Chinese consumers “moving away from shoes”
02/06/2014
In a statement to the Hong Kong Stock Exchange, Belle International said this level of growth was “significantly lower” than in previous years. It said slower growth was now the norm in the Chinese economy, which it described as “continuing its structural rebalancing”. It said the outlook for the next two years was less than optimistic, with the consumer retail market continuing to come under pressure owing to “weak consumer sentiment”.
The group has more than 13,000 footwear outlets across China and is a major consumer of locally produced leather. It operates five factories in Shenzhen and Dongguan in Guangdong province, Jianhu in Jiangsu province, Zigui in Hubei province and Suzhou in Anhui province, with a combined annual production capacity in excess of 40 million pairs of shoes.
In 2013, Belle decided to change its financial year end date from December 31 to February 28 or 29 “to coincide with the natural retail cycle in the footwear business”. For the 14-month period up to the end of February this year, Belle International posted revenues of around $6.9 billion. This represents an increase of 10% on the 14-month period leading up to the end of February 2013. Operating profit in the period to February 28, 2014 was just over $1 billion, growth of 4.1%.
Reacting to the results from Belle International and other major retail groups in China, the head of China Market Research, Shaun Rein, told the Financial Times: “From a consumer confidence point of view, this is the worst I have seen in my 17 years in China. Consumers are concerned about wage growth and rising housing prices so they are cutting back on spending. They are moving away from shoes and apparel, spending [money] on experiences such as tourism and movies.”
However, even if growth is at a lower level than in previous years, Belle International’s results show that the footwear market is still growing, and in many economies, 4.1% growth would be hailed as great success.
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