Listing candidate Belle International, the mainland's biggest women's shoe retailer, said each of the 1,000 new outlets it planned to open every year could start contributing profit after one month of operation because of the high margins in such businesses.
Belle's gross margin for footwear retailing, which generated 64.3 per cent of the company's revenue in the second half of last year, was 62.9 per cent. Gross margin for sportswear retailing, which accounted for 35.7 per cent of the company's sales, was 35.8 per cent.
Belle chief executive Sheng Baijiao yesterday said that fluctuations in costs of raw materials including leather would have little impact on the company's profitability because margin in retailing was high.
Belle owns more than 2,800 women's footwear stores and concessionaire counters, and more than 1,050 sports shoe stores under the brands Belle, Teenmix, Tata and Staccato. It is also the licensee of Joy & Peace and Bata.
Each new outlet cost between 100,000 yuan and 200,000 yuan, the company said, adding that capital expenditure this year would reach 884 million yuan from last year's 500 million yuan.
To fund expansion, Belle aims to raise as much as HK$8.6 billion in an initial public offering with LVMH Moet Hennessy Louis Vuitton, the world's largest luxury-goods maker agreeing to buy US$30 million worth of shares. LVMH's purchase accounts for about 3 per cent of the institutional portion, based on the 90 per cent of the issue allotted to the tranche.