How BELLE Should Deal With Expansion And Slow Down Shareholders' Sell-Off

Under the slowdown, shareholders sell off.

What's wrong? Compared with the excitement of Chinese clothing brands this year, a big wave shoe business led by BELLE is slightly dull.

Recall the brilliant BELLE, the biggest shoe manufacturing and retail companies in China, and how many companies have tried to follow the example.

At the moment, frequent negative news, shop closures, shareholder reduction, slow development, not to mention surprises, even calm need courage.

I can't help asking, what's wrong with BELLE?

Compared with the excitement of Chinese clothing brands this year, a big wave shoe business led by BELLE is slightly dull.

Recall the brilliant BELLE, the largest shoe production and retail companies in China, and how many companies have been trying to follow the example.

BELLE needs it.

If you forget, we can give up a little more.

BELLE group is composed of two major parts of footwear business and sports apparel business. The Group operates 13 footwear brands: Belle (BELLE), Teenmix (Teenmix), Staccato (Staccato), Joy&Peace (Zhen Meishi), Millie 's (Zhen Meishi), Senda (xnda), Innet (Yin Naer), Basto (100 best) and so on.

Yes, these brands that we all know well are all BELLE's.

BELLE group is not only the largest female shoe retailer in China, but also the leading consumer market share in the capital market. As of last August, there were nearly 2 retail outlets in the world.

At the moment, frequent negative news, shop closures, shareholder reduction, slow development, not to mention surprises, even calm need courage.

Some even predict that BELLE will die without pformation.

I really can't help asking, what's wrong with BELLE?

Expansion slowdown

In fact, BELLE

Business has been weak for some time.

From 6 to August 2014, the number of retail outlets in mainland China decreased by 56 in 2014.

Rough statistics will close a store on an average of less than two days.

Time passed in the past year.

Today, there is no improvement, only worse.

According to BELLE international latest retail business data released in the first quarter of this fiscal year (3 to May), the number of retail outlets in the mainland has decreased by 167.

At the same time, BELLE's core main business footwear business and same store sales fell by 7.8%.

What does this figure mean? We can learn one or two from the comparison of past data.

Previously, the scale of stores has always been the advantage of BELLE international.

Since 2010, BELLE has been roping around with more than 2000 new stores every year.

In the craziest days of opening stores in 2011, BELLE international opened 2 to 3 stores a day.

After the rapid development of BELLE, BELLE suffered the most sluggish time in China's footwear industry. Its share price dropped by nearly half of its historical high price of HK $17.86 after being listed on the stock exchange of Hong Kong.

From peak to trough, survival is like roller coaster.

By 2014, BELLE's fast forward wheels stopped abruptly.

In the three months from 6 to August 2014, the number of retail outlets in the mainland decreased by 56.

This is not only the first time that BELLE has seen a negative growth in the number of shops, but also embarrassed BELLE to start a shop in an average of less than 2 days from the previous day to an average of less than 2 days.

Now, when the number of 167 stores in a single season has been reduced, the BELLE shop's record has also been replaced by the embarrassing rhythm of closing nearly one half a day.

The leader is still so, and the performance of other peers can be imagined.

In the first quarter, the performance of women's shoes such as Daphne and Saturday was also unsatisfactory.

Among them, the total number of Daphne core brand outlets decreased by 14 to 6388, and the same store sales of core brand businesses fell by 15.9% on a year-on-year basis. The operating income on Saturday decreased by 8.93% compared with the same period last year, and net profit dropped by 27.36% over the same period last year.

The bad news is that such a momentum is unlikely to be reversed in a short time.

BELLE CEO and executive director Sheng Bai pepper has said that the weakening of sales performance of footwear companies is mainly due to structural problems rather than cyclical problems, which will not be improved in the short term.

At the same time, this year's footwear profits will decline further, and the same store sales will also be worse than last year.

The slowdown in group business growth will become normal and there will be no explosive growth in the short term, so the pace of opening stores will slow down in the future.

This statement can be seen that in the next few years, the tone of BELLE's slowdown has no suspense.

The age of crazy horse shop was completely over.

Shareholders selling

The direct result of the slow down of the expansion, the shrinkage of the line and the unsatisfactory results were the sharp sell-off of BELLE's major shareholders. The Credit Suisse trust reduced 94 million 449 thousand and 506 shares of BELLE shares, accounting for about 5% of its total holdings, with a total cash dividend of HK $9.37600246062. After the reduction, the agency still accounted for 21.44% of BELLE's shares, holding 1 billion 808 million 399 thousand and 41 shares.

The deal took place after BELLE released its first quarter results.

And then HSBC issued a report that BELLE's first quarter footwear business in the same store decreased by 7.8%, its performance was disappointing, and it made an unexpected profit factor for the market. The bank maintained BELLE's "reduction" rating and target price of 9.3 yuan, which is quite forecasting 13.7 times earnings in fiscal year 2016.

Although sports and clothing business has recorded growth, HSBC believes that this contribution to the group's profits is relatively small.

Transboundary clothing

Traditional business growth is weak, so we have to find new market growth points. This is also one of BELLE's strategic development directions.

In fact, BELLE was planning cross-border pformation earlier.

In August 2013, BELLE acquired 31.96% stake in Barok Japan company for HK $733 million.

Just a week later, he signed a takeover agreement with LNUOI in Italy, referring directly to the high-end fashion market.

This campaign declared that China's "women's shoes king" formally crossed the realm of clothing.

Intervention

The field will undoubtedly help to try and cultivate a new retail mode in the future. Although the main shoe business is weak, BELLE's sportswear business is doing well. In the first quarter of last season, the same store sales of BELLE sportswear business increased by 12.4%.

BELLE said that in the next 3 to 5 years, the main business of BELLE international will focus on the retail business of fashion shoes and sports shoes and clothing.