The globe’s largest footwear manufacturer recorded higher shipment volumes in H1, driven by increased orders from multiple brands, as average selling prices rebounded. However, Yue Yuen was again saddled with uneven production leveling and higher labor costs, which each negatively impacted short-term profitability in the group’s manufacturing segment.
H1 Ebit tumbled by 16.5 percent to $221.3 million from $265.2 million for the six months ended June 30. Net profit slid by 10.6 percent to $182.3 million from $204.0 million as gross margin contracted by 166 basis points to 22.62 percent. Total revenues inched up by 1.1 percent year-over-year to $4.06 billion from $4.02 billion, with manufacturing segment sales up 6.2 percent to nearly $2.8 billion and retail division sales through Pou Sheng down by 8.6 percent to $1.26 billion.
Yue Yuen: Value increases despite tariffs and market uncertainty
The value of footwear exports from major manufacturing hubs in Southeast Asia increased in H1, despite uncertainty over tariffs, inflation and ongoing regional conflicts. Footwear exports out of Vietnam rose by 10.1 percent to $11.9 billion for the six months, increased by 13.6 percent in Indonesia to $3.8 billion, and declined by 7.2 percent in Greater China to $21.7 billion, according to the respective countries’ customs departments. The group confirmed that it remains committed to its mid- to long-term capacity-allocation strategy, which includes an expansion of manufacturing capacity in Indonesia and India, where the labor supply and infrastructure can support sustainable growth.
Sales of YY’s largest footwear segment, athletic/outdoor shoes, rose by 4.9 percent in H1 to $2,176.2 million to account for 53.6 percent of all production. The casual shoes & sports sandals segment, meanwhile, had a 29.2 percent year-over-year gain to $434.6 million. Sales of soles, components & other items declined by 16.2 percent to $187.1 million.
H1 revenues from the group’s retail unit, Pou Sheng, were hindered by volatile footwear traffic in various regions of Greater China, combined with a substantial drop in the offline direct retail and sub-distributors channel. On June 30, Pou Sheng operated 3,408 retail stores in China, down by 40 doors from the year-ago period. In a separate development, Yue Yuen intends to complete the rollout of its SAP ERP system and singular One Common Platform (OCP) by the end of 2025.
