Belle Fashion Group Files IPO Application to HKEX Again

On March 1, Belle Fashion Group, a leading Chinese fashion footwear and apparel company, submitted an IPO application to the Hong Kong Stock Exchange, with Bank of America Securities and Morgan Stanley as joint sponsors for Belle Fashion Group's IPO.

According to the prospectus, for the nine months ending on November 30, 2023, the company's revenue reached CNY 161 billion, a 12.8% year-on-year increase, with a net profit of CNY 21 billion, marking a 92.7% year-on-year growth. The net profit margin reached 12.8%, the highest level during the performance period.

Belle Fashion, whose business was previously operated under Belle International (formerly listed under the code 1880:HK), was listed in Hong Kong in 2007 at an offer price of HKD 6.20 per share, with a market value of approximately HK$51 billion. At its peak, its market value reached as high as HKD 150 billion. At the end of April 2017, Belle International accepted a buyout offer mainly from Hillhouse Capital and CDH Investments, completing its privatization and delisting from the Hong Kong Stock Exchange for a total price of HKD 53.135 billion. On July 27th of the same year, Belle International's shares were delisted from the Stock Exchange of Hong Kong.

The main reason for privatization was that since 2014, Belle International's footwear business (the main source of Belle International's operating profit) had experienced a significant decline in performance. The weak performance of the company's footwear business led to a continuous decline in overall financial performance.

According to Frost & Sullivan data, Belle Fashion Group has maintained the number one market share in the fashion footwear category in China for over a decade, increasing from 11.2% in 2020 to 12.3% in 2022. From 2021 to 2023, the overall retail sales of the fashion trend market in China showed a small V-shaped fluctuation. In 2022, a year of industry downturn, Belle Fashion Group, while enduring certain downward pressure, not only maintained profitability but also further expanded its market share. Data shows that in 2022, Belle Fashion Group's market share rose to 12.3%, far surpassing the second-ranked company.

Belle Fashion Group's performance growth is closely related to its diversified track.

The prospectus shows that Belle Fashion Group has established a diversified portfolio of 19 core brands, covering categories such as women's shoes, men's shoes, children's shoes, clothing, and accessories. As a pioneer in China's footwear and apparel industry's vertically integrated business model, Belle Fashion Group adheres to a DTC (Direct-to-Consumer) retail model, continuously optimizing its offline retail network, and strategically focusing more resources on online operations.

On one hand, physical stores have strategically optimized and upgraded their operations based on each brand's development strategy, strategically closing underperforming stores, and focusing on improving the efficiency of individual stores. As of November 30, 2023, Belle Fashion had over 8,300 directly operated stores and tens of thousands of employees across 300+ cities in China. According to data from Frost & Sullivan, Belle Fashion possesses the largest directly operated fashion footwear and apparel retail network in China.

On the other hand, Belle Fashion has heavily invested resources in continuous online expansion. According to its prospectus, the proportion of Belle Fashion's online footwear and apparel revenue has increased from less than 7% for the fiscal year ended February 28, 2017, to 28% for the nine months ended November 30, 2023.

Belle Fashion's DTC (Direct-to-Consumer) omnichannel retail network, after years of refinement and continuous optimization, has solidified the foundation for performance growth. This, coupled with the expansion of multiple brand portfolios, has formed a dual driving force. The combination of its "order, replenishment, iteration" product model, precise research and development, and accurate marketing, has not only deepened the interactive relationship between the brand and consumers but also facilitated a flexible upgrade of the supply chain. This ensures Belle Fashion's core competitive advantages and barriers within its business model. Wang Xiaoyi, a marketing professor and associate dean at the School of Management, Zhejiang University, believes that in the high-quality development of omnichannel retail, both subtraction and addition are necessary. It is not merely about the increase or decrease in the number of stores, but more importantly, about the structure and the overall picture. Belle Fashion's DTC omnichannel retail network has a reasonable structure, providing strong support for its performance growth.

Furthermore, since initiating comprehensive digital transformation in 2017, Belle Fashion has adhered to technological innovation and forward-looking digital construction, achieving an industry-leading level of digitalization. As of the end of November 2023, Belle Fashion had obtained 144 patents related to automated intelligent manufacturing. In January 2024, Belle Fashion obtained a Level 4 Enterprise Certificate in Data Management Capability Maturity Model (DCMM), led by the Ministry of Industry and Information Technology, making it the only consumer retail company among nearly a hundred Level 4 and above graded enterprises.

Currently, Belle Fashion has implemented digital applications across various stages of the entire value chain, including product design, merchandise management, production, and DTC retail. For instance, in digital merchandise management, Belle Fashion innovatively developed a dynamic data presentation system for the entire lifecycle of products, enabling real-time analysis of "procurement, sales, adjustments, and inventory" data, thereby aiding the group in swiftly formulating plans for ordering, replenishment, and iteration, and improving the efficiency of product circulation.

Benefiting from the expansion of its diverse brand portfolio, the advantages of its omnichannel network, flexible supply chain's rapid and precise response, and the efficiency enhancement brought about by the digitalization of the entire value chain, Belle Fashion has achieved steady profitability and rapid recovery during a challenging period for the industry, with its market share steadily increasing year by year.

As of the latest available information, Belle holds a 46.36% stake in Belle Fashion, Hillhouse holds 44.48%, and SCBL under CDH investment holds 9.16%. The ultimate beneficial owners of Wise Rise include several directors, as well as current and former senior management members of Belle International Group and its affiliated companies.