Bata stumbles, Apex shines amid Jul-Sep challenges

Infographics: TBS

Bata Shoe Company Bangladesh reported a loss with declining revenue in the July-September quarter of this year, primarily due to unforeseen events, notably the student-led mass uprising in July. 

Despite these challenges, Apex Footwear achieved growth in both revenue and profit during the quarter, largely due to swift management responses to mitigate adverse impacts and efforts to diversify export destinations.

Disruptions caused by the unrest led to a significant loss of working days, which adversely impacted the company's business, Bata officials say.

Today (13 November), Bata Shoe shares closed 0.58% higher at Tk906.10 on the Dhaka Stock Exchange (DSE) while Apex Footwear ended 1.22% lower at Tk202.20.

Market analysts say Apex Footwear is anticipated to sustain its growth momentum in the local segment surpassing the Bata Shoe Bangladesh as the company has begun manufacturing and marketing export-quality shoes at reasonable prices for rural customers.

They also highlight Apex Footwear's competitive edge in exports, as it is one of only three Bangladeshi companies certified by the Leather Working Group, the world's leading certification for responsible leather sourcing. This certification enhances Apex Footwear's appeal to foreign buyers and allows the company to command higher prices in the export market, thereby boosting profitability.

In contrast, as Bangladesh's oldest multinational shoe manufacturer, Bata has struggled to innovate and keep up with local competitors, leading to a decline in its position in the branded footwear market, the analysts observe.

Bata Shoe

According to Bata Shoe's unaudited financial statement for the July-September quarter, the company suffered a loss of Tk13 crore, resulting in a loss per share of Tk9.34 during the quarter. This loss per share was significantly higher than the same quarter of the previous year.

Moreover, its revenue also dropped over 18% to Tk153 crore during the quarter against the same quarter the previous year.

Bata Shoe said in its statement that suffering losses during the quarter because of the loss of working days due to unforeseen events in the country that impacted retail operations on a limited scale which caused lower sales and profitability.

Despite incurring losses, it declared a 340% interim cash dividend based on January-September 2024 results and the retained earnings up to 31 December 2023. The record date for entitlement of interim cash dividend on 19 November.

Apex Footwear

The local shoemaker reported that its revenue grew over 20% to reach Tk423 crore in the July-September quarter, compared to the previous year in the same quarter.

According to the company's officials, its local sales revenue rose 9% to reach Tk221 crore, while exports surged by around 36% to Tk202 crore during the quarter against the previous year at the same time.

Its net profit during the quarter grew by 26% to reach Tk2.82 crore, while the earnings per share was Tk1.98.

Omar Faruque, company secretary of Apex Footwear, told TBS that despite the July unrest and flooding, the company's local sales saw growth, though they fell short of the target. "Our extensive sales network across the country helped sustain growth in the local market," he said.

However, he noted that rising interest rates have become a major concern, squeezing profit margins.

Discussing the export market, Faruque explained that the company missed its export target last year due to lower orders from key buyers, particularly in Europe and Japan.

"Orders from these markets remain low, so we've diversified our export destinations to include the USA, India, and the Middle East," he said. 

Faruque further said, "We've received a positive response from these new markets, contributing to export growth, and are continuing efforts to expand into additional regions."

Meanwhile, Apex Footwear said in its disclosure on the Dhaka bourse, its board has recommended a 35% cash dividend and a 10% stock dividend. 

"The stock dividend is intended to improve capital adequacy, utilising retained earnings as paid-up capital," said the company in the statement.