Merino & Co, a Perth-based lifestyle clothing and accessories company, has defied broader concerns about a weak consumer environment to make a solid debut on the ASX this week with the company’s shares sitting on a 32.5 per cent premium at the end of their second day’s trading yesterday afternoon.

The company, which issued 3https://www.businessnewsaustralia.com/1.77 million shares at 20c each in its IPO to raise $6.35 million, is capitalised at more than $https://www.businessnewsaustralia.com/13 million at yesterday’s close of 26.5c per share.

It’s a dream start for founders Fiona Yue and Tim Yang, a husband-and-wife team who were seasoned cashmere producers in Inner Mongolia before emigrating to Australia. The couple previously operated their own wool and cashmere garment manufacturing facility in China producing accessories for the global luxury apparel market.

Yue and Yang have built Merino & Co into one of the few merino apparel brands that manufactures in Australia.

The capital raising and ASX listing is aimed at driving growth in international markets, including an expansion of its Perth manufacturing facility through the addition of highly automated woven loom machines.

“Australia produces more than 80 per cent of the world’s merino wool, yet no one is making them into a premium product at a scale that Merino & Co does,” says Yue, the CEO of Merino & Co.

“As a country that is riding on the sheep’s back, we think it’s very important that we have a cultural icon on a global stage.

“Merino & Co is looking at expanding into the US, Europe and China markets. With people paying more and more attention to the environment that we are living in, they are making more sustainable choices.”

Yue points out that Merino & Co is in a position to provide “sustainable and longer-lasting fashion items”, noting that merino wool has “many defining qualities that can’t be replaced by any other fibre”.

“It’s biodegradable, it’s breathable and it’s good for your skin,” she says.

“As Australian customers have already benefitted from our offering, we are now looking at offering our premium products to the world.”

Established in 20https://www.businessnewsaustralia.com/13 as Aclink International, a wool clothing and accessories business that largely focused on the local market, the company rebranded as Merino & Co in 2020. The move followed Aclink’s purchase of NSW-based Australian Wool Network’s Merino & Co and MerinoSnug businesses.

Merino & Co is now one of the largest wool products manufacturers in Australia with retail, wholesale and e-commerce business channels.

The vertically integrated company is involved in the manufacture, marketing and sale of wool products through more than 600 points of sale in Australia.

Prior to its acquisition of Australian Wool Network’s assets in 2020, Merino & Co struck relatively early success through the sale of its products in local tourism markets, establishing a presence in most of the key tourism areas across Australia, including airports and duty-free shops.

The company has since started exporting and selling directly to international markets, including China, Japan and North America, where Merino & Co says high-quality wool products are in higher demand because of colder climates.

Merino & Co reported revenue of $5.5 million in FY24, down from $7.5 million a year earlier, leading to a net profit of $https://www.businessnewsaustralia.com/137,256 for the year. However, the company has not put forward financial forecasts for the current year in its prospectus.

While Merino & Co estimates the global merino apparel retail market is worth $730 million a year, up from $6https://www.businessnewsaustralia.com/10 million in 20https://www.businessnewsaustralia.com/18, the company forecasts it could reach $780 million in 2025

Australian-made merino apparel sales comprised a fraction of this figure at $https://www.businessnewsaustralia.com/12 million in 2023, although it’s forecast to increase to $https://www.businessnewsaustralia.com/15 million by 2025.

Among the key business priorities following the ASX listing is for Merino & Co to redevelop its website and e-commerce platform to make it more user friendly and drive more direct-to-consumer sales.

The company is also exploring new product development which it says is essential for the constant evolution of its offering.

“As a leading Australian merino wool manufacturer, we are committed to delivering only the finest home-grown merino wool,” says the company.

“Australia is the world’s primary exporter of merino wool, estimated to account for over 60 per cent of the global wool trade by value.”