Companies

Stella Holdings' profitability improved in the first semester

Aug 30, 2023 Hong Kong

The Hong Kong-based manufacturer reported that has seen an improvement in profitability during the first half of 2023 driven by strong customer demand for luxury, fashion and sports products

“By partnering with more Luxury and high-end Fashion brands to introduce sports and athleisure footwear lines into their portfolios, we are further enhancing our category mix. These brands are outperforming the wider footwear market, and together with our Sports customers, they are demanding more premium product styles. These will lead to a modest increase in full-year ASP and help offset the decline in shipment volumes”, commented Mr. Chi Lo-Jen, Chief Executive Officer of the Group.

According to Stella, this strong demand for premium products has led to an increase of 6.5% in their average selling price, as well as a gross profit margin improvement of 3.3 percentage points to 23.1%. At the same time – added the company – increased production efficiency, as well as the focus on cost control, enabled its operating profit margin to grow to 9.0%, as compared to 8.3% in the first half of 2022.

Altogether, the manufacturer group posted a net profit of 55.2 million US dollars and an adjusted net profit of 60.3 million US dollars, on a comparable basis to an adjusted net profit of 60.2 million US dollars registered in the first six months of last year; its adjusted net profit margin increased to 8.4% from 7.3% in the same period of 2022.

The company believes that is therefore on track to achieving an operating margin of 10% and low teens annualized growth rate on profit after tax by the end of 2025, according to its Three-Year Plan.

“In addition to focusing on our product mix, we are confidently moving forward with other parts of our Three-Year Plan”, added Mr. Lawrence Chen, Chairman of the Group. “We are making good progress in enhancing our operational management including digitalization, while taking more steps to strengthen cost efficiency and working capital management, while prudently expanding capacity in line with demand”.

Image Credits: Carlos Muza on Unsplash

Hong Kong Footwear Management Manufacturing Results Stella