Belle avoids wage increase by moving manufacturing inland
24/02/2014
It said manufacturing labour costs did not increase because it had moved production inland.
The footwear business recorded revenue growth of 5.9%, a rate significantly lower than prior years. “There are three major reasons,” said the group. “First, same store sales growth was weak. Second, there was a slowdown in new store expansion. Third, lost revenues from the discontinuation of a certain brand could not be fully offset by a new distribution brand."
The gross profit margin of the sportswear business was higher than the same period of last year by
2 percentage points. “The promotional environment was gradually normalised, resulting in less discounting. Brand companies provided more subsidies and support to distributors, resulting in reduced purchase cost.”
It added that it will continue to move production to inland areas. “On the one hand this can help us improve stability in the manufacturing labour pool, especially in light of the shortage of labour supply in southern China as well as the seasonal disruptions. On the other hand the geographical relocation also helps alleviate and partly offset the cost pressure due to wage inflation.”
Company-owned brands include Belle, Teenmix, Tata, Staccato, Senda, Basto, Jipi Japa, Millie’s, Joy & Peace,15MINS and Mirabell. Distribution brands include Bata, Clarks, Hush Puppies, Mephisto, Merrell and Caterpillar.
Belle directly managed a network of 19,077 stores in mainland China as end of 2013, an increase of 9% from a year ago. It said it would maintain a similar pace of network expansion in the next two to three years.
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