Profit margins continued to be under pressure for the world's largest shoe manufacturer, which is also a major distributor and retailer in China. Yue Yuen Industrial's total revenues increased by 8.4 percent in the first three months of this year to (U.S.) $2.48 billion, but the attributable net profit declined by 20.9 percent to $75.5 million. Excluding extraordinary items, net earnings were down by 23.7 percent to $69.2 million.

Revenues from manufacturing went up by 5.0 percent to $1.39 billion, including a 6.4 percent increase to $1.28 billion in the footwear sector, with an increase in volume of 6.7 percent to 81.7 million pairs. Athletic shoes remained the biggest category, with a 41.0 percent share in total revenues, and their sales grew by 8.4 percent during the quarter.

Sales of casual and outdoor shoes went down by 4.8 percent, representing 9.3 percent of total revenues, while sales of sports sandals increased by 35.9 percent to $36.7 million, or 1.5 percent of the turnover.

The gross margin from the manufacturing business declined by 0.5 percentage points to 18.2 percent, and the company attributed this to fluctuating order patterns triggered by changing consumer demand. Other factors were the introduction of a higher level of automation and the implementation of an SAP-based ERP system, which caused temporary inefficiencies at some production facilities.

Yue Yuen's retail sales, which are mainly represented by Pou Sheng, jumped by 13.7 percent to $976.1 million, and they were up by 19.9 percent in terms of renminbi. No further details were given about this part of Yue Yuen's operations.

Wholesale revenues, which are represented by the Texas Clothing Holding Corp. (TCHC), went up by 8.5 percent to $108.0 million, but the company has decided on May 7 that it will no longer be consolidated into the group's results, after its sale for $230 million to an independent third party.