On August 20, Jiuxing Holdings Co., Ltd., a well-known footwear company listed in Hong Kong, released its semi-annual performance report as of June 30, 2020.
The report stated that due to the new crown pneumonia epidemic disrupting the global retail industry, the group’s revenue in the first half of the year was US$511 million, a year-on-year decrease of 31.9%. Shipments fell 30.8% to 20.4 million pairs, compared with 29.5 million pairs in the same period last year.
The group analyzed the reasons for the decline in revenue and said that for most of the second quarter, the group’s footwear sales were mainly limited to e-commerce sales, especially in the group’s two major retail markets, the United States and Europe. This has had a serious impact on the Group’s customers, especially those who rely heavily on physical stores and distribution through department stores.
This impact quickly spread to two aspects.
First of all, due to the sudden drop in sales starting in March, many customers requested to delay or cancel shipments and orders, and also postponed payments to suppliers to manage inventory and protect cash flow. Second, as brick-and-mortar stores began to reopen in June, customers focused on discounts to clear spring and summer merchandise. Therefore, customers have become more conservative when planning and placing orders for the autumn and winter of 2020.
Jixing Holdings said it will increase profit margins by permanently closing factories in China and accelerating the migration of production capacity to Southeast Asia. Based on the current financial situation, the Group’s new plant investment in Indonesia will proceed as planned in the second half of the year.
Screenshot of Jiuxing Holdings report
In the 1990s, Jiuxing Holdings (01836-HK), a shoe manufacturer from Hong Kong, set up several factories in Dongguan City, supplying well-known products such as Clarks, Rockport, Timberland and Wolverine. The company offers a steady stream of footwear products.
In 2008, Jiuxing Holdings’ revenue exceeded US$1 billion and its annual production capacity reached 50 million pairs.
At present, the incremental market for fashion sports shoes is still very huge. Jiuxing Holdings seeks to enter the high-end and luxury segment of the fashion sports market fashion brand. The growing market share in the high-end market has enabled Jiuxing Holdings’ global high-end footwear market share to increase from 11.0% in 2018 to approximately 11.8% in 2019.
Although the transformation has been quite effective and its market share has increased rapidly, Jiuxing Holdings’ performance in the past few years has not been impressive. From 2014 to 2019, Jiuxing Holdings’ revenue stagnated and its net profit also continued to be sluggish. </p
