BELLE Says It Will Not Die For Pformation.

With the increasing demand of consumer shopping convenience, e-commerce is in a booming trend, but the traditional retail industry under line is facing an unprecedented difficult pition period.

Belle International Holdings Ltd, China's largest women's footwear brand (01880.HK), has acquired a lot of brands in recent years, and its business is much worse than before. Its profit fell by 40% last year.

Faced with the challenge of the great pformation of traditional retail industry, BELLE management says that if it does not pform, enterprises will die.

However, management lacks direction for BELLE's future pformation. Some market participants say that if enterprises fail to take the initiative to pform, they will face a great crisis.

In May 24th, the Belle International Holdings Ltd announced its year-round results for the year ending February 29th.

The report shows that in the fiscal year 2015/16, the group's revenue was 40 billion 790 million yuan, an increase of 2% over last year.

Among them, sales of footwear business decreased by 8.5% to 21 billion 74 million yuan compared with last year, and sales of sports and clothing business increased 16.2% to 19 billion 716 million yuan.

Footwear business income accounted for 51.7% of the total business revenue, compared with 57.6% last year, the proportion has decreased.

Due to the deterioration of the retail market in the mainland, Hongkong and Taiwan, it is also necessary to make over 1 billion 300 million yuan large write offs for the acquisition of brands such as Mirabell and Millie's in recent years, resulting in a net profit of 38.4% to 2 billion 934 million yuan for the year ended February 29th and a decrease of 37.79% to 35.86 points in earnings per share.

Among them, the loss of footwear and footwear products was very large, and the income decreased by 22.48% to 3 billion 944 million yuan compared with the same period last year, which was mainly caused by the same store sales. The overall revenue of the branch still fell 9.75% to 6 billion 300 million yuan over the same period last year.

BELLE said in its annual report that due to the deterioration of the consumer and retail market environment in the domestic and Hong Kong and Macao regions, the sales performance of footwear business in the group affected the sales profit of the same store in the second half of the year.

BELLE pointed out that the weak performance of the footwear business resulted in an impairment of its intangible assets of 1 billion 356 million yuan, including 1 billion 127 million yuan of goodwill impairment and 229 million yuan of intangible assets impairment. The related impairment was mainly caused by the group's previous acquisition of Mirabell, Millie's, SKAP and other businesses.

Looking back at BELLE's annual performance, BELLE international chairman Deng Yao told a press conference in Hongkong that the footwear business and sports and clothing business of the group continued to show more obvious differentiation.

After experiencing deep adjustment, sports and apparel business maintained good growth and profitability continued to grow.

The footwear business is declining due to the decline in passenger flow and consumption preference, which continues to show a weakness in the same store sales decline and profitability decline.

Chief executive Sheng Bai Jiao pointed out at the meeting that the promotion of Chinese consumers' demand for cost-effective and shopping facilitation is an important reason for the decline in the footwear business of the group.

On the whole, consumers are inclined to choose online shopping with high cost performance, which has a great impact on the business of the group.

Sheng Bai Jiao said that with the improvement of living standards, consumers now have more leisure activities, such as sports, beauty and watching movies.

When consumers' living content increases and shopping demand does not decrease, they have a demand for shopping facilitation.

At present, many shopping malls can meet the different consumption needs of consumers, including eating and shopping, while department stores can only meet consumers' shopping needs, so they are left out in the cold.

It can provide more facilitation needs.

He pointed out that, in any case, the group's efficiency in improving management can not fundamentally change the impact of changes in consumer demand on business.

The group currently faces two choices, one is to focus on improving efficiency and no fundamental change, but the choice can not fundamentally change the trend of footwear business downturn; the second is to make fundamental pformation, which is a risky decision, which is likely to create great pressure on short-term performance, and also the risk of failure.

Sheng Bai Jiao concluded that BELLE will not be in the future.

It will die slowly, and the fundamental pformation may accelerate the decline, but it may also lead to a good tomorrow.

However, he did not give a clear answer to the direction of pformation, which is hardly convincing to market participants.

As of February 29, 2016, the total number of retail outlets owned by Belle International Holdings Ltd was 21017, of which 20873 were in mainland China and 144 in Hongkong and Macao.

Sheng Bai Jiao said that all the brands of the original company were pursuing the maximization of the market, which had a contradiction with the change of consumers' increasingly fragmented and individualized demand.

The group entered the sports industry more than a decade ago, and realized that the market share of sports shoes would gradually increase, so even if the profits of this category were not high, the company still chose to stick to it.

However, in sports brands are overcapacity now, BELLE faces more than one challenge, Sheng Bai Jiao admitted that he personally realized that the electricity supplier is the greatest threat to the company, but what the company lacks is the sense of direction and specific actions. How to satisfy consumers' demand for price performance through change has no definite idea.

This is because the group is bound by vested interests, and any change can bring short-term impact and cost.

Since the listing of the company, sustained growth is the main objective, and it will not dare to make decisions for the fundamental pformation in the future.