Stella International posted a net loss of $9.3 million for the first half of this year, against net income of $39.2 million in the year-ago period, on revenues that dropped by 32 percent to $511.5 million. The gross margin fell by 1.4 percentage points to 16.6 percent, due to cancelled or delayed orders, as well as the temporary shutdown of production at its factories in China, the Philippines and Bangladesh, owing to the coronavirus outbreak.

The Chinese shoemaker saw shipment volumes go down by 30.8 percent to 20.4 million pairs. The average selling price dropped by 2 percent to $24.70 per pair, which was mostly due to changes in the group’s product and customer mix.

Men’s footwear sales decreased by 22 percent to $230.3 million, while women’s footwear plunged by 39 percent to $266.3 million. Europe was the hardest hit region, with revenues tumbling by 45 percent to $124.6 million. North America recorded a 29 percent decline to $260.3, while in Asia, sales fell by 27 percent to $36.7 million and in China, they inched down by 8 percent to $78.2 million. Sales to other countries were down by 49 percent to $11.7 million.

Stella expects to see a recovery in the next months and will focus on increasing its operational efficiency and enhancing product mix in the second half, with a view to grow its customer base with sports and high-fashion brands. In addition, like the much bigger Yue Yuen group, it will keep transferring its production capacity to Southeast Asia from China, expanding its production footprint in lower-cost production areas, to enhance its long-term cost structure.

Another Chinese shoe manufacturer, Pegasus International, managed to report a profit for the first half although its revenues were down by 52 percent to just $1.4 million. The coronavirus epidemic exacerbated what was already a rapidly declining business, as orders from western clients all but dried out and travel restrictions hampered sales prospecting efforts.

The company posted a net loss of $2.5 million for the period, down from $9.0 million, and a revaluation of property led to a positive comprehensive net income of $1,387,000. Pegaus said it was confident of weathering the downturn thanks to net assets of $40 million on its balance sheet, including $10 million in cash.