Yue Yuen Industrial Holdings shrugged off the effects of higher costs for raw materials, increases in labor costs and the appreciation of the Yuan to post a 2.2% increase in net profit to $310.1 million for its fiscal full year ended September 30. The company had to rely on cost-cutting measures to offset a 80 basis point decline in gross margins to 23.1% of sales on top of a 220 basis point decline in 2004.
Revenue jumped 16.0% for the year to $3.15 billion compared to $2.72 billion in the previous year. Apparel and owned-retail were key drivers for the years, increasing 128% and 35%, respectively. The company said the retail move into Mainland China had borne fruit, and has certainly offset some of the margin pressure. Yue Yuen expanded its retail presence in mainland China by over 73% this year to 520 shops across the country. YY still plans to have over 1,000 shops before the 2008 Olympics.
Total shoe pairage was up 11.2% to 185.9 million pairs, compared to 167.5 million pairs the previous year. Casual and outdoor footwear led the way in footwear with a 16% increase, but Athletic and Sport Sandals both delivered nice low- to mid-teen gains.
YY said 2006 will “likely be demanding” due to the uncertainty of raw material costs and rising labor and energy costs. Still, they say they are optimistic for the year after posting a 16.7% increase in sales to $869 million in fiscal Q1 on contributions from both the mainland retail operations and core manufacturing.
| Yue Yuen Industrial Ltd. | |||||
| 2005 Full Year Sales Breakdown | |||||
| (in $ millions) | 2005 | %/ttl | 2004 | %/ttl | Change |
| Category Breakdown | |||||
| Athletic | $1,890 | 59.9% | $1,665 | 61.2% | 13.5% |
| Casual & O/D | $581.8 | 18.4% | $502.3 | 18.5% | 15.8% |
| Sport Sandals | $43.9 | 1.4% | $38.6 | 1.4% | 13.7% |
| Soles/Comps | $415.0 | 13.2% | $405.8 | 14.9% | 2.3% |
| Apparel | $169.1 | 5.4% | $74.2 | 2.7% | 127.9% |
| Retail | $46.0 | 1.5% | $34.0 | 1.3% | 35.3% |
| Geographic Breakdown | |||||
| United States | $1,255 | 39.8% | $1,121 | 41.2% | 11.9% |
| Canada | $58.7 | 1.9% | $45.3 | 1.7% | 29.6% |
| Europe | $834.6 | 26.5% | $734.3 | 27.0% | 13.7% |
| So. America | $65.0 | 2.1% | $56.0 | 2.1% | 16.1% |
| Asia | $862.4 | ||||
