BELLE Invested 880 Million Yuan To Acquire Big&Nbsp; Step&Nbsp; Limited To Expand The Sports Market.

Yesterday,

Domestic peers have lowered their business expectations and contracted their scale. BELLE International (01880.HK) has been expanding against the trend.

Yesterday, BELLE announced that it would invest 880 million yuan to acquire a full stake in a company called Big Step Limited, and would like to increase domestic sports and leisure with the latter.

"There is a great correlation between the two businesses. BELLE's acquisition of Big Step can greatly enhance the company's share in the high-end sports brand market and substantially reduce procurement costs."

Du Yanhong, a retail researcher at CIC, told reporters, however, how the effect of the investment plan will ultimately depend on BELLE's later resource integration, brand building and market development capabilities.

Big Step is a sports brand distribution company in China. It sells and distributes Nike and Adidas products in some provinces and cities, and has 600 self operated stores.

The scope of this business is basically the same as that of BELLE.

And BELLE's business scope is beyond Belle, Teenmix, Tata, Staccato and other footwear businesses.

"Big Step is mainly engaged in Nike, Addias and other brands, and has a strong resource advantage."

Du Yanhong believes that the company is in a monopoly position in some areas. After BELLE's acquisition, it can rely on its advantageous resources to enrich product categories. It is estimated that Big Step will bring BELLE 2 billion yuan per year terminal revenue.

In fact, the acquisition of Big Step is a continuation of BELLE's ideas to expand its domestic market.

In recent years, BELLE has increased the integration of the distribution market and eliminated some disadvantaged dealers.

At the same time, BELLE has also accelerated its entry into various cities. Last year, for example, the group has entered more than 30 new cities, and has worked with more than 200 department stores, with 1025 net growth year-on-year, an increase of 28% over the same period.

BELLE's 2011 Annual report shows that the sales revenue of sportswear products is 10 billion 346 million yuan, up 15% from 8 billion 997 million yuan in 2010.

However, the success of this "speed up plan" will be tested by the market environment.

Due to the disappearance of the international economic situation and the domestic dividend policy such as population and land, the sports apparel industry has been developing rapidly from the rapid development. At the beginning of this year, all kinds of sports brands including Lining, Anta and so on all encountered the industry test of declining orders and high inventory.

Credit Suisse's recent report also pointed out that domestic sports apparel industry competition is white hot, coupled with overstock and unreasonable discounts to distributors, this year's outlook is cautious.

In fact, BELLE's performance last year is also showing signs.

Last year's performance showed that the proportion of sports apparel business in the group fell from 38.2% to 36%, and gross margin was 36.6%, up only 0.7 percentage points from the same period last year, far below the gross profit margin of the footwear products of the group.

BELLE said frankly that the future sportswear business is facing many challenges such as general merchandise channel adjustment, fierce competition of international sports brand and overstock of local sports brand.

Du Yanhong thinks, but Big Step is mainly for the middle and high-end market, and this part of the market tends to be saturated, and the promotion space is limited. In addition, similar business formats merge or there are duplication of redundant functions in the functional departments, and different corporate cultures need to be adjusted at the integration stage. The integration in the latter stage is more critical.