Stella International continued to struggle in the fourth quarter, ending a difficult year for the Chinese footwear company. Shipment volumes for the last three months of 2020 were down by 21.7 percent from the year-ago quarter to 10.8 million pairs, while total revenues plunged by 18.9 percent to $280.1 million, including those of its in-house brands. The management noted, however, that this was the second consecutive quarter in which it saw the decline in shipment volumes narrow compared with the previous quarter, as the customers’ business began to recover, with some seeking to replenish their inventory levels after experiencing understocking ahead of the holiday season.

Quarterly revenues from manufacturing fell by 18.8 percent year-on-year to $275.9 million due to lower demand amid the pandemic. The average selling price inched up to $25.60 from $24.70, driven by changes in the product mix and customer mix.

For the year ended Dec. 31 2020, revenues decreased by 26.5 percent to $1,135.8 million, including a 27.0 percent drop in manufacturing revenues to $1,117.1 million. The company shipped 43.4 million pairs, 26.9 percent below the level of 59.4 million in 2019, with the average selling price inching down by 0.4 percent to $25.70.

Based on a preliminary estimate, the group expects to record a net profit within a range of $0 million to $5 million for the year, well below the net profit of $95.9 million recorded in the previous year. The causes for the expected decline are mainly the significant decrease in shipment volumes and higher one-off costs incurred from severance payments and impairment of property, plant and equipment in connection with the permanent closure of factories in Mainland China, as Stella accelerated its planned migration of production capacity to Southeast Asia.

Looking at 2021, the management said it is “cautiously optimistic” about order levels for the upcoming spring and summer 2021 seasons, although it still has low visibility for the second half of the year due to the recent new Covid-driven lockdowns in many countries around the world.

As of Dec. 31 2020, Stella’s financial position remained solid with sufficient cash on hand and total undrawn bank facilities of over $180 million. The group said it will continue to work with customers as they expand into new categories, particularly athleisure products. Margin growth will be a key priority.