BELLE'S International Performance Continues To Fall, Where Will Privatization Lead?

Recently, the news of "BELLE selling cheap" has finally come to a conclusion. The shoe king who has been on the market for ten years will embark on the privatization road.

In April 28th,

The Holding Company Limited (hereinafter referred to as "BELLE international") issued a notice that the consortium, composed of high leverage group, CDH investment and BELLE international executive director, proposed a privatization offer to BELLE international, with a total purchase price of HK $53 billion 100 million.

In this regard, BELLE International said that the company is now in urgent need of pformation, but there is no lack of risk in pformation. Privatization will help promote the implementation of relevant strategies.

The urgent pformation of BELLE international is its poor performance in recent years.

Since the fourth quarter of the fiscal year ended February 28, 2014, Bailey's same store sales have increased for 13 consecutive quarters.

In addition, the number of BELLE international stores has also been greatly reduced, data show that in 2016 6-8 months,

Speed up the sales network by closing 3 stores a day.

However, BELLE International's road to privatization will not necessarily be smooth.

Insiders say that factors such as intensified market competition, brand aging and backward design concept are the main reasons for the gradual decline of traditional shoes and clothing brands represented by BELLE. If these changes can not be made in order to win back consumers, even if privatization is successful, BELLE international will face more severe development in the future.

Sale settled

In April 28th, a joint announcement issued by BELLE international settled the sale of "rumors" before.

The difference is that BELLE international will sell at a low price of HK $44 billion 200 million, while the consortium composed of high and low capital group, CDH investment and BELLE international, has offered a privatization proposal to BELLE international, with a total purchase price of HK $53 billion 100 million.

It is reported that BELLE International's paction is more than the total amount of privatization of HK $34 billion 500 million, which has become the largest privatization deal in the history of HKEx.

According to BELLE's international bulletin, the price of the paction is HK $6.3 per share, which is about 19.54% higher than the market price of HK $5.27 at the last trading day before the suspension, which is about 12.5% of the 52 week maximum closing price of BELLE international at HK $5.6 per share.

After the privatization deal is completed, the high leverage Capital Group will own 56.81% of BELLE international, and CDH investment will have 12.06% of the shares. The BELLE international participating in the tender offer will have the remaining 31.13% stake, including the BELLE.

It is reported that in 2007, the Hong Kong Stock Exchange listed the highest value of BELLE international reached HK $150 billion, and ranked second in the world footwear listed companies.

BELLE international began to expand the offline retail network.

In the 2010-2012 year, the number of BELLE's brand stores increased by about 1500 a year.

According to BELLE international annual report, the largest number of footwear business stores reached 14128.

During this period, BELLE International's net profit also increased at a rate of over 20%.

Sheng Bai Chai, chief executive of BELLE international, once said, "wherever there are women, there are BELLE."

According to the data, BELLE international has occupied nearly 50% of the women's shoes Market in its prime period, and has won the top of China's shoes sales list for 12 years in a row.

Decline in performance

The glory of the past did not let BELLE international escape from the footwear industry.

Behind this sale is BELLE International's recent decline in performance.

In March 19th, BELLE international issued a profit warning for the 2016/2017 fiscal year. As at February 28, 2017, the board predicted that the international net profit of BELLE would be reduced by about 15%-25% compared to the same period last year, mainly due to the continued weakening of footwear business performance, resulting in some impairment loss related to goodwill and other intangible assets related to footwear business. Meanwhile, the income, gross profit and net profit of footwear business decreased significantly compared with the same period last year.

Reporters visited BELLE international annual report found that 2015/2016 fiscal year results in a sharp decline in sales, footwear sales revenue fell 8.5%, net profit fell by 38.4%.

As of the fourth quarter of fiscal year February 28, 2014, Baili international footwear business and same store sales for 13 consecutive quarters of negative growth.

What happens at the same time with net profit decline is "closing shop tides".

In the fiscal year 2015/2016, BELLE's international footwear business outlets were shrinking. As of February 29, 2016, the number of retail outlets dropped by 366 to 13762 stores.

As of February 28, 2017, the number of shoe business shops of BELLE group has been reduced to 13062 again, and the number of stores has been reduced by about 700.

According to BELLE international bulletin, although the store network is huge, the main sales channel of the company is department stores, which are diverted by electricity providers and other emerging retail channels such as shopping centers.

Zhu Dan Peng, a researcher at the China Brand Research Institute, pointed out that in recent years, with the rise of commercial real estate prices, BELLE international such a huge store system has caused enormous cost pressure on the development of the company. With the rising cost, the profitability of single store has declined accordingly, which has affected the company's performance.

In fact, in order to deal with all kinds of impact, BELLE international management has repeatedly expressed the need for pformation.

It is reported that as early as 2009, BELLE international set up an electronic business platform "Tao Xiu net" and set up an excellent purchase network in 2011.

In addition to setting up an e-commerce platform, BELLE international is also working with Alibaba and Jingdong to layout online business.

Compared with other brands of domestic shoes and clothing, BELLE international is a traditional enterprise which has developed to the Internet earlier.

It is a pity that BELLE international, like many domestic shoe and clothing enterprises, regards the online platform as the channel to clean up inventory and tail money. This has also become an important reason why BELLE international has failed to make some contributions to the electricity supplier.

Independent fashion commentator Ma Gang pointed out that for large enterprises such as BELLE international, which are mainly offline shops, when merging online and offline, this traditional enterprise is actually worried that online will affect the sales situation of physical stores, thus restricting the development of the online industry.

Because of the different understanding of the development of the online and offline businesses, the leadership of the electricity supplier company also left job hopping, which eventually led to the failure of the development of the electricity supplier.

Uncertain future

BELLE international management has repeatedly expressed the view that "no pformation will die".

In view of the privatization, BELLE international also announced in its announcement that pformation is necessary to enhance the competitiveness of the company and consolidate the long-term leadership position in the Chinese women's footwear market; the joint offeror plans to invest in financial and operational resources to BELLE international, cooperate with the company to actively explore and try new retail mode, practice a series of pformation and innovation initiatives, and put a lot of resources into technology, logistics and talent.

Because of the risk of pformation, the pformation strategy can be implemented more effectively if the company is privatized and is not affected by the short-term turmoil in the open stock market.

Zhu Danpeng analysis points out that privatization is beneficial to the current BELLE international from organizational structure to corporate governance.

After privatization, BELLE international has become a "centralized system". It is no longer subject to the opinions of the board and so on, making it more convenient and faster in decision-making.

But it will also lead to the loss of BELLE International's success or failure.

As a matter of fact, the problem of aging and slow updating of BELLE's international brand has also become an important factor in consumer turnover and declining sales.

According to the reporter's previous visit, BELLE international owns many.

Brand aging, design obsolescence, and high pricing problems have emerged.

At the BELLE store in the new China Customs mall, the reporter found that most of the shoes were discounted and only two or three staff were in the shop and the customers were scarce.

Only one street is located in the hot air store in Europe and America shopping mall. There are many busy shops. Customers trying to buy clothes are basically full of benches in the shop.

Reporters log on to BELLE Tmall flagship store, found that the best sales volume of a shoe is 1714 months, the footwear product price is about 400 yuan, while the hot wind Tmall flagship store footwear products priced at about 200 yuan, the best month sales volume of up to 35 thousand.

Zhu Danpeng said that the change of consumption concept is inevitable, and BELLE failed to keep pace with consumers.

In fact, nowadays consumers are either demanding fashion design or demanding high cost performance, but BELLE international has only an advantage in brand awareness, but it can not keep up with consumers' demand in terms of style and cost performance.

After the development of enterprises is relatively large, how to pform and how to accurately link the core needs of the new generation and emerging consumers has many problems.

For more information, please pay attention to the world clothing shoe and hat net information report.