Apex stumbles, Bata buckles: Footwear giants see profits shrink amid inflation, turmoil

Infographics: TBS

Bangladesh's two footwear giants — Apex Footwear and Bata Shoe Company (Bangladesh) — have closed their latest financial years with sharp declines in profits, underscoring the challenges facing consumer-focused industries amid persistent inflation, rising costs, and an uncertain business environment.

While Apex posted a 23% drop in profit, Bata reported an even steeper 41.26% fall, reflecting both operational hurdles and extraordinary disruptions in the marketplace.

Apex Footwear, one of the country's largest footwear exporters, saw its net profit fall to Tk13.55 crore in FY25, compared to Tk17.64 crore in the previous year. The earnings per share dropped to Tk8.62 from Tk11.22 a year ago.

During the January-June 2025 period alone, profit plunged 42% year-on-year to Tk7.53 crore, despite the company enjoying robust revenue growth in earlier quarters.

According to its July–March financials, Apex recorded a 29% year-on-year rise in revenue, reaching Tk1,369 crore, but the profit margins failed to keep pace.

A senior company officer, requesting anonymity, explained that the decline stemmed largely from higher income tax expenses due to greater deductions at source on export earnings. Additionally, sustained inflation compelled the company to offer discounts in the domestic market throughout the year, thereby cutting into its profit margins.

"Apex was able to push revenue growth, but increased tax deductions and inflation-driven discounts eroded the bottom line," he said.

To reward shareholders, Apex has recommended a 50% dividend for FY25, comprising 25% cash and 25% stock, compared to the previous year's 35% cash and 10% stock payout.

The decision will be placed before shareholders at the company's annual general meeting on 26 November, with the record date set for 20 October.

Market insiders noted that Apex has consistently issued stock dividends for three consecutive years to expand its paid-up capital, in line with Bangladesh Securities and Exchange Commission (BSEC) requirements.

Back in 2021, the BSEC mandated that all main-board listed companies must maintain a minimum paid-up capital of Tk30 crore. Apex's current capital stands at Tk15.72 crore, according to Dhaka Stock Exchange data. Stock dividends have therefore become a necessary tool to meet the regulator's standards over time.

Apex shares closed at Tk229.50 on Thursday, giving it a market capitalisation of Tk360.82 crore.

Bata hit by economic stress, external shocks

If Apex's struggles came from structural issues like rising taxes and inflation pressures, Bata Shoe Company's performance was derailed by both economic stress and external shocks.

The multinational footwear brand posted a net profit of Tk19.6 crore for the July 2024–June 2025 period, down from Tk33.37 crore in the previous year. For the April–June 2025 quarter, Bata even reported a net loss of Tk9.64 crore.

Revenue also took a hit, declining 6.43% year-on-year to Tk907.73 crore.

In its official statement, Bata attributed the weak results to "exceptional circumstances," pointing in particular to widespread vandalism earlier this year. In April, pro-Palestine protestors targeted several foreign and multinational-linked outlets across Bangladesh, mistakenly including Bata among Israeli-affiliated companies. Its stores in Sylhet, Chattogram, Khulna, Barishal, and Cumilla were damaged, disrupting operations and resulting in lost sales.

The company quickly issued a clarification, stressing that Bata is a privately held, family-owned multinational founded in the Czech Republic, with no ties to Israel or involvement in the ongoing conflict. "These events, while unprecedented, highlighted the company's resilience and the strength of its stakeholder relationships," Bata said.

Despite the blow to earnings, Bata had previously paid a generous 445% cash dividend for 2024, consistent with its practice of closing accounts on a calendar-year basis. Its shares ended Thursday at Tk875.50 on the Dhaka Stock Exchange, with a market capitalisation of Tk1,197 crore.

Industry insiders noted that both Apex and Bata are grappling with broader challenges common across Bangladesh's consumer goods sector.

Rising finance costs, higher income tax burdens, stubbornly high inflation, and an increasingly business-unfriendly environment have collectively dampened profitability.

For export-oriented firms like Apex, global demand shifts and tighter tax regimes have squeezed margins. For retail-heavy firms like Bata, unexpected disruptions and weak domestic purchasing power have compounded the pain, according to the market analysts.