Strong points:
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Well ahead of schedule to achieve the operating margin and profit after tax CAGR target levels set out under our three-year plan (2023 – 2025)
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Average selling price (“ASP”) up 4.2%
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Continued enrichment of the customer portfolio, driven by the Luxury and High-end Fashion categories
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Streamlining the Group’s retail operations in mainland China and removing all other physical outlets worldwide
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Gross profit margin increased 3.0 percentage points to 24.6%
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Operating profit of US$159.4 million saw an increase of 18.2% year-on-year
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Operating profit margin increased to 10.7% from 8.3% last year
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Adjusted net profit increased 23.5% to US$147.6 million
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Strong net cash position of US$287.4 million (2022: US$206.1 million). About $140.0 million is earmarked for delayed capacity expansion in Bangladesh and Indonesia.
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Final dividend declared of 61 Hong Kong cents per share, representing a full year dividend of 103 Hong Kong cents per share (70% payout ratio based on adjusted net profit)
HONG KONG SAR – Media OutReach Newswire – March 21, 2024 –
Stella International Holdings Limited (“Stella” or the “Group”; SEHK: 1836), a leading developer, manufacturer and retailer of quality footwear and leather goods, today announced its annual results for the financial year ended December 31, 2023 .
In 2023, we achieved much in advance the growth objectives set as part of our three-year plan (2023-2025), namely an operating margin of 10% and an annualized growth rate of profit after tax of the order of 10%. end of 2025.
ASP and margin expansion through significantly improved customer and product mix
A significantly improved customer and product mix, driven by customers in our Luxury and High-end Fashion categories who introduced new high-end products, offset the impact of destocking by certain Sports customers and contributed to the increase in 300 basis points of our gross margin. Our average selling price (“ASP”) increased, even though revenue and volume decreased as expected. At the same time, our constant efforts to improve our operational efficiency, while maintaining strict cost controls, have steadily improved our operating margin which increased to 10.7% from 8.3% in 2022.
Due to the factors described above, the Group recorded a net profit of 140.3 million US dollars. Excluding net change in fair value related to its investment in Lanvin Group, the Group recorded adjusted net profit of US$147.6 million (2022: US$119.5 million). Our adjusted net profit margin was 9.9% (2022: 7.3%).
Maintaining a normal distribution rate of approximately 70%
Having reviewed the Group’s free cash flow situation, the Board of Directors has decided to declare a final dividend of 61 Hong Kong cents per ordinary share, representing a full year dividend of 103 Hong Kong cents per ordinary share for the financial year ending December 31, 2023, and to maintain our normal distribution. ratio of approximately 70% compared to our adjusted net profit.
Outlook: optimistic about Continued margin expansion with further improvement in customer and product range and improvement in production efficiency within the three-year plan
We plan to maintain our strong gross profit margin and operating margin levels in 2024 and continue to achieve the targets set in the three-year plan.
We expect our non-sports manufacturing facilities to continue operating near full capacity as we further enhance our product category lineup under our three-year plan. This is why we plan to shift more production from our factories in Vietnam to the factory we are developing in Solo, Indonesia, including the production of some fashion products, as workers’ skills improve. We also expect our Sports order book to improve in 2024.
Fostering capacity expansion in Indonesia and Bangladesh
As we become more confident about our prospects, we plan to advance our long-term capacity expansion plans. This includes commencing construction of a new manufacturing facility in Indonesia for our major sports customer, and continuing construction of an additional production facility in Bangladesh that we are already undertaking.
Mr. Chi Lo-Jen, Managing Director of the Group said: “We are optimistic that our margins will continue to expand as we improve our customer and product mix, increase our production efficiency and further strengthen our operational management through digitalization and other measures as part of our three-year plan. environment remains subdued, we remain firmly on the path of improving earnings and strong performance. »
Mr. Lawrence Chen, President of the Group, said: “We will continue to nurture our relationships with new clients in the Luxury and Premium Fashion categories, who are looking to expand or add premium lifestyle and athleisure footwear to their collections, improve our mix products and provide increasing returns for our shareholders.
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The issuer is solely responsible for the content of this announcement.
