Hong Kong footwear manufacturer Yue Yuen Industrial Holdings recorded a 0.5 percent increase in revenue at $8.48 billion for the financial year ending on December 31, 2016.
Athletic shoe sales saw a rise of 2.4 percent at $4.11 billion while retail sales (shoes, apparel and leasing) saw the largest revenue gain of 6.2 percent at $2.44 billion compared to 2015. Casual and outdoor shoes fell by 9.9 percent at $1.23 billion. Soles and components suffered a loss of 8.5 percent at $604.6 million while sports sandals revenue dropped 0.6 percent at $93.8 million.
Yue Yuen reported that the revenue for the footwear manufacturing business dropped 1.6 percent in 2016 compared to 2015. Production volume grew by 1.4 percent in 2016. The group’s manufacturing business produced a total of 322 million pairs of shoes compared to 317.5 million pairs in 2015. The growth in volume was offset by a fall in average selling prices.
Yue Yuen reported the company is placing more strategic emphasis on transforming its business model from offering “economies of scale” and expertise in footwear manufacturing to “economies of value” to better meet consumers changing demands and interests.
Yue Yuen’s retail business – Pou Sheng International Holdings – saw a revenue growth of 6.2 percent in 2016 at $2.44 billion.
Better operational efficiency resulted in an increased gross profit margin of 8.1 percent at $2.13 billion in 2016 compared to $1.97 billion in 2015. Rising wages were partly offset by lower material costs tied to the commodity and oil price trend, according to the group. Yue Yuen continued to work with international brand customers to enhance productivity across production sites and efficiency in its supply chain. Pou Sheng saw a gross profit increase of 13.3 percent to $868.2 million attributable to stronger retail demand and fewer discounting activities.
Recurring profit attributable to owners of the company increased by 29.5 percent to $525.1 million while non-recurring profit amounted to $9.4 million for the year.
An increased number of directly operated stores for Pou Sheng resulted in an increase in selling and distribution expenses at $834.6 million compared to $777.8 million in 2015.
The group attributed employee-related provisions to a decrease in administrative expenses, which were reported at $611.1 million for 2016 compared to $682.2 million in 2015.
Chairman Lu Chin Chu commented, “We are pleased with the Group’s performance despite the presence of uncertainties and slow global macroeconomic growth. We will continue to seek greater efficiency and provide value added solutions to our brand customers, while balancing the need for sustainable development. We will also continue to offer better sports-related experiences and choices to consumers, thereby helping our brand customers benefit from rising sports consumption in Greater China.”
Photo courtesy Yue Yuen
