Yue Yuen Sees Balanced Growth Across Most Business Segments…

Yue Yuen Industrial Ltd, which manufactures footwear for many major athletic brands, saw its biggest growth come in its casual/outdoor footwear and sports sandals categories in its second quarter ended March 31. Overall Q2 revenues rose 11.9% to $944.5 million while net profit slipped 2.5% to $80.1 million from $82.2 million. Gross margins eroded to 23.2% from 23.7%.


Athletic footwear manufacturing revenues climbed 9.5% to $543.3 million, but declined to 57.5% of the total business versus 58.8% in Q2 last year. Casual and Outdoor footwear advanced 15.6% to $164.3 million and increased its share of the total business to 17.4% from 16.8%. Sport Sandals revenues catapulted 65.3% to $23.8 million. Components revenues declined 9% to $98 million; owned-retail advanced 46.8% to $107 million.


Growth in exports to the U.S. grew 4.8% to $345.8, but lagged all other regions. The region with the most growth was South America, gaining 36.6% to $26.5 million, followed by Asia, up 21.4% to $322.2 million; Europe 9.3% to $212.2 million; and Canada, 7.2% to $14.9 million.


In the first two months of Q307 (April and May), sales increased 6.6% to $713.8 million, an increase of 6.6% year-on-year. For the remainder of the year, Yue Yuen expects sales growth for the footwear and China retail operations to remain on track.


 

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Teresa Hartford

Teresa Hartford Editorial & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

Yue Yuen Sees Balanced Growth Across Most Business Segments…

Yue Yuen Industrial Ltd, which manufactures footwear for many major athletic brands, again saw most of its growth come from expansion of its owned-retail business in the fiscal first quarter ended December 31.

Overall net revenues rose 9.4% to $960.3 million, while net profit increased 5.4% to $93.3 million. The core footwear manufacturing business rose 6.2% year-on-year, with footwear production volume increasing to 52.6 million pairs.

Athletic footwear manufacturing grew 6.7% for the period, but declined to 57.9% of the total business versus 59.4% in Q1 last year. Casual and Outdoor footwear increased 10.3% and maintained its share of the total business at around 17.4%. Sport Sandals revenues declined 7.5%. Components revenues were up 19.1% and Owned-retail was up 26.0% for the quarter.

Growth in exports to the U.S. lagged behind South America and Asia, but outpaced Europe and Canada.

Including the Group’s subsidiaries and associate companies, the Group had about 1,450 self-run and franchised stores/counters in mainland China at the end of 2006.

Net revenues for the first two months of the second quarter through February were up 11.6% to $617.5 million, with the core footwear manufacturing business recording stable volume growth. The company expects to see continued pressure from rising labor costs and Yuan appreciation.

Yue Yuen Industrial Ltd.
2007 First Quarter Sales Breakdown
(in $ millions) 2007 %/ttl 2006 %/ttl Change
Category Breakdown
Athletic $556.4  57.9% $521.5  59.4% +6.7%
Casual & O/D $167.5  17.4% $151.8  17.3% +10.3%
Sport Sandals $18.5  1.9% $20.0  2.3% -7.5%
Soles/Comps $126.5  13.2% $106.2  12.1% +19.1%
Retail $82.0  8.5% $65.1  7.4% +26.0%
Other $9.4 1.0% $13.4 1.5% -29.9%
Geographic Breakdown
United States $335.4  34.9% $318.8  36.3% +5.2%
Canada $19.7  2.1% $20.5  2.3% -3.9%
Europe $255.3  26.6% $254.1  28.9% +0.5%
So. America $26.1  2.7% $19.9  2.3% +31.2%
Asia $290.9  30.3% $237.4  27.0% +22.5%
Othe

About The Author

Teresa Hartford

Teresa Hartford Editorial & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

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