" Shoe King " Two Reasons For BELLE's Declining Performance.

In the past 2015, the revenue of BELLE group has been declining. The two reasons for the bad performance are that it may escape from the mire.

In the evening of March 29th,

International Holdings Limited issued a profit warning, saying that net profit in the 2015-2016 fiscal year ended February 29th was 35% to 45% lower than that in the previous fiscal year.

BELLE international attributed the main reason for the decline in profits to 2015 points: first, the continued weakening of the footwear business performance, and the further decline in the same store sales in the whole fiscal year, especially in the second half of the year, resulting in a larger impairment loss for some goodwill and other intangible assets related to footwear business.

In addition, in fiscal year 2015-2016, the income and gross profit margin of the footwear business of the company decreased compared with the same period of last year, and the cost continued to rise.

In the past, the brands such as Belle (BELLE), Teenmix (Teenmix) and Staccato (Staccato) were monopolized by the women's shoe counters in the major department stores. However, with the continuous weakening of women's shoes industry and the impact of e-commerce on the offline business, BELLE began to decline in the same store sales from the beginning of fiscal year 2013.

In the second half of 2015, due to the worsening financial situation and the decline in performance to double digits, BELLE brand closed its stores in Hongkong and quit altogether.

Market.

In view of BELLE's performance, major investment banks have lowered target prices.

UBS reported that BELLE's footwear sales in the 30 third quarter ended November 2015 down 10.4%, compared with a further decline in the two quarter, reflecting a further contraction in the sales volume of footwear business.

Therefore, UBS believes that the downward trend in the first half of the fiscal year will continue in the next few years. It is expected that the sales of BELLE footwear will drop by 10% in the next three years.

In order to make up for the rapid decline of footwear industry, BELLE international is expanding its sports and apparel business.

BELLE is Nike's largest agent in China. It is also the main agent of Adidas, Puma, Cat and other sports and outdoor products brands in China.

The sustained growth of China's sports industry provides opportunities for BELLE to make profits in this field.

In the three quarter, the group increased 278 stores, of which 272 were sports and clothing stores. The fourth quarter was more rapid expansion. 315 of the 367 sales outlets that were net increased were sports and clothing businesses.

According to the fourth quarter results released by BELLE international in fiscal year 2015-2016, the same store sales in mainland China dropped by 16.5% in the three months from December 2015 to February 2016, but the same sales volume of sports and clothing business increased by 6.2%.

In addition, BELLE is adjusting its clothing brand portfolio.

Not long ago, BELLE International announced the takeover of Italy, the parent company of Replay.

The group's Fashion Box SpA 29% stake will set up a joint venture to manage Replay brand development in the Greater China market.

Nomura believes that BELLE needs to close more shoe sales outlets to stabilize its sales in the same store, but due to the increasing popularity of sports and outdoor activities, it is expected that BELLE sports and clothing sales will be maintained at the same time.