Stella International's revenues decreased by 0.7 percent in 2018 to $1,588.6 million. The volume of its shoe deliveries from its manufacturing facilities rose by 6.4 percent, with 60.2 million pairs shipped by the Chinese company during the period, but average selling prices went down by 3.5 percent to $25.80 per pair because of changes in the product mix. The company pointed out that the recovery in shipment volumes stemmed from robust orders for fashion athletic products and higher overall orders for casual and fashion footwear products.
The management said the efficiency gains it achieved as the result of the ongoing refinement of its manufacturing footprint enabled the company to become more responsive to its customers, while also raising its ability to defend its margins.
Retail sales declined to $59.4 million from $70.0 million in the previous year. On a comparable basis – after adjustments for the disposal of the group's former retail business in China – Stella's total consolidated revenues for the year improved by 3.3 percent. In July, Stella completed the sale of its 60.0 percent stake in its Chinese retail business to Max Branding. It continues to maintain control over its retail brands – Stella Luna, What For and JKJY by Stella – as well as its retail operations in Europe and other markets.
Geographically, North America and Europe remained the two largest markets, representing 51.1 percent and 29.2 percent of total revenues. Mainland China and Hong Kong came next with a combined 10.0 percent of revenues. The rest of Asia accounted for 6.4 percent, while other geographic regions represented 3.3 percent.
Stella said it continued to focus on building the global profile and value of its two contemporary retail brands, Stella Luna and What For. During the year, it explored distributorship opportunities in Europe and continued to invest in the e-commerce channels, while also enhancing its visibility and presence in department stores around the world.
Retail sales in Europe jumped by 10.9 percent to $17.3 million, while same-store sales decreased by 10.0 percent as the branding business focused on online clearance events that aimed to manage inventory.
Overall, the company's gross margin inched up by 0.3 percentage points to 17.4 percent. Net profits progressed by 4.2 percent to $62.2 million. While recovering $10.3 million from the bankruptcy of Rockport, it took a $8.2 million loss from the bankruptcy of Nine West, the American shoe retail chain that was eventually taken over by the Authentic Sports Group.
Looking forward, Stella expects shipment volumes in 2019 to be around the same level as of 2018, with a steady growth in demand for fashion athletic footwear products and stable demand for casual and fashion footwear products. It will continue to ramp up its new manufacturing facility in Vietnam, which is specifically geared toward fashion athletic products, to increase production efficiency and grow margins.
It will also further develop its branding business in Europe, centered on Stella Luna and What For, by investing further in product development and expanding the two brands' reach in the German-speaking markets.