Despite Tariff Anxiety, Sales Are Booming for This Chinese Manufacturing Powerhouse

The trade war may have sent hundreds of companies scrambling for new strategies, but Stella International Holdings Ltd. appears to be holding steady.

The Hong Kong-based manufacturer has posted revenues that climbed 3% to $742.5 million so far this year, amid the yearlong tit-for-tat tariff dispute between the United States and China. In a purported effort to resolve the countries’ differences, President Donald Trump announced in late June the suspension of his threatened hike on the fourth tranche of levies that would impact footwear, apparel and more accessories.

Stella chairman Lawrence Chen, meanwhile, said he expects the business performance to continue to improve for the full year “despite prevailing uncertainties about possible trade tariffs by the United States on foreign-made footwear.”

Fashion sports footwear once again served as Stella’s greatest growth driver for the six-month period ended June 30, contributing to a 1.7% rise in the number of shipments to 29.5 million pairs of shoes.

As it continues to prioritize margin expansion, the company announced that it would move even more of its production from China to Southeast Asia while ramping up manufacturing in its Vietnam facility. In response to rising labor costs in China — and more recently, rising tariffs — many companies have begun shifting some of their supply chains to Vietnam and other neighboring countries.

“We will also continue to closely monitor potential risks to our operations arising from external events, particularly ongoing trade negotiations between the United States and China,” it added.

Stella Group manufactures shoes for clients including casual footwear companies Clarks, Ugg parent Deckers Brands and Timberland; fashion shoe brands Cole Haan, Kenneth Cole and Tory Burch; and high-fashion names like Alexander Wang, Givenchy, Marc Jacobs and Prada. It also helms three retail brands: Stella Luna, What For and JKJY by Stella.

The company reported that the average selling price of its products hit $25.20 per pair in the last six months — up 1.2% from the same period last year — attributing the increase to a change in its product mix.

Looking to 2019’s second half, Stella said it expects further growth in its fashion sports footwear division as it continues to make improvements in its fashion and casual footwear businesses.

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