The disruption of the supply chain and the geopolitical situation in China have seriously started to affect Yue Yuen in both of its business segments. Its latest financial update for the month of October showed a year-on-year sales decrease of 21 percent, including drops of 18 percent in manufacturing and 24 percent at its retail and distribution operations. A few days earlier, the world’s largest shoe producer reported a 3.2 percent increase in revenues from footwear manufacturing for the first nine months of 2021 on roughly flat deliveries of 179.0 million pairs. Revenues in this segment went up to $3,300.5 million because of an increase in the average price of 3.1 percent to $18.43 per pair, thanks to an improved sales mix.
The factory lockdowns in Vietnam during the third quarter effectively countered the ongoing recovery experienced during the first half, which had seen footwear volumes increase by 5.0 percent to 136.4 million, with the average price going up by 6.5 percent to $18.37.
In the first nine months of the year, revenues from athletic and outdoor shoes went up by 1.9 percent to $2,766 million, while causal shoes and sport sandals grew by 11.0 percent to $534.1 million. Revenues from soles, components and other items rose by 31.4 percent to $355.5 million.
Meanwhile, Yue Yuen’s distribution and retail subsidiary, Pou Sheng, saw revenues rise by 6.3 percent to $2,785.2 million, but its sales in the local currency declined by 1.7 percent. Besides sporadic, local Covid-related lockdowns in China, Yue Yuen said that its sales suffered from the “market dynamics” that were a headwind against western brands such as Nike, Adidas, Skechers, Puma and Converse.
Gross margins improved by 1.8 percentage points to 15.3 percent in the manufacturing segment and by 5.8 points to 35.9 percent in the retail segment.
The group’s total revenues in dollars increased by 5.8 percent to $6,441.2 million during the nine-month period. Yue Yuen booked a net profit attributable to shareholders of $99.6 million against a loss of $154.0 million in the same period a year ago. Excluding extraordinary charges related to Covid-19 and other items, the company ended up with net income of $68.4 million against a loss of $141.9 million.
