Shares in Mirabell International Holdings rocketed after Belle International, a large competitor in Hong Kong, offered to buy out the Chinese shoe retailer at a 15 percent premium price of HK$1.67 billion (€136.5m-$214.4m). DBS Asia Capital, a subsidiary of Belle, made the offer on behalf of the group and an extraordinary shareholders’ meeting on this issue will be held at Belle in early April. First Shanghai Capital Limited acts as its financial adviser in the deal.
Belle, which went public last year, made the move in order to boost its organic growth on the Chinese mainland and invest in Mirabell’s medium-high-range footwear offer. This category seems to have huge growth potential in China and will add to the group’s lower-priced categories of women’s footwear.
Mirabell currently has 105 stores based on the Chinese-administered territories of Hong Kong and Macau and another 207 on the Chinese mainland. In the first half of the 2007 calendar year, turnover at Mirabell grew by 8.5 percent to HK$454 million (€37.1m-$58.3m) and profits at the company surged to HK$3.4 billion (€278.0m-$436.5m) from HK$70 million in the previous year.
Stores owned by Mirabell are run under banners such as Mirabell, Joy & Peace, Fiorucci, Inshoesnet and Geox. Mirabell has an additional 133 stores in China that are franchised out under Joy & Peace, and another 17 under Fiorucci in Taiwan. Mirabell’s products fall into a price range of $60 to $300.
The Mirabell Group is involved in the manufacturing, wholesale and retail stages. It was founded by Tang Keung Lam and Tang Wai Lam in 1989 – presently vice chairman and chairman of the company – who went on to open two outlets in Hong Kong. The company acquired retail space in Macau in 1994 and in China in 1997. It is currently the exclusive distributor of Caterpillar, Merrell, Royal Elastics and Sebago in Hong Kong, Macau and mainland China, and of Geox in Hong Kong and Macau.
Meanwhile Belle International published very strong results for 2007. Its net profit shot up by 102.7 percent to 1.9 billion Chinese renmimbi (€172.9m-$271.4m) for 2007. Total revenues increased by 87.1 percent to RMB 11.7 billion (€1,064.6m-$1,671.4m), mainly due to acquisitions in the sporting goods sector in mid-2006 and to the opening of 2,280 stores.
Sales of shoes and footwear products grew by 33 percent to RMB 6.2 billion (€564.1m-$885.7m), generating a higher gross profit margin of 63.8 percent, up from 63.0 percent in 2006. Sportswear sales jumped by nearly 250 percent to RMB 5.4 billion (€496.4m-$771.4m), but here the gross margin declined slightly from 35.8 to 35.6 percent, diluting the overall gross margin to 50.6 percent. Labor costs grew by 8 to 10 percent at Belle.
Within the footwear segment, 91.6 percent of the turnover was represented by company-owned brands, while only 5.5 percent came from the sale of distributed brands and another 2.9 percent from contract work.
In Belle’s sportswear business, turnover for first-tier brands was RMB 4.73 billion (€425.7m-$668.3m), or 86.5 percent of the total turnover came from the distribution of Adidas and Nike, which both enjoyed steady and healthy growth. The balance came essentially from second-tier brands such as Fila, Reebok, Puma, Kappa, Mizuno, Converse and Li-Ning.
Most of the company’s revenues, or a total of RMB 11.3 billion (€1,017m-$1,597m), came last year from mainland China, where they doubled. Smaller jumps were seen in Hong Kong, which had revenues of RMB 172 million (€15.5m-$24.3m) last year, up from RMB 131 million; and elsewhere, up to RMB 223 million (€20.0m-$31.5m) from RMB 173 million in 2006.
The regional variations were largely due to the fact that most of the 2,280 new company-managed stores were opened in mainland China. By the end of 2007, the group managed a total of 6,143 stores, of which 6,090 were in the Chinese mainland and the others in Hong Kong, Macau and the USA. Out of the total door count, 3,732 were shoe shops and 3,399 were selling Belle’s footwear brands including Staccato, Teenmix, Tata and JipiJapa. Out of the 2,358 sportswear stores, 1,492 were Adidas and Nike single-brand shops.
In mainland China, the so-called second- and third-tier markets grew faster than the first-tier market (Beijing, Shanghai, Guangzhou, Shenzhen). Looking to the future, Belle plans to operate differently in the different areas of the country, focusing on enhancing brand quality in the first-tier markets and emphasizing expansion in the others.