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Avery, Shenzhou in JV to Accelerate Heat Transfer Innovation

Zacks Equity Research

Avery Dennison Retail Branding and Information Solutions (:RBIS), a unit of Avery Dennison Corporation (AVY) has entered into a joint venture (:JV) with Ningbo Shenzhou Knitting Co., Ltd. (Shenzhou). The JV will assist leading global apparel brands by offering heat transfer embellishment innovations.

This partnership will join the collective expertise of RBIS and Shenzhou and provide customers with decorative transfers, printed and woven labels, graphic tags and tickets and sustainable packaging.

Avery Dennison RBIS is a global leader in the apparel industry branding, labeling, packaging, embellishments and RFID solutions. Its heat transfer innovation provide imagery and text fused to fabric for permanent messaging and appeal. These embellishments being touch-soft will ensure consumer comfort and help them to feel relaxed with tag-free labeling. The JV will help in accelerating RBIS’ heat transfer embellishment innovation capabilities across the market.

On the other hand, Shenzhou, the largest vertically integrated knitwear manufacturer in China, will offer increased design flexibility and comfort to consumers without compromising garment utility with this JV.

The JV will be located at the Shenzhou manufacturing campus and serve as Shenzhou’s preferred supplier for garment embellishments and labels. It is also expected to help in boosting the consumer’s intent to purchase.

This JV will help both the companies as the overall apparel industry imporves in the long term. As per the Ministry of Industry and Information Technology (:MIIT), China’s textile industry will maintain steady growth in 2014 driven by a solid growth in domestic consumption and external demand. Also the health and profitability of the U.S. textile and apparel industries continue to improve over the coming years.
 
Avery reported 4% year-over-year increase in its second quarter 2014 revenues to $1.62 billion. However, RBIS segment’s sales declined due to decreased demand from U.S. based retailers and brands.

Notwithstanding the challenging end market condition, RBIS continued to make good progress in executing key productivity initiatives by taking forward steps toward long-term urban target.

Pasadena, CA-based Avery Dennison manufactures pressure-sensitive materials and tickets, tags, labels and other converted products. The company has over 200 manufacturing and distribution facilities in more than 60 countries.

Currently, Avery has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the sector include ACCO Brands Corporation (ACCO), AO Smith Corp. (AOS) and ARC Document Solutions, Inc. (ARC). All these stocks carry a Zacks Rank #2 (Buy).

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