Yue Yuen Industrial (Holdings) Limited (Group) reported total revenue of $1.99 billion in the 2026 first quarter, representing a decrease of 2.2 percent compared to revenue of $2.03 billion in the 2025 first quarter

First quarter revenue from Footwear Manufacturing (including athletic/outdoor shoes, casual shoes and sports sandals) decreased by 5.8 percent to $1.17 billion, compared with the 2025 first quarter. The volume of shoes shipped during the first quarter decreased by 8.1 percent to 56.9 million pairs, while the average selling price increased by 2.4 percent to $20.52 per pair as compared with the 2025 first quarter.

The Group’s total revenue with respect to the manufacturing business (including footwear, as well as soles, components and others) was $1.26 billion for the first quarter, representing a decrease of 5.5 percent compared to the 2025 first quarter.

First quarter revenue attributable to Pou Sheng China retail business increased 4.1 percent to $730.0 million, compared to $701.2 million in the 2025 first quarter. In RMB terms (Pou Sheng’s reporting currency), revenue decreased slightly (-1.1 percent) to RMB 5.05 billion, compared to RMB 5.11 billion in the 2025 first quarter. The narrowing of the revenue decline was said to be mainly attributed to Pou Sheng’s continuous enhancement of its operational efficiency, strategic dynamic inventory management, and the establishment of fully integrated, one-stop operations, with direct retail channels performing resiliently.

Profitability & Expenses Summary
First quarter Group’s gross profit decreased 7.0 percent year-over-year (y/y) to $431.8 million, with the overall gross profit margin decreasing by 1.2 percentage points to 21.7 percent of revenue.

The gross profit of the Manufacturing business decreased 20.7 percent y/y to $186.3 million, while the gross profit margin of the Manufacturing business decreased 190 basis points y/y to 14.8 percent of revenue. This decrease was said to be mainly attributed to volatile short-term order demand, as well as intensified production scheduling challenges caused by seasonal misalignments arising from the overlap of the Lunar New Year and Ramadan in the first quarter of 2026. The company said these factors resulted in short-term production inefficiency within the manufacturing business which, coupled with higher labor costs, drove up manufacturing unit costs.

For the Pou Sheng retail operation, gross profit margin was 33.6 percent during the period, an increase of90 basis points, supported by effective inventory aging optimization and stringent discount management.

Total selling and distribution expenses and administrative expenses decreased 2.2 percent y/y to $340.4 million , equivalent to approximately 17.1 percent of revenue.

  • Group selling and distribution expenses decreased 1.6 percent y/y to $203.3 million, equivalent to approximately 10.2 percent of revenue.
  • Administrative expenses decreased 2.9 percent y/y to $137.1 million, or approximately 6.9 percent of revenue.

Other Income decreased 31.1 percent y/y to $21.5 million (2025: $31.2 million), equivalent to approximately 1.1 percent (2025: 1.5 percent) of revenue.

Other Expenses increased 15.0 percent y/y to $44.5 million (2025: $38.7 million), equivalent to approximately 2.2 percent (2025: 1.9 percent) of revenue.

Group net operating expenses for the first quarter increased by $7.9 million, equivalent to approximately 18.3 percent (2025: 17.5 percent) of revenue.

Share of Results of Associates and Joint Ventures
First quarter share of results of associates and joint ventures was a combined profit of $11.3 million, compared to a combined profit of $15.8 million recorded in the 2025 first quarter.

Profit Attributable to Owners of the Company
Profit attributable to owners of the company amounted to $35.2 million in the first quarter, representing a decrease of 53.6 percent as compared with that of $75.8 million recorded in the 2025 first quarter.

The Group recognized a non-recurring loss attributable to owners of the company of $2.6 million, which was attributed to a loss due to fair value changes on financial instruments at fair value through profit or loss.

A non-recurring loss of $0.5 million was recognized in the 2025 first quarter, comprising a loss of $2.9 million resulting from fair value changes on financial instruments at fair value through profit or loss, which was largely offset by a one-off gain of $2.4 million arising from the partial disposal of associates.

As a result, excluding all items non-recurring in nature, the recurring profit attributable to owners of the company for the Period under review was $37.7 million, representing a decrease of 50.6 percent as compared with $76.3 million for the 2025 first quarter.

Outlook
Amid mounting global economic headwinds, the Group said it will continue to solidify its role as a strategic supplier and strengthen its multi‑location, high‑end footwear development capabilities, while deepening its long‑standing partnerships with leading international brands to capitalize on emerging opportunities and secure a higher-quality order mix. However, the company said reciprocal tariff-related challenges, inflation pressures and uncertainties around the macroeconomic trajectory may continue to weaken consumer momentum. Multiple factors may lead to volatile sentiment, with near-term order demand expected to remain fluctuating.

The Group said it will continue to closely monitor developments in the global economic and political environment, as well as the potential impact of recent regional conflicts on delivery timelines and the stability of raw material supplies. It will also prudently assess the risks associated with fluctuations in raw material prices and potential supply disruptions, and leverage such developments as an opportunity to further diversify its sourcing and strengthen its mid‑ to long‑term local procurement strategy. Meanwhile, the Group will proactively address the related challenges by enhancing operational flexibility. By commencing earlier raw material procurement negotiations and inventory planning to ensure supply stability, and strengthening cost controls measures, the Group said it aims to mitigate the potential adverse impact of such uncertainties on its short‑term profitability.

The Group said it remains committed to its mid- to long-term capacity allocation strategy and is continuing to advance the ramp-up of its manufacturing facility in Central Java, Indonesia, in an orderly manner, while progressing the construction-related work for its new factory in India. In response to evolving demand from brand customers, the Group will flexibly adjust its ramp-up pace and production commencement plans. At the same time, guided by its fast-response operating principles, the Group seeks to balance demand, its order pipeline and labor supply to reinforce operational efficiency.

The Group shared that it will also further strengthen its operational resilience through its highly flexible and agile manufacturing excellence strategies, while leveraging its core competitive edges and superior adaptability. These efforts, coupled with strict cost and expense controls and its long-term digital transformation strategy, will continue to safeguard the profitability of the Group’s manufacturing business, while maintaining a healthy cash flow and a solid financial position.

It will also harness its strategy of balancing sustainable value and volume growth, capitalizing on the ‘athleisure’ trend and its integrated product development capability – which combines automation technology with R&D strength – to build a product mix with stronger niche advantages.

Image, data and table courtesy Yue Yuen Industrial (Holdings) Limited