Bolstered by its manufacturing segment, Yue Yuen reported a 158 percent increase in annual operating income to $416.8 million in FY22 on a 5 percent revenue expansion to $8.97 billion from $8.53 billion. Net income grew by 106 percent to $293.2 million as the annual gross margin dropped slightly to 23.83 percent from 24.0 percent in FY21. But the globe’s largest maker of athletic, casual, and outdoor footwear is warning that many current headwinds, including soft global demand and high inventory levels, are making short-term demand for footwear “cloudy” and “the magnitude of order recovery uncertain.”
Despite the current climate, the group is promising to continue pursuing its long-term digital transformation strategy focused on digital lean management and integrating additional digitalization tools.
Yue Yuen’s FY22 manufacturing business saw its annual volume rise by 14.4 percent to 272.7 million pairs as the average selling price (ASP) per pair climbed by 12.0 percent to $20.93 on robust demand for the group’s high-end footwear and its efforts to alter its product mix through the acquisition of more high-value orders. The group, which produces footwear for a dozen athletic and outdoor brands, including Adidas, Salomon, Nike, and Merrell, made 46 percent in Indonesia, 38 percent in Vietnam, 10 percent in Mainland China, and 6 percent in other sourcing nations that included Bangladesh, Cambodia, and Myanmar. Except for Mainland China, all regions posted double-digit gains in sales last year, led by a 37.7 percent increase in Europe to $1.66 billion. Sales to the U.S. rose by 20.8 percent to $2.04 billion, gained 5.4 percent in Mainland China to $905.7 million, and increased by 25.7 percent in all other global regions to $1.59 billion.
Annual production by category shows 30 percent year-over-year growth for athletic/outdoor shoes to more than $4.89 billion, an 18.6 percent increase in casual shoes and sport sandals to $816.1 million, 7.1 percent year-over-year improvement in soles, components & other to $496.5 million, and a 23.5 percent annual decline in retail sales to $2.77 billion.
Results at Pou Sheng, the group’s retail subsidiary, were impacted by soft consumer demand and foot traffic in China that was accelerated by government-mandated closures related to the Covid-19 pandemic. In 2022, the retail group shuttered 1,124 stores to end the year with 4,093 directly operated retail outlets and 3,200 sub-distributors across Greater China. Pou Sheng, which promoted its acting CEO Wang Jun to permanent CEO on March 15, has experienced “recovery momentum” and improved in-store traffic and purchase intent in certain regions since the earlier Chinese New Year.
