Chinese footwear manufacturer Yue Yuen Industrial Limited reported that a 19.2% fiscal second quarter revenue gain was due primarily to YYs core manufacturing operation and retail sales in greater China. The company said that the operating environment for footwear manufacturing continues to be difficult because of the increases in crude oil prices and labor costs.
Yue Yuen is working to control production overhead and SG&A and increased average selling prices could only partially offset the general increase in raw materials. The company did manage inventories more efficiently with sales growth out-pacing inventory growth by more than six full percentage points.
In spite of increased raw material costs, gross margins climbed 10 basis points to 24.8%. YYs net income rose 16.8% to $75.3 million versus $64.4 million last year.
Total number of shoes produced during the quarter increased 12% to 43.8 million pairs compared with 39.1 million pairs last year. Additionally, the company is experiencing continued growth momentum for retail sales in greater China and apparel manufacturing. Yue Yuen also reported April/May sales for fiscal Q3 grew 11.9% to approximately $558.3 million.
YY said that back-to-school orders are strong this year and it remains confident that it will meet projections for the full-year. Yue Yuen also said that consumer spending power in China continues to grow with the company positioning itself as a key retailer in the market. Retail sales accounted for more than 5% of total revenue.
| Yue Yuen Industrial Ltd. | |||||
| Fiscal Second Quarter Sales Breakdown | |||||
| (in $ millions) | 2005 | %/ttl | 2004 | %/ttl | Change |
| Category Breakdown | |||||
| Athletic | $443.4 | 60.6% | $382.4 | 62.3% | 16.0% |
| Casual & O/D | $134.0 | 18.3% | $105.3 | 17.2% | 27.3% |
| Sport Sandals | $16.9 | 2.3% | $13.0 | 2.1% | 30.0% |
| Soles/Comps | $93.0 | 12.7% | $92.2 | 15.0% | 0.9% |
| Retail | $38.6 | 5.3% | $17.2 | 2.8% | 124% |
| Others | $5.6 | 0.8% | $3.6 | 0.6% | 55.6% |
| Geographic Breakdown | |||||
| United States | $306.2 | 41.9% | $267.7 | 43.6% | 14.4% |
| Canada | $12.5 | 1.7% | $10.9 | 1.8% | 14.7% |
| Europe | $180.2 | 24.6% | $153.6 | 25.0% | 17.3% |
| So. America | $12.9 | 1.8% | $10.9 | 1.8% | 18.3% |
| Asia | $202.3 | 27.7% | |||
