Zhitong Financial APP learned that on March 1, 2024, Beijing time, Belle Fashion Group (hereinafter referred to as Belle Fashion) submitted an IPO application to the Hong Kong Stock Exchange, with BofA Securities and Morgan Stanley as the joint sponsors of Belle Fashion's IPO. According to Frost & Sullivan, Belle Fashion has occupied the first market share in China in the fashion footwear category for more than ten consecutive years, and has further increased from 11.2% in 2020 to 12.3% in 2022.
With the support of a vertically integrated consumer-centric business model and the digitalization of the entire value chain, Belle Fashion has achieved steady growth and maintained considerable profitability. According to the prospectus, for the nine months ended November 30, 2023, the company's revenue was 16.1 billion yuan (RMB, the same below), a year-on-year increase of 12.8%, and the net profit in the same period was 2.1 billion yuan, a year-on-year increase of 92.7%, and the net profit margin reached 12.8%, the highest level during the performance period.
China's leading fashion footwear and apparel performance is stable and shows strong resilience
According to Frost & Sullivan data, the retail sales of China's fashion trend market showed a small V-shaped fluctuation from 2021 to 2023, and in 2022, when the industry was at a low point, Belle Fashion was under certain downward pressure, but its market share further expanded while maintaining profitability. According to Frost & Sullivan, Belle Fashion's market share rose to 12.3% in 2022, much higher than the second-ranked company.
In 2023, as the industry recovers, Belle Fashion will also recover strongly, and various performance indicators will enter the fast lane of growth. According to the prospectus, for the nine months ended November 30, 2023, Belle Fashion's revenue and profit both rebounded significantly, and the net profit margin reached 12.8%, the highest level during the performance period.
Cheng Weixiong, an independent analyst of the footwear and apparel industry, said: "In 2022, the fashion footwear and apparel industry will be under great pressure, and the revenue will decline temporarily due to factors such as the decrease in the flow of people in offline stores, and most of the peers will lose money, but individual companies will also show strong resilience to steady profits, such as the leading Belle Fashion 22/ In FY23, it still achieved a considerable profit of nearly 1.3 billion yuan and an operating cash flow of more than 3.4 billion yuan, which shows that even in the trough of the industry, Belle Fashion has shown better resistance to the market and is more capable of achieving a rapid and strong recovery. ”
Diversified brand expansion to promote growth DTC omni-channel retail high-quality development
According to the prospectus, Belle Fashion has laid out a diversified portfolio of 19 core brands, covering women's shoes, men's shoes, children's shoes, clothing and accessories and other categories, including BELLE, TATA, STACCATO, 73Hours, Joy &Peace, BASTO, TooManyShoes, functional casual SKAP, hush puppies, Bata, SENDA, sports and leisure TEENMIX, CHAMPION, CAT, ELLESSE, trendy and energetic OGR, INITIAL, MOUSSY, SLY, meet the diverse needs of different ages and different occasions.
Belle Fashion continues to pay attention to the latest market trends, closely follow the popular fashion style, dynamically adjust the brand and product matrix, and maintain the vitality of the brand portfolio. For example, in 2018, it strengthened its brand portfolio of high-end fashion women's shoes through the acquisition of 73Hours, and in 2023, it acquired the emerging brand OGR to expand the trend and vitality track.
As a pioneer in the vertically integrated business model of China's footwear and apparel industry, Belle Fashion adheres to the DTC retail model, continuously optimizes the offline retail network, and strategically focuses more resources online.
On the one hand, brick-and-mortar stores make optimization and upgrade decisions according to the development strategies of each brand, strategically close stores with poor performance, and focus on improving the efficiency of single-store stores. As of November 30, 2023, Belle Fashion has more than 8,300 directly-operated stores and tens of thousands of store employees in more than 300 cities in China, and according to Frost & Sullivan, Belle Fashion has the largest directly-operated fashion footwear and apparel retail network in China.
On the other hand, Belle Fashion has invested a lot of resources to continue to develop online: according to the prospectus, the proportion of Belle Fashion's online revenue in shoes and apparel has increased from less than 7% for the year ended February 28, 2017 to 28% for the nine months ended November 30, 2023.
Wang Xiaoyi, full-time deputy dean of the School of Management, professor of marketing, and doctoral supervisor of the School of Management of Zhejiang University, believes that the high-quality development of retail omni-channel must be done by subtraction and addition, and we cannot simply look at the increase or decrease in the number of stores, but more importantly, look at the structure and look at the whole. After years of precipitation and continuous optimization, Belle Fashion's DTC omni-channel retail network has consolidated the fundamentals of performance growth, forming a two-wheel drive with the expansion of multiple brands. Its "ordering, supplementing, and stacking" product model, precise R&D and precision marketing's combination of accurate prediction and rapid response capabilities not only deepens the interactive relationship between brands and consumers, but also realizes the flexible upgrading of the supply chain, which ensures the core competitive advantages and barriers in its business model.
Long-term construction of digital intelligence, improving the efficiency of the whole value chain, escorting through the cycle
Since launching its comprehensive digital transformation in 2017, Belle Fashion has adhered to technological innovation and forward-looking digital construction, achieving an industry-leading level of digital intelligence. As of the end of November 2023, Belle Fashion has obtained 144 patents related to automated intelligent manufacturing. In January 2024, Belle Fashion obtained the Level 4 Enterprise Level Certificate of the Data Management Capability Maturity Assessment Model (DCMM) led by the Ministry of Industry and Information Technology, and is the only consumer retail company among nearly 100 Level 4 and above enterprises.
At present, Belle Fashion has realized digital applications in all aspects of the whole value chain such as product design, product management, production, and DTC retail. Taking digital commodity management as an example, Belle Fashion has innovatively developed a dynamic data presentation system for the whole life cycle of commodities, which realizes the real-time analysis of the "purchase, sales, adjustment and storage" data of commodities, helping the group to quickly formulate plans and decision-making and improve the efficiency of product circulation.
Thanks to the expansion of multiple brands on the track, the advantages of online and offline omni-channel networks, the rapid and accurate response of flexible supply chains, and the efficiency improvement brought about by the digitalization of the whole value chain, Belle Fashion has also achieved stable profitability and rapid recovery during the pressure period of the industry, and its market share has steadily increased year by year.