Yue Yuen Industrial Holdings Ltd, one of the worlds largest manufacturers of athletic footwear, reported that revenues for the fiscal third quarter ended June 30 rose 15.6% to $768.4 million from $664.9 million in the year-ago period. Net income increased 6.6% for the quarter to $93.2 million from $87.4 million in fiscal Q3 last year despite a 180 basis point decline in gross margin to 24.0% of sales.
The quarters double-digit growth was a nice boost from first half sales that inched up just 1.3% and net income that rose 4.4% for the six-month period through March. Margins have declined steadily throughout the year.
YY said the revenue growth for Q3 was due primarily to gains in its core footwear manufacturing business. The business has continued to shift for YY, as Athletic footwear now makes up 62.0% of total revenues versus 64.6% of revenues in Q3 last year despite an 11.0% increase in Athletic revenues. Casual and Outdoor increased its share of the total business (17.5% vs. 16.8% in Q3 LY). Owned-Retail made the biggest jump in both revenues and share of total sales in the quarter.
After a few quarters of shifting more business away from the U.S., YY saw the business in its largest market increase in revenues as well as a percentage of total revenues. Europe continued to shrink as a percentage of total business, but also saw its revenues decline.
Yue Yuen said the average selling price saw positive growth in the third quarter, reflecting the increase in raw material costs and the change in product mix. The Groups gross margin stabilized despite the fluctuation in raw material prices.
