Belle Converse shoes economic crisis behind the accumulation of inventories

Recalled in 2008, the global economy has yet to escape the period, consumption of the mainland's 1.3 billion people strong, a lot of domestic shares in 2008 are to produce beautiful results, but he died alone Belle haggard, mediocre performance, operating performance, comparable with similar difficulties, in the past weeks the stock market boom, its stock price has lagged behind.

     But the Belle of the Mainland footwear category leader, from 2005 to 2007 profit surged twice, is that many investors love China's economy has maintained growth, increased spending power of mainland people, Belle has become hot in a matter of course. But the company could not pay good results in 2008, have made difficult to build a good price. Belle Shoes 2008 income of 17.856 billion yuan (RMB below), an increase of 53%, the group last year to expand, from the 2007 self-employed retail stores increased to 9,169 of 6,090 family homes. However, profitability has failed to catch up, net profit rose by only 1.58%, only a year and $ 2.0 billion.
Revenue surged five-fold
One of the reasons to reduce profits, with the company in 2007 with a special gain related. 2007 Belle recorded revenue of more than 500 million yuan financing, including freezing of funds to bring a listing of more than 300 million yuan of disposable income, financial income in 2008 and only 7,225 yuan. With significant increase in income tax expense in 2007 compared with nearly five times from $ 43.2 million emergency increase to nearly 2.6 billion yuan, profit greatly reduced so far as sales performance.
Actually, Belle 2008 first half results have been less than ideal, turnover rose 60%, net profit is now back, edged down 1.4% year, the same tired by tax expenditures. Annual report in 2008 explained that its new Belle Footwear (Shenzhen) Co., Ltd., enjoy income tax exemption in 06,07, 08 to 10 years income tax of 9%, as the newly acquired Senda, Millie and Mirabell , in the Mainland tax rate of 25% can be expected the company's tax expenses remain high.
In addition, Belle expenses also increased last year, "selling and distribution expenses," "general and administrative expenses" were recorded in two parts over 60% increase, which "selling and distribution expenses" amounted to 5.68 billion yuan , accounting for more than 3 percent of revenue, the future situation are worth noting.
Although in 2008 the company is still profitable, are also capable of expansion, but the above-mentioned negative factors, such as tax rates continue high, eating into profits, is not yet see the turn for the better, as big expansion led to the problem of rising costs, management has 09 sportswear stores that will not significantly increased, mainly because the part of the business re-engineering, and footwear will increase 10-15% stores, or about 600-900, compared with 4,000 in 2008 over the shop, the pace is slowing down.
Inventory accounting for 40 percent of current assets
2008 Belle expanding rapidly, the company's assets and liabilities Jie increased, but increased by about a quarter of assets, liabilities, has risen more than doubled Nevertheless, the current ratio is still 2.9:1, debt accounts for only 26% of shareholders' equity, financial condition appears to health. However, scan the contents of current assets, but found the situation unusual.
Belle inventory in 2008 compared with nearly 07-fold increase from the 2.28 billion yuan to 42.3 billion, as no large changes in total current assets, inventories accounted for approximately 25% from the current assets increased to nearly 44%, but cash is greatly reduced, reduced by the 5.21 billion yuan to 23.3 billion. Belle of liquidity seen in fact has been on a decline, with current liabilities for trade payables rose and more than doubled, reaching 325 million yuan, even if the quick ratio is still 1.6:1, as the standard measure of liquidity is still qualified, But if inventory continues to increase the proportion of total current assets, the company is very bad.
Belle inventory rapidly increased concern the outside world, not only worrying sales inventory accumulation problems, such as the need may also drag down sales margins. 2008 Belle average inventory turnover of 138.1 days, compared with 121.8 in 2007 on the rise. Management explained that the increase in inventories was due to overestimation of the earlier sales, but has improved in the first quarter, and emphasizes the inventory is less than its peers. However, the company in 2007 as inventories rose more than doubled in 2006, in fact, Belle main retail distribution business and other distributors of the brand only to enterprises, such as China Dongxiang (03818), Li Ning (02331) and other business patterns are different, more prone to inventory problems, poor economic circumstances, the pressure is particularly evident.