Belle says Q1 store sales grows, sees pressure on costs

May 26 - Belle International Holding Ltd, world's No.4 apparel and accessories retailer by market value, posted a 22 percent rise in same-store sales for the first quarter and expects to maintain the pace this quarter, its chief executive said.

Belle

But the Chinese footwear distributor also sees rising cost pressures from materials and labour.

"We sees some pressure from costs and fees," Chief Executive Sheng Baijiao told reporters after an annual general meeting. "We have to digest the pressure from rising raw material costs, labour costs and increasing tax expenses."

Sheng said the company aimed to offset the cost increases by improving sales efficiency, and would maintain a mild 3-5 percent increase in product prices this year.

Belle is a strategic partner of Nike Inc and Adidas AG, which account for more than 80 percent of its sportswear sales. It also distributes Converse, Kappa, Puma, Reebok, Li-Ning Co Ltd and Mizuno brand sport shoes.

Belle, which said its gross profit margin increased to 55.7 percent in 2010 from 53.3 percent in 2009, recorded same-store footwear sales growth of 16.5 percent in the second half of 2010, down slightly from 18 percent in the first half.

The company recorded 22 percent growth in first quarter of 2011.

"For the second quarter, (growth) will not be very different from the first quarter. The overall (business) environment has been good," Sheng said. "Performance in the first four months was better than we expected."

Sheng said the company had initially forecast same-store sales growth of 10-15 percent for this year, compared with about 17 percent growth in 2010.

Sheng forecast wages to rise 15 percent this year, higher than a 12 percent increase in 2010, but he said the rapid growth in wages should steady in 2-3 years.

The company aimed to maintain network growth of about 10 percent per year, he added.

Belle, China's largest shoe retailer with more than 10,000 outlets in China, said it faced a shortage of labour and rising wages as rural workers are less willing to work far from home.

Shares of Belle were up 3.4 percent at midday on Thursday, compared with a 0.74 percent gain by the Hang Seng Index.

By Donny Kwok and Rachel Lee
(Editing by Chris Lewis)

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