Shoemaker and retailer Belle International Holdings, which reported an almost 30 per cent increase in operating profit last year, plans to expand its sales network on the mainland despite the poorer economic outlook. The No1 retailer of women's shoes in the country saw attributable profit rise 1.58 per cent to 2.01 billion yuan (HK$2.28 billion). The increase was slight because it was dragged down by an almost sixfold jump in income taxes to 257.56 million yuan last year as a two-year tax-free holiday ended. Operating profit rose 29.88 per cent to 2.28 billion yuan. The profit in the previous year was inflated by a one-off gain of 364.2 million yuan from the interest income of its listing proceeds. Despite a 52.95 per cent rise in turnover to 17.86 billion yuan, net profit shrank 5.8 percentage points to 11.2 per cent. 'We expect considerable revenue growth in 2009,' chief executive Sheng Baijiao said yesterday, pointing to an expansion in its retail network last year that was faster than analysts had expected. The focus of growth would be in the newly acquired footwear chains, Millie's, Senda and Mirabell, which would be increased by acquiring the retail space of competitors at department stores or counters, he said. The gross profit margins of its footwear and sportswear divisions barely changed at 64.9 per cent and 36.1 per cent, respectively. Sportswear generated about 46 per cent of the group's turnover, with the rest from footwear. To improve profitability, Belle shifted its strategy to enhance the profit margin of the sportswear division from increasing turnover, Mr Sheng said. Some analysts expressed concern about the profitability of Belle's about 200 retail outlets in Hong Kong, where shoppers have tightened their belts. An analyst at an American brokerage worried about intensified price wars, pointing to deeper discounts and aggressive promotions in Hong Kong and major mainland cities since November last year. 'The company should be able to improve profitability through better supply chain efficiency, store economics, product management and network expansion,' he said. Belle's attributable profit was in line with his estimate, he said. At the end of last year, Belle operated about 9,100 retail outlets on the mainland. The final dividend was unchanged at 3.5 fen per share, leaving the full-year payout the same at 6.5 fen per share. Earnings per share declined 4.83 per cent to 23.82 fen. The stock added 5.69 per cent to HK$4.08 yesterday after the results announcement.