Belle International Holdings, which is performing better in street shoes than in sports apparel, is transferring most of its Fila properties in China, Hong Kong and Macau to Anta Sports Products for 314 million renminbi (€32.3m-$46.0m).
Anta, whose results grew strongly in the first half of this year (see next article) claimed a few years ago to be the second-largest sportswear brand in China. Belle’s management indicated that the company preferred to concentrate on retailing, where it has more expertise than in brand management.
Specifically, Belle is selling its 85 percent stake in Full Prospect, the owner of Fila trademarks in the region, and HK Retail Company, which deals with Fila retail in Hong Kong. It is passing the ownership of these properties on to Motive Force Sports Products, a subsidiary of Anta. Full Prospect was an 85-15 joint venture with Fila Luxembourg. That company, as well as its major shareholder, Fila Korea, have to approve the sale before it is completed.
Belle has reported a 13.1 percent sales jump for the first half of the year, coming in at CNY 9.3 billion (€955.8m-$1,363.3m), mostly because of strength in non-athletic footwear. Its sports apparel division was partly affected by a comparison with last year’s strong pre-Olympic sales of these products.
The Chinese company’s profits rose by 14.9 percent to CNY 1.14 billion (€117.2m-$167.1m). The gross margin grew by 1.6 percentage points to 52.4 percent because of less discounting, but the gross margin in footwear contracted to 64.5 percent from 65.0 percent. Earnings before interest and taxes (Ebit) went up by 14.5 percent to CNY 1.27 billion (€130.5m-$186.2m), for an operating margin of 13.6 percent, 0.2 percentage points above the same period last year.
Footwear revenues jumped by 23.3 percent to CNY 5.3 billion (€544.7m-$776.9m) as demand was good for its brands Tata, Staccato and Joy & Peace as well as Bata, Geox and Clarks, which it distributes. Comparable store sales increase by 7.4 percent. The gross margin in this division inched down by 0.5 percentage points to 64.5 percent. Belle is China’s largest women’s footwear retailer.
Sportswear sales were up by only 0.3 percent to CNY 3.99 billion (€410.1m-$584.9m). In that division, Belle sells sports brands such as Nike, Adidas, Reebok, Puma, Mizuno, Li Ning, Kappa and Converse through its own stores. Sportswear’s comparable store sales fell by 7.1 percent, while its gross margin rose by 0.7 percentage points to 36.3 percent. In sportswear, it is still working to clear inventory from the 2008 Olympics. It closed 650 stores in the first six months of the year.
The company said that while the global economy is still weak, it is seeing signs of renewed vigor in many countries and thinks the drop in consumer spending has bottomed out. Its footwear sales were termed “volatile” and driven in good part by promotions, but the more established brands held their own, boosting margins.
For the rest of the year, Belle expects moderate growth from footwear with help from new stores, but continued sluggishness in sportswear.
