The world’s largest shoe producer plans to list its shoe retailing subsidiary, Pou Sheng International, on the Hong Kong stock exchange later this year, in the wake of the successful flotation of Stella International and other big Chinese shoe retailing companies. Morgan Stanley and Merrill Lynch are advising Yue Yuen on the move, which could raise more than US$750 million, but some observers doubt that it will take place. Five separate IPOs have been postponed or abandoned in Hong Kong because of uncertainties or instabilities in the market
The group had about 3,000 stores and sales counters operating in China as of last September, and it is investing strongly in the sports footwear side of the retail market in view of the Beijing Olympics, trading in particular through its own YY Sports brand and through Reebok shops. It also operates stores in Hong Kong and Taiwan.
Yue Yuen’s retail sales in the Greater China region jumped by 48.8 percent to $488.4 million in the financial year ended last Sept. 30. Combined with higher wholesale revenues in Hong Kong and Taiwan, they helped the group to post an increase of 12.5 percent in its turnover for the year to $4.11 billion.
Net earnings rose by only 1.6 percent to $359.4 million, indicating the kind of pressure on costs that it is sharing with other Chinese shoe producers. The company says that some jointly controlled subsidiaries were unable to cope with the severe and challenging business environment, and their reorganization led to substantial losses that affected the group’s overall results.
The total number of shoes manufactured by the group rose by 18.2 percent to 232.2 million pairs. The number of production lines was raised by 25 to 398, evenly spread among its three production bases in mainland China, Vietnam and Indonesia.
The USA remained the largest market for Yue Yuen, marking a sales increase of 4 percent, but the company won many new clients, especially in emerging markets in Asia and South America. Sales of athletic shoes grew by 10.6 percent. Sales of casual and outdoor shoes rose by 9.5 percent.