Tuesday, September 9, 2014

Seeking Alpha: Belle International Fairly Popular Despite Some Core Weakness

It is certainly true that not all retail is the same and that has been quite clear over the last six months in China's retail sector. Food retailers like Sun Art (OTCPK:SURRY) and China Resources Enterprise (OTCPK:CRHKY) are struggling through weak same-store sales growth, but footwear and sportswear retailers like Belle (OTCPK:BELLY), Daphne (OTCPK:DPNEY), and ANTA Sports (OTCPK:ANPDY) are doing quite a bit better despite unimpressive same-store growth in the footwear business.

I have mixed feelings about Belle shares after this better than 10% move since my last update. I think Belle has a very good business (six of the top ten women's footwear brands in China and a long run of double-digit returns on capital), but management still has a lot of work to do with its online strategy. I'm also a little concerned about valuation, as the market seems to already be pricing in at least 8% annual free cash flow growth across the next decade.

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Belle International Fairly Popular Despite Some Core Weakness

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