In the six months to the 30^th of June, Yue Yuen recorded an 11.8% revenue decline to 4.14 billion US dollars, on a comparable basis to the same period of 2022, mainly due to a weaker performance from its manufacturing business thanks to “softer global demand for footwear” in the context of “the current inventory digestion cycle taking place across the industry”.

The manufacturing business – footwear as well as soles, components and others – reported a fall in revenue of 19.3% during the first half of 2023 to 2.57 billion US dollars, as compared to the same period of last year. Particularly, the footwear manufacturing activity (including athletic/outdoor shoes, casual shoes and sports sandals) posted 2.40 billion US dollars in revenue, down by 18.1% from the same period of last year, as the volume of pairs shipped declined by 23.8% year-over-year to 109.8 million pairs and the average selling price per pair rose by 7.5% year-over-year to 21.67 US dollars.

Meanwhile, in the first six months of the year, the Pou Sheng subsidiary's revenue amounted to 1.58 billion US dollars, growing by 4.0% from a similar period in the previous year; in Renminbi terms, its revenue increased by 11.1% year-over-year. This result was attributed to the “recovery of purchasing intent and foot traffic at its retail stores across mainland China, the resilient performance of its omnichannels, particularly its Pan-WeChat Ecosphere, as well as a low base effect”.

In line with a previous profit warning to its stakeholders, Yue Yuen reported a decline of 52.2% in the profit attributable to the owners, which totalled 175.0 million US dollars, over the first half of 2023, on a comparable basis to the same period of 2022. In this period, basic earnings per share were 5.19 US cents, as compared to 10.87 US cents in the first six months of last year.

Outlook

Looking ahead, the group said it remains optimistic about the long-term expectations of its manufacturing business, but cautious concerning its short-term horizon, as “persistent inflation and high-interest rates, alongside the conservative approaches being seen across the industry” will continue to impact the performance of the segment.

“Despite the destocking cycle being experienced by the global footwear industry across the board, we have been able to defend our profitability to a certain extent thanks to the milestones we had already reached as part of our multi-year capacity allocation and digital transformation strategies", said Mr. Lu Chin Chu, Yue Yuen's Chairman. "This fuels our optimism about the long-term prospects of our manufacturing business. The streamlined business structure, store refinements, omnichannel investments and our expanding alliances with brand partners will allow our retail business to further safeguard its long-term competitive edge", he concluded.