BELLE'S International Performance Reflects Changes In China'S Apparel Retail Market

BELLE's annual international performance shows that its two major business performances are "two days". This phenomenon is reflected to some extent. Chinese apparel retail market Some characteristics of the moment.

The "two BELLE" in the annual performance report

The Hong Kong stock BELLE International released the annual performance announcement for the year ended February 29, 2016 May 24th, announcements that the group's revenue recorded 40 billion 790 million yuan, an annual increase of 2%. Net profit of 2 billion 934 million yuan, a 38.4% regression, earnings per share 35.86 points. Among them, the income of footwear business decreased by 8.5% to 21 billion 74 million yuan, mainly due to the same store sales decline. Sports and clothing business revenue increased by 16.2% to 19 billion 716 million yuan, mainly due to the same store sales grew faster and the retail network maintained healthy expansion.

BELLE's business is mainly divided into two parts, footwear business and sports and apparel business. Footwear business including private brand Belle, Teenmix, Tata and so on more than a dozen, the use of vertical integration mode of operation, including product development, procurement, manufacturing, distribution and retail, are their own. Agency brands include Bata, Clarks, Hush Puppies and so on. There are brand agents and distribution agents.

The other part is sports and clothing business, strictly speaking sports apparel and other clothing business two, mainly to sell agents. The main agents are sports brands such as Nike, Adidas, PUMA, Converse and so on. Other brands of clothing are mainly women's clothing brands such as Moussy and SLY. These two brands are brands of Japanese Baroque company which BELLE had previously bought for 31.96% stake.

Overview of BELLE's 2016 financial year results, a general thread is that BELLE's first decline in earnings since listing, all due to the footwear business dragged behind. Footwear business revenue, gross margin, gross profit margin, sales outlets, profit margins, same store sales, business share, inventory turnover and other business indicators declined across the board. Its business revenue declined by 8.5%, mainly due to the same store sales fell by more than 10%. The same store sales decline is mainly due to the decline in the number of close to 10%, the spanaction unit price slightly reduced. At the same time, BELLE closed 366 shoe retail outlets.

Contrary to the footwear business, BELLE's sportswear business and other apparel businesses have not been on the decline but are on the rise. Revenue, gross profit, same store sales, sales outlets, inventory turnover and other indicators are rising all the way. Among other clothing business, women's clothing increased by 66.2% to 491 million yuan compared with the same period last year. The overall sports and clothing business income increased by 17.2% to 16 billion 971 million yuan, and business accounted for 48.3% from last year's 42.4%. The main reason is that the same store sales have increased to a high number of units. While the sales volume of single stores has risen, 682 new sports and apparel business outlets have been opened.

To sum up, this is the two BELLE, one is the BELLE who is in trouble, the other is the BELLE, the outstanding "shoe king". Can this "non shoe king" be called "Sports" BELLE? It's hard to say. As mentioned above, BELLE business is actually divided into three parts, footwear, Sportswear And other costumes, the three status quo is footwear shrinking, sports apparel Jiangshan, and women's clothing based other "emerging" business is growing rapidly. BELLE has entered the Italy Cowboy brand REPLAY this year and is responsible for developing REPLAY brand in Greater China. It is not ruled out that BELLE will shift further to the "clothing" BELLE direction in other clothing items.

Changes in the retail market behind the "two BELLE"

As a listed clothing company with a market value of HK $50 billion, BELLE's expansion and contraction to some extent reflect the development and changes of the apparel industry and the retail consumer market, which has a strong inspiration for Ceng Chao.

BELLE footwear business is shrinking, and the expansion of its apparel business is positively related to the current development trend of the apparel industry segmentation market. Last year, the domestic women's footwear industry showed a downward trend overall. Foshan's 2015 annual report on Saturday showed that the operating income was 1 billion 642 million yuan, a decrease of 6.60% over the same period last year, and the net profit attributable to shareholders of listed companies was 22 million 534 thousand and 600 yuan, down 37.32% from the same period last year. In this case, we plan to diversify strategic spanformation on Saturday. The Daphne international bulletin lost 379 million yuan in the year ended December 31, 2015 (2014 earned 176 million yuan), with a turnover of 8 billion 379 million yuan, an annual decrease of 19.09%, a gross profit of 4 billion 725 million yuan, an annual decrease of 17.65%, and a reduction of 827 sales points in 2015.

As for the sports apparel market, usher in the "Renaissance" time. In the listed companies of several major domestic sports apparel companies in Hong Kong stock, Lining earned 7 billion 89 million yuan in 2015, an increase of 17% over the previous year, a net profit of 14 million yuan, and a loss of 781 million last year. This is the first time that Lining has made profits in the past four years. Anta sports business income in 2015 reached a record 11 billion 126 million yuan, an increase of 24.7%, net profit of 2 billion 41 million yuan, an increase of 20%, becoming the first to enter the tens of billions of sales clubs. The PEAK sports sales in 2015 achieved 3 billion 107 million yuan, an increase of 9.4%.

Comparing the two phases, let people sigh the "power" of the industrial development cycle. If BELLE international is split into two companies, one is shoe company and the other is sportswear company, the performance will be well understood. This shows that the garment industry is closely related to the retail consumer market, and the market segmentation is a major trend. In the market segmentation, there is always room for the garment enterprises to move. This also provides more operational space for the spanformation of garment enterprises.

Apart from the market segmentation, the change of BELLE's international business situation also reflects the change of retail channel. An important phenomenon is the drop in retail efficiency of department stores. BELLE has been positioned as a retail platform, its own mode is to expand the market share through the expansion of multi brand expansion channels, as far as possible to expand the market share, so that others can not enter, that is, the so-called "take all" mode. BELLE's shoes are mainly the Department Store channels, we often see in the first floor of shopping malls and other low floor footwear sales area, BELLE's dozens of brands into a string, occupied most of the space in the sales area.

The problem is coming. With the change of consumption trend, shopping centers and e-commerce channels have risen, and department stores have been impacted. They have begun their own adjustment and spanformation, and have shifted to high-quality, high-end and other differentiated routes. While BELLE's brand group is mainly located in the middle price, the location between them is not obvious enough, and the original eating advantage has become a disadvantage. Looking back at BELLE's business situation, its cash reserves are adequate, its overall revenue is still rising, while net profit has dropped by nearly 4. However, excluding the factors of one-time impairment of goodwill and other intangible assets of footwear business, the operating profit has declined by 10.3% compared with last year. It can be said that the business situation is not "bad". The main reason for the decline in business is the decline in the sales volume of the footwear business and the drop in volume and price. Although many of the sports and clothing business channels are also department stores, the channel mode is relatively more flexible. Among them, the fast growing clothing business, Barok's women's clothing brand is basically shopping channels.

Observation: the trend of consumer market is accelerating.

Behind the changes in market segmentation and channel changes, there is a fundamental change factor: consumption change. The characteristics of China's consumer market upgrading, consumption power upgrading, the rise of the middle class, the continuous urbanization, the sink of consumption channels, and the rapid development of the electricity supplier channel should be obvious to all. But what specific characteristics and preferences do Chinese consumers have in detail, and different research fields and research objects have different conclusions. Here I quote a report from a business organization. McKinsey recently released 10000 research reports, on the one hand, Chinese consumers brand Loyalty is rising. "Chinese consumers are not very willing to buy other brands outside their brands of concern. For example, in clothing category, the proportion of consumers willing to choose non selective brands has dropped from about 40% in 2011 to less than 30% in 2015. On the other hand, McKinsey said that Chinese consumers can quickly accept the new trend. Chinese consumers accept new products, new services and new retail experience faster than the developed market.

At the same time, the report also said that 2/3 of consumers said that shopping and shopping is the best way to spend time with their families, up 21% compared with three years ago. "Shopping centers are the biggest beneficiaries of this trend. Consumers turn to shopping centers from large retail stores such as department stores and hypermarkets. The latter integrates shopping, dining and entertainment experiences to meet the family's leisure needs. According to statistics, Beijing business information consulting center and Shanghai Garment Industry Association statistics also show that the retail sales volume of commercial department stores in Beijing, Shanghai and other first tier cities all showed a downward trend in 2015. These conclusions are echoed with BELLE's current plight.

More and more data and phenomena show that China's retail consumer market is undergoing rapid upgrading and spanformation. The phenomenon of "double cold days" of BELLE's two major businesses confirms this point from one side. The advantages once turned out to be a disadvantage, and the spanformation seemed to be the only way out. As BELLE international management said in its performance conference, the group's spanformation may die. This is not just a matter of improving business efficiency alone, and BELLE International's business situation is not very bad. For BELLE, the spanformation may be faced with the problem of "big ship turning around". This also gives inspiration to other Chinese clothing enterprises, and should be good at grasping the trend of the change of the consumer market and timely adjusting the spanformation. We are faced with a rapidly changing and upgrading consumer market, which has difficult challenges and hidden opportunities for spancendence.