue to grow by 20 percent this year, thanks to new business that it captured from European retailers. The company's executives provided a comprehensive update regarding its radio frequency identification initiatives at its third-quarter earnings conference call, held on Friday, Oct. 25. During the call, Dean A. Scarborough, Avery Dennison's chairman, president and CEO, noted that while RFID revenue is slated to grow by 20 percent for the full year, compared with that of 2012, it increased by only 6 percent during the third quarter of 2013, relative to Q3 2012. This, he explained, was due to an extremely large sale to a North American retailer in Q3 2012 that was not repeated in 2013.
"I'm very pleased with the gains we're seeing in RFID," Scarborough said. "We're targeting continued strong growth for this $100 million part of the business over the next few years. The value proposition here is all about inventory management. Retailers are seeing good ROIs from their RFID implementations, and we remain the leading provider in the apparel space, by combining the best-performing products with an in-depth understanding of the use case—that is, understanding exactly how our customers can maximize the return on investment in equipment and consumable products. We're currently working on new rollouts for significant expansions of existing programs with seven major retailers across multiple market segments."Retail Branding and Information Solutions (RBIS), Avery Dennison's division that provides RFID tags and services, experienced "some slowdown in the rate of orders for certain segments in the U.S.-based retailers, especially. I would characterize the department store segment and the mass-merchandising segment as being softer than we expected. But we still had good performance in fast fashion, as well as the performance athletic segments of the market. So for me, that was still relatively good news. We performed very well in Europe, actually, across most segments, and a number of RFID programs kicked in a little stronger than we had thought."
When asked what the full-year growth for 2013 would have been had Avery Dennison stripped out the impact of that major customer from 2012's revenue, Scarborough said the company's RFID revenue for 2013 would show an 80 percent increase over that of 2012.
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