Retail sales of shoes and apparel in the Greater China region surged 48.8% year-on-year to US$488.4 million. This was due to the strong growth in the retail sales operation in mainland China and increased contributions from the wholesale operations in Taiwan and Hong Kong. The total number of self-operated stores/counters in China under the group stood at about 3,000 by the end of September 2007. In addition, there were about 2,600 distributors in the Greater China region for the Group’s wholesales operations for the three licensee brands.
Although the manufacturing environment in the past year continued its down turn, the group managed to maintain its growth and profit margins by leveraging on its economies of scale, improving efficiencies and expanding its retail operation. Some associate companies, and especially jointly controlled entities, however, were unable to cope with the severe and challenging business environments. They have strived through organizational restructuring and reset their business directions resulting in substantial losses which undermined the group’s bottom line performance.