Ever-Glory International Group saw profits slump during the first quarter, despite an increase in sales.

Income from operations for the first quarter of 2010 decreased 4.6% to $1.8m, compared to $1.9m in the first quarter of 2009.

For the first quarter ended 31 March net sales increased 27.5% to $26.1m, Ever-Glory said, with increases in wholesale and retail businesses.

However, the company said gross margin decreased 2.2%, primarily due to increased raw material prices and lower sales prices.

Sales generated from the company's wholesale business increased 7.8% to $19.4m, primarily attributable to increased orders from customers in the UK, France and the US.

Retail sales from La Go Go, the company's branded retail division, increased 166.8% to $6.8m.

"Our performance was solid during the first quarter of 2010," said Edward Yihua Kang, chairman of the board and CEO of Ever-Glory. "Our wholesale business is improving, reflecting general economic conditions. We are also very encouraged by our retail business's performance."

The company opened 13 new La Go Go stores in the first quarter of 2010 and now has a total of 195 La Go Go stores in the country.

Kang added: "We will continue to develop La Go Go through perfecting design styles and improving our store management efficiency. We are confident that we will strengthen and enhance same store sales, upon which we will further expand La Go Go's presence in China, and lay a better foundation for organic growth and continuous development."

For the second quarter of 2010, the company anticipates total net sales of $23 to $26m and net income of $1.2 to $1.5m. For the full 2010 year, the company anticipates total net sales between $121 and $141m and net income between $6.5 and $7.0m.