Hong Kong-based Stella Intl. reported a 15 percent improvement in year-over-year operating profit to $152.0 million after changes in fair value of financial instruments. Annual Ebit rose by 21 percent to $161.3 million from $133.2 million and FY profit increased by 20 percent to $140.3 million. Stella’s annual revenues contracted by 8.5 percent to $1.49 billion from $1.63 billion as sales rose in Mainland China to $258 million but fell in all other geographies, including North America (-18.5% to $680.2 million), Europe (-5.5% to $372.1 million), Asia excluding China (-1.4% to $132.1 million), and Other countries (-9.0% to $50.3 million).
Aided by higher average selling prices (ASPs), productivity gains, and product enhancements in its sports/luxury/high-end fashion segment, the company expanded its gross margin by 300 basis points to 24.6 percent and operating profit margin by 240 basis points to 10.7 percent. Footwear ASPs increased by 4.2 percent last year to $29.70 a pair, partially offsetting a 12.5 percent decline in unit shipments to 49.0 million pairs from 56.0 million in 2022.
The company is expanding its manufacturing capacity to protect its cost basis, ramping up a new manufacturing facility in Solo, Indonesia, and working to complete a new production facility in Bangladesh. Stella intends to reallocate some sourcing orders from Vietnam to Indonesia to free up resources. Additionally, the group is scaling back its branded business. All retail stores and distribution centers have ceased operations in Europe, and there are plans to further rationalize its remaining China retail business over the next two years.
