Belle FY17 Q2 operational data

FY17 Q2: For Footwear business, the number of outlets dropped by 271 stores from the previous quarter, and the same store sales growth (SSSG) fell by 10% yoy. While this is negative, it’s an improvement from SSSG of -16% in FY17 Q1 and -16.5% in FY16 Q4.

For sportswear and Apparel business, the number of outlets dropped by 5 stores from the previous quarter, and the SSSG grew by 6% yoy. This remains steady growth from last year.

Business Segment FY17 Q1 FY17 Q2
SSSG Outlets SSSG Outlets
Footwear -16.% yoy 13,655 -10.0% yoy 13,384
Sportswear and Apparel +5.5% yoy 7,221 +6.0% yoy 7,216

Overall, for first half of FY17, the operational result was better than my expectation, mainly because of the less serious decline for footwear business in Q2. So, Q2 operational data was good news to me.

The reason why I invested in Belle is not because of its upside and growth potential, but because the market oversold it during the downturn. For Belle, its sportswear business is experiencing stronger growth in recent years, helping to offset the strong downtrend in footwear business. For this year, sportswear business should report higher revenue than footwear business, but the latter should remain to have higher margins than the former.

What about the competitors’ performance for first half of this year?

Stella International reported 10% drop in revenue and and 44% drop in net profit due to falling volume and ASP and rising competition. In its interim report, it highlighted the growing popularity of ‘athleisure’ footwear products – a fashionable take on the traditional sports shoe.

Daphne International suffered -11.7% SSSG for first half and reduced the number of outlets by 450 stores. Revenue decreased by 22.3% yoy and the bottomline suffered losses. Its interim report also mentioned the prevailing sports fashion trend in recent years.

I am expecting the operating margin of Belle’s sportswear business to normalize from 8.8% last year to 7%, but I think it should be exceeded for first half. I hope this year’s Euro 2016 and Olympics give it an extra boost in terms of margins.

Belle will report its FY17 first half result next month. The overall revenue and profit should decline compared to the corresponding period last year. But, as long as the financial numbers are inline with the reported operational data for first half, I’ll be satisfied.


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