A reduction in orders from Nike will not do too much damage to upcoming results Analysts remain optimistic about new blue chip Yue Yuen Industrial's earnings outlook despite key customer Nike reporting a decline in future orders. They said a decrease in orders from customers was obviously negative for the industrial stock but believed Yue Yuen's overall business was unlikely to be substantially hurt. CLSA analyst Kenny Lau said: 'Most of the world's athletic shoe companies were Yue Yuen's customers. 'One customer suffering from a decline in orders could mean that other shoe companies are getting more business from the market.' As a result, the overall order trend for Yue Yuen might not see significant change, Mr Lau said. Last week, Nike announced its United States future orders fell 10 per cent quarter to quarter due to a significant decline in orders from Foot Locker. But net earnings in the fourth quarter rose 18 per cent year on year. The news prompted fears that the inventory build-up might adversely affect Yue Yuen's shipments in the third and fourth quarters of this year. Nike is a key client of Yue Yuen, with orders estimated at 30 per cent of sales of the shoemaker's athletic footwear. Its other major athletic shoe customers include Reebok and Adidas. UBS Investment Research said some of Yue Yuen's other customers, such as Adidas, might also report a similar decline in their US orders in the first-half results. But the investment firm said Yue Yuen's sales were less correlated with its biggest customers' order trends. In recent quarters, Yue Yuen had outpaced its athletic customers' growth rates through gains in market share, increased product offerings and acquisitions of footwear-related assets, it said. Nicholas Tan of UBS said: 'At the margin, Yue Yuen has been growing its sales by expanding into other product categories such as upstream footwear materials, downstream retailing in China and athletic apparel manufacturing.' For the six months to March 31, athletic footwear accounted for 73.4 per cent of the company's sales, down from 76.5 per cent. Casual shoes accounted for 17.7 per cent , up from 16.9 per cent over the same period last year. Sports sandals and retail sales contributed nearly 3 per cent to the company's total sales for the first time. Mr Tan estimated non-athletic footwear sales would account for 34.9 per cent of group sales by the next financial year. 'We expect further corporate initiatives to support this strategic shift,' he said. Earlier, Yue Yuen said the company would spend up to US$20 million to acquire two shoe and garment-related projects as part of the expansion. According to Thomson First Call's consensus estimates, Yue Yuen is expected to report a year-on-year 29.66 per cent rise in profit to HK$2.31 billion this financial year to September.