Fewer orders, particularly for casual footwear, eroded profit for Stella International Holdings for the second quarter of this year.
Challenges ahead, the group says, include fallout from the Brexit vote and the “vitriolic” presidential election campaign in the US.
Its unaudited consolidated revenue for the three months was about US$437.2 million, down about 12.3 per cent from the $499.2 million of the same quarter last year, while for the six months ended June 30 the revenue was about $717.5 million, 10 per cent down on $797.2 million.
Stella says the drop in orders led to the group’s non-sports footwear factories not being fully used, affecting efficiencies and margins.
Looking forward, the group expects the second half of the year to be challenging, with shipment volumes likely to be impacted by the Brexit vote and its effect on consumer confidence and economic growth in Europe.
“An increasingly vitriolic presidential election campaign in the US, coupled with a slowing global economy, may also affect demand,” says the group.
Rising demand
However, it believes the expected fall in shipment volumes will be partially cushioned by a rising demand for sports fashion footwear.
To deal with these challenges, the group will continue to enforce strict cost controls and other improvement measures. It will also continue to focus on building long-term competitiveness by selectively opening new standalone stores in high-potential locations in China, and by expanding its presence in Europe.
In China, the group’s revenue of $17.7 million for the quarter was a 15.7 per cent drop, with the six-monthly figure of $32.7 million down 15.1 per cent. Same-store sales of $14 million for the quarter were down 14.1 per cent, and for the six months dropped 17.6 per cent to $24.7 million.
During the year ended June 30, the group had 22 fewer stores on the mainland compared with the previous year. Stella Luna and JKJY by Stella stores both dropped by four to 175 and 57 outlets respectively, 12 What For stores were closed for a total of 57, while the two Pierre Balmain stores were shuttered.