Case Studies » Clothing Retailer
Circumstance:
A large scale clothing retailer places orders weeks and sometimes months in advance due to lead times and shipping cycles from its suppliers in China. Before working with MTFX, the client never managed their foreign exchange exposure and was always at the mercy of adverse market fluctuations. For years they had an entry in their financial statements for "loss against currency exchange" – adversely affecting their bottom line.
Solution:
MTFX worked with the client to develop effective hedging strategies including the use of forward contracts and market orders. Forward contracts allowed the client to “lock in” foreign currency rates today for settlement in the future, protecting their profit margins from adverse currency fluctuations. Market orders allowed the client to capture the best possible exchange rates by taking advantage of favorable market trends.
Outcome:
Since working with MTFX the client can now cost their product with certainty, protect their profit margins and as a result have been able to better improve their overall cost structure, working capital, and budget plans. Their financial statements no longer have an entry of “loss against currency exchange”.