Profit attributable to owners of the Chinese group Yue Yuen increased by 97 percent to $100.0 million from $50.8 million for the period ended March 31. Ebit rose by 82 percent to $145.1 million from $79.7 million despite a 4.9 percent decline in total revenues to $2.0 billion from $2.1 billion. Gross profit jumped by 150 basis points to 25.1 percent and was 350 basis points higher in the manufacturing segment at 20.3 percent.
Due to changes in its product mix, the company realized a 9.2 percent drop in average selling price (ASP) for footwear to $19.55 a pair despite a 9.1 percent increase in Q1 pairs shipped to 58.8 million. Yue Yuen attributed that development to a gradual recovery trend and a more normalized order book. By segment, Q1 athletic and outdoor shoe sales were down by 1.9 percent year-over-year to $996.2 million, but up by 6.4 percent in casual shoes/sport sandal sales to $153.3 million. Soles, components, and other sales rose by 9.5 percent to $104.4 million.
Pou Sheng, the group’s retail subsidiary in China, suffered a 12 percent drop in quarterly sales to $749.7 million but proceeded with its digital transformation strategy amid a mixed operating environment in the country. In a statement, Yue Yuen said it remains optimistic about the long-term prospects for its footwear manufacturing business and the outlook for a gradual recovery trend, however, it cautioned that the global shoe business is likely to “remain unsettled” in the near term. Additionally, the group confirmed that it’s committed to a long-term capacity allocation strategy, which includes diversifying its manufacturing capacity in countries such as Indonesia and India where labor supply and infrastructure can support sustainable growth.
