As Stella International adds roughly 20 million pairs of capacity across three new Asia factories, gross margin fell to 20.3% from 22.6%, largely because its largest Sports customer, widely reported to be Nike, shifted toward lower-priced domestic styles.
Stella International, the Hong Kong-listed footwear manufacturer whose clients include Nike, HOKA and UGG owner Deckers, Coach parent Tapestry, Under Armour and Saucony, is in the midst of a major manufacturing expansion under its current three-year plan (2026-2028), according to interim results published Aug. 20 for the six months ended June 30.
Three new factories are under construction: a dedicated plant in Indonesia that the company said is built for its largest Sports customer, a smaller Vietnam facility for a new Sports partner, and a second Bangladesh site. Together with an existing Solo, Indonesia plant, the four sites are expected to add roughly 20 million pairs of annual capacity over the coming years, though 2026 contributions will be modest.
Management said it brought forward the onboarding of management teams for each site into the first half, with the factories expected to come online progressively in the second half, subject to customer certification and regulatory approval. Alongside the new plants, the company is building a product development center in Vietnam dedicated to a new Sports customer, plus a broader research and development hub serving all footwear customers.
The expansion comes with a retreat elsewhere. In July, Stella began a phased shutdown of its smaller-capacity footwear plant in the Philippines, citing limited expansion prospects, and booked $2.5 million in severance and related costs.
The buildout carried a cost in the first half. Gross margin fell to 20.3% from 22.6% a year earlier. The company said the decline reflected higher raw material costs, new-factory labor and training expenses, and operating deleverage at PRC facilities dedicated to its largest Sports customer, as that customer’s product mix shifted toward lower-priced domestic styles.
Revenue rose 1.5% to $786.7 million on flat shipment volumes of 27.5 million pairs, with average selling price up 1.8% on a richer Sports-segment mix.
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Analysis, insights, and expert perspectives on the sporting goods industry across Asia-Pacific — covering market trends, manufacturing, retail, and brand strategy from China to Southeast Asia to Oceania. With Jakarta-based contributing editor Yohana Belinda.
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