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Shoemaking BELLE Brand New Store Sales Increase Steadily

2011/1/20 14:32:00 64

BELLE

International (1880) 2010 sales of footwear and sportswear in the same store increased by 17% and 5% respectively, consistent with the annual targets set by the management: 15% and low to medium digit growth respectively.

As of the end of 2010, the total number of shops was 11967, representing a net increase of 2633 over the previous year, with an annual increase of 24%, exceeding the expansion plan announced by the company at the beginning of the year.

With the solid growth of BELLE's same store sales and active expansion of stores, we estimate that total sales in 2010 will increase by 17% to 23 billion 100 million yuan annually.

Expansion to low permeability cities

By the end of 2010, the total number of footwear shops increased to 8312, with a net increase of 1562.

About 80% of the shoe shops are located in the two or three line market.

We believe that the company will continue to expand its stores in less permeable cities, especially BELLE.

brand

As a representative of the mature brand.

Benefiting from China's potential to increase urbanization and the rapid growth of the three and below markets, this strategy will accelerate the growth of footwear business.

After streamlining poorly performing shops in the previous year, the company continued to expand its sportswear business in 2010. As of the end of 2010, the total number of shops was 3655.

In 2010, the number of retail outlets selling first-line brands increased by 668, bringing the total number to 2817, while the number of second-line stores increased by 125 to 819.

The company is more active in expanding the first-line brand, and will further enhance the gross margin.

At the same time, the number of retail outlets for pure sportswear is maintained at 19.

We believe that BELLE will raise its average selling price and reduce it.

Price

The discount will continue to support the gross margin of the company and offset the rise in the cost of raw materials and labour.

The brand developed by the company accounts for over 90% of its footwear sales and will continue to become the main source of revenue in the short term.

At the same time, due to the integration of sales and research and development, the newly acquired brands such as Senda and Basto will contribute more and will continue to improve.

Multi brand strategy to ensure competitiveness

BELLE's financial position is still robust. As at the end of the first half of 2010, the company had a net cash value of 6 billion 196 million yuan.

Looking ahead, the company will expand the number of existing core footwear brands such as BELLE brand and focus on the two or three line market.

BELLE has a high reputation and has a leading position in the industry. Its retail network is all over the country, plus multi brand strategy, which should ensure the competitiveness of the company and keep it in the leading position in the mainland market.

The company acquired Mei Bao in 2008. It is expected that the two will be further integrated, which should increase the synergy and scale economic benefits of the company and improve the overall business efficiency.

BELLE's financial position is steady. We expect that the dividend payout ratio of the company will be maintained at about 26% and can be funded through internal resources for the expansion of business.

We maintain the buy rating of BELLE and raise the target price to 15.75 yuan, equivalent to 27.5 times of the 2011 price earnings ratio, or 1 times the earnings growth rate calculated at the compound annual growth rate of 28% of the estimated earnings per share in 2009-11.