Belle International

Belle takes Big Step after profit rise

PUBLISHED : Thursday, 22 March, 2012, 12:00am
UPDATED : Thursday, 22 March, 2012, 12:00am


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Shares of Belle International, the mainland's largest women's footwear retailer, rose nearly 5 per cent yesterday after reporting a 24 per cent rise in net profit last year. Yet analysts were mixed on the company's outlook.

Belle said net profit for the year to December rose to 4.25 billion yuan (HK$5.21 billion) from 3.42 billion yuan a year earlier. Revenue increased 22 per cent to 28.9 billion yuan thanks to 15 per cent growth in same store sales for its footwear.

The company also announced it will buy Big Step, a distributor of Nike and Adidas products with 600 stores on the mainland, for 880 million yuan to build its presence in the sportswear market.

Belle's share price closed 4.73 per cent higher yesterday at HK$14.18, against a 0.15 per cent fall in the Hang Seng Index.

Catherine Lim, an analyst with Citigroup Global Markets, said the 26 per cent growth in Belle's core footwear business was better than the financial services firm had expected. She rates the firm a buy.

'This more than offset the weaker sports distribution sales momentum and profitability,' she said in a note.

The sportswear business posted only mid-single-digit growth in same-store sales owing to weak consumer sentiment and big discounts by other firms in the market.

However, UBS analyst Spencer Leung maintained his sell recommendation on Belle because the company's lack of growth-drivers spelled gloomy times ahead.

'Belle has rolled out the first batch of mass-market stores. We remain concerned about execution risk and expect no material contribution over the next three years,' he said.

A slowdown in same-store sales growth to 8.3 per cent in the fourth quarter last year was another concern, Leung said, adding that the fall had continued in the first three months of this year.

Belle owns and distributes local and international footwear brands including Staccato, Millie's, Joy & Peace, Clarks, Geox and BCBG. It is also the distributor of sportswear brands such as Nike, Adidas, Puma and Converse.

Footwear business accounted for 64 per cent of revenue last year, compared to 61.8 per cent a year earlier. Sportswear business amounted to 36 per cent.

As of December, Belle ran 10,270 self-managed footwear shops and 4,680 sportswear shops on the mainland, Hong Kong and other places.

Sheng Baijiao, chief executive of Belle International, said yesterday the same-store sales growth for its footwear business was expected to slow this year but the gross profit margin would remain stable thanks to an easing of labour and raw materials costs.

Belle proposed a final dividend of eight fen per share.