Stella International's revenues for the third quarter were down by 2 percent from the year-ago period to $447.9 million. The Chinese shoe manufacturer blamed the decline on its strategic decision to prioritize margin improvement over growth in shipment volumes.
Half of the drop came from Europe, with sales down by 85 percent in the region as the company implemented restructuring measures. In particular, revenues from the company's branded footwear business in Europe declined to $700,000, down from $4.8 million in the same quarter in 2018.
Sports fashion footwear is still the main growth driver of sales in Stella's bigger shoe manufacturing division, where the total volume of deliveries from its facilities remained flat at 16.1 million pairs during the period. Average selling prices went down by 1.4 percent to $27.80 per pair, however, because of changes in the product mix.
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.
Stella expects stable volumes for all of 2019, with steady growth in the demand for fashion athletic footwear and stable demand for casual and fashion footwear. 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 improve margins.
It will also focus on developing 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.