High inventory levels across the industry coupled with softer global footwear demand negatively impacted Q1 results at Yue Yuen. Ebit fell by 32.2 percent to $65.9 million from $97.1 million for the period ended March 31. Net profit attributed to the company declined by 42.6 percent to $50.8 million from $88.6 million.
Total Q1 revenues dipped by 12 percent to $2.11 billion from $2.39 billion due to weakness in its manufacturing segment, which only suffered a 30-basis-point decline in gross margin to 16.8 percent as cost reductions, efficiency improvements, and flexible production scheduling helped offset some of lower capacity utilization during the period.
Within the manufacturing segment, sales of athletic/outdoor shoes declined by 14.3 percent to $1,015.6 million; revenues from casual shoes & sports sandals decreased 31.0 percent to $144.1 million; soles, components & others fell by 30.8 percent to $95.3 million; and Pou Sheng sales dipped by 1.2 percent to $852.4 million.
The volume of shoes shipped in Q1 fell by 24.0 percent to 53.9 million pairs, but the average selling price per pair rose by 9.6 percent to $21.53 due to “relatively resilient demand” for the group’s high-end footwear.
While Yue Yuen remains optimistic about the long-term prospects for its footwear manufacturing business, it said the near-term outlook is clouded by current macroeconomic headwinds and the industry’s high inventory levels. The group intends to continue focusing on cost controls and cash flow management and remains committed to a mid- to long-term strategy of diversifying its manufacturing capacity in places such as Indonesia and India.
See a visual of Yue Yuen’s shoe manufacture volume by region from its 2022 Annual Results in our data visuals archive.
