Higher costs bite into Apex Footwear profits

Despite an impressive 51% jump in revenue, Apex Footwear Ltd logged merely 11% year-on-year profit growth in the first quarter of this fiscal year thanks to higher costs of sales, marketing and logistics and the massive appreciation of the dollar against the taka.

In the July to September quarter, the company's revenue increased to Tk424.68 crore, from Tk281.88 crore in the same period a year ago.

Its local sales and exports increased by 16.45% and 88.38% respectively.

According to its financial statements, the cost of marketing, selling and distribution increased by 28.14% to Tk68.12 crore.

Its net profit stood at Tk3.15 crore, which was Tk2.84 crore in the first quarter of FY22.

The earnings per share (EPS) stood at Tk2.67 and the net asset value per share was Tk251.12.

Apex Footwear's Chief Financial Officer Dilip Kajuri told The Business Standard, "The company's operational costs went up by 5% due to dollar appreciation and also the recent power disruptions."

He said a portion of the company's revenue came from the clearance sales of its products that were made during the pandemic.

"Besides, the company recently offered a 26% discount on its products on account of its 25th anniversary in the local market which augmented its sales massively," he added.

Local sales usually increase during festivals such as Pahela Baishakh, Eid-Ul-Fitr, and Eid-Ul-Adha.

Apex Footwear bounced back strongly from massive impacts wrought by the Covid-19 outbreak in the country and its consequent government restrictions from the second quarter of the last fiscal year.

Firoze Mohammad, chief operating officer of unit-2 of Apex Footwear, earlier said that the company, having captured 28% of the local market, wants to increase sales in the country's rural areas.

He said it also wants to consider 4% profit to provide export quality shoes at affordable prices to the rural people, adding that the company has already marketed several products under its 'Gram Project'.

Apex Footwear was listed on the capital market in 1993.

It recommended 35% cash and 10% stock dividends for its shareholders for FY22.

In FY22, its EPS was Tk11.70, which was Tk8.92 in FY21.

The last trading price of each share of the company at the Dhaka Stock Exchange (DSE) was Tk257.50 on Sunday.

Out of its total shares, sponsors and directors hold 31.75%, institutions 21.79%, and general investors have 46.56% shares as of October this year.