Yue Yuen's total revenues rose by 12.7 percent to US$1.91 billion in its first quarter, ended Dec. 31. Sales of athletic footwear increased by 14.3 percent to $1,033.5 million, while casual and outdoor shoes were up by 16.8 percent to $324.6 million, and sports sandals were down by 38.4 percent to $15.7 million. Retail and wholesale sales increased by 13.3 percent to $393.1 million.

With an increase in volume of 1.6 percent to 83.4 million pairs, revenues from shoe manufacturing increased by 13.8 percent to $1;374 million, driven by growth in Asia and South America.

Geographically, the group's sales to the U.S. rose by only 1.7 percent, representing 26.1 percent of the total. They rose instead by 15.0 percent in Europe, by 15.3 per cent in Asia (excluding retail) and by 48.6 percent in Latin America.

The gross margin declined by 0.7 percentage points to 22.9 percent, due primarily to higher production costs in footwear manufacturing and inventory adjustments at retail and wholesale. As further increases are expected input costs, the group is trying to improve manufacturing efficiencies and creating more value-added products and services. Among other initiatives designed to reduce costs, the group is said to be testing a new manufacturing facility in Bangladesh.

Stronger marketing support for the group's retail activities in China and other initiatives led to a 19.5 percent increase in operating costs. The Hong Kong-based group saw its net profit dip down by 0.5 percent to US$161.9 million in the quarter, but with a 4.7 percent increase to $155.9 million in the profit attributable to the company's shareholders.

With sales up by only 8.2 percent for the four months between October and January, the company is expecting only modest growth in the current financial year, coming mainly from the London Olympics and from emerging markets.