Profit attributable to Yue Yuen shareholders fell by 49 percent to $137.7 million from $270.1 million for the nine months ended Sept. 30, as sales declined by 14.1 percent to $5.99 billion from $6.97 billion. Manufacturing revenues declined by 20.9 percent year-over-year to $3.79 billion. Ebit sunk by 38 percent to $218.0 million from $353.4 million as gross margin dipped by 30 basis points to 23.5 percent from 23.8 percent. Gross margin in the manufacturing business remained relatively stable at 18.0 percent versus 18.2 percent due to cost cuts, efficiency improvements, and flexible production scheduling.
The group reported that global demand for footwear remained subdued for Yue Yuen, especially given the macroeconomic environment. However, cost reductions and efficiency improvements helped the company offset the effects of operating deleverage. While material costs increased by 1.52 percent year-over-year, labor overhead expenses fell by 1.7 percent, and SG&A costs dipped by 1.6 percent. The number of Yue Yuen employees contracted by 15.2 percent year-over-year to 265,900, including a 17.6 percent drop in the number of workers at its Pou Sheng retail arm with 22,400 employees and a total of 243,500 manufacturing employees.
Total pairage declined 24.5 percent over the nine months to 160.9 million pairs. But Yue Yuen’s average selling price per pair rose 5.3 percent year-over-year to $21.71, helped by “relatively resilient demand” for high-end footwear styles.
The company, which makes footwear for more than a dozen brands, including Adidas, New Balance, and Nike, suffered double-digit declines in all segments over the period, except for Pou Sheng, which realized 0.7 percent year-over-year growth to $2.19 billion as the retail business moved forward with its digital transformation. Athletic and outdoor shoe sales declined by 19.2 percent to $3.03 billion. Sales of casual footwear and sport sandals slid by 27.3 percent to $464.4 million, and sales of soles and other components declined by 26.2 percent to $298.3 million.
Regionally, Yue Yuen’s nine-month sales fell nearly 24 percent in Europe to $1.03 billion and declined by 34.3 percent in the US to an implied $1.36 billion. Meanwhile, sales in Mainland China edged 3.3 percent lower to $810.0 million.
