David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

Which apparel retailer has the most stores worldwide? Zara's owner Inditex? Hennes & Mauritz? Uniqlo's parent Fast Retailing?

None of those: It's the Chinese shoemaker Belle International. Its 20,873 outlets, under brands such as Joy & Peace and Tata, form the biggest retail network after Seven & I, the Japanese owner of the 7-Eleven convenience-store chain.

You could put together all the stores operated by Gap, TJX, Foot Locker, Home Depot, Staples, Target, Sears and Guess, and still have a smaller fleet than Belle. Last year it had more stores in Xinjiang -- a sparsely populated desert province in China's far west -- than Under Armour has worldwide.

Here, There and Everywhere
Belle has almost twice as many outlets as any other discretionary retailer
Source: Bloomberg data
Note: Staples retailers such as convenience stores, supermarkets, and pharmacy chains have been excluded

While the total includes concessions in department stores that are probably less arduous to run than a standalone shop, that doesn't mean they're cheap. Of 253 retailers worldwide with sales of at least $1 billion, Belle spends the biggest share of revenue on rent, according to data compiled by Bloomberg -- a bigger proportion than Prada, Hugo Boss or L'Occitane.

Too Damn High
Belle's rental expense as a percentage of revenues is the highest among large retailers globally
Source: Bloomberg data
Note: Shows only stores with at least $1 billion in annual revenue. Based on figures for latest fiscal year.

That's not a smart strategy. There's a reason most of the biggest store fleets are operated by sellers of staple goods -- supermarkets, pharmacies and convenience stores. Rent is a fixed cost, so it's best kept low if you're selling discretionary items such as clothing and electronics, which can rise and fall with consumer sentiment. Retail leases can be notoriously expensive to quit -- just ask BHS, the U.K. clothing and homeware store that collapsed last month after struggling under the weight of an oversized rental bill.

None of that is necessarily a problem as long as sales are rising smartly. Belle's are not. While its sportswear and clothing stores are doing all right, sales from footwear outlets open at least 12 months have been on an unbroken downward trajectory for more than two years as the likes of Alibaba, and Vipshop lure more consumers online and Chinese shoppers head for glitzier malls rather than the department stores where Belle is omnipresent. Shoe shops make up about two-thirds of Belle's fleet, so the issue can't be wished away: the company wrote off about a third of its goodwill and intangible assets thanks to "deteriorating performance in the footwear business'' in annual results reported overnight Tuesday. 

Hole in My Shoe
Sales from Belle's footwear stores open at least 12 months have been cratering
Source: Bloomberg data

It's not just competition from the Internet, either. The rising cost of essentials -- pork prices in April were up 34 percent from a year earlier -- is squeezing the amount of cash Chinese consumers have to spend on other goods. That's putting downward pressure on the sorts of things that Belle makes money from: Inflation in apparel and footwear last month was running at its slowest pace since 2011.

Buddy, Can You Spare a Dime?
Rising Chinese food prices are squeezing other areas of spending. Consumer price indexes by sector
Source: Bloomberg data

Belle has some defenses at its disposal. It's holding about 6.92 billion yuan ($1.1 billion) in net cash, so should be able to avoid the sort of liquidity problems that can be fatal to overextended retailers. Its operating margins have held steady around 15 percent for several years, although they dipped sharply to 10 percent in Tuesday's annual results.

Its shares, trading at just 8.7 times estimated earnings over the coming 12 months, are also cheap. The median among more than 600 companies globally in the leisure goods, personal goods and retail industries is 16.1, according to data compiled by Bloomberg.

But investors should keep an eye on that outlet empire and remember that caveat emptor is the oldest piece of retail advice. Cheap doesn't always mean good value.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
David Fickling in Sydney at

To contact the editor responsible for this story:
Paul Sillitoe at