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Alpargatas announces 26.3% increase in net income

May 27, 2014 Brazil
Alpargatas announces 26.3% increase in net income
The Brazil based company posted net revenue up by 14.1% in the first quarter of the year. Net income was 38.50 million euros, a 26.3% growth from similar period last year
The giant Brazilian footwear group announced an impressive set of results for the first quarter of the year, with net revenue going up 14.1% from 252.5 million euros in the first quarter in 2013 to 288.3 million euros registered in similar period this year.

The business in Argentina grew 30%, while operations in the United States, Europe and Exports (US and Europe) were up by 21.5%. Alpargatas Argentina has been under a restructuring plan for the last few months, and despite the uncertainty within that South American market the evolution of this business segment is consistent, having reached sales of 1.8 million pairs. Main reasons behind the good performance are the high popularity of Topper products in Argentina; the good retail performance, and a bigger proximity of the collections to the consumer's wishes. The US and Europe segment growth is mainly explained by an increase of the brand awareness of Havaianas; by important new clients (like J. Crew in the US) and by retail expansion. The Brazilian market, the main region for the company’ sales revenue, increased by a solid 9.0%. According to Alpargatas the main reasons explaining this growth in the domestic market were a higher average prices in sandals and sports items, a better mix of products and an increase on sales of high value footwear.

Net income for the first quarter of the new year was 38.5 million euros, a 26.3% increase from the 30.5 million euros registered in similar period in 2013.

According to the statement issued with the results, business environment in Brazil is even more challenging in the present than what it was last year, and the main factors are the high inflation and interest rates, and the fluctuating exchange currency. All of these allied to bigger uncertainty about employment has resulted in an alteration on consumer's behavior, who, according to Alpargatas, are now more selective and cautious about the future.

During the first quarter of the year, sales in the domestic market were stable at 2013 first quarter level reaching 53.9 million units of sandals, footwear, clothing and accessories. The company confirmed that 19.2 million pairs of sandals (brands Havaianas and Dupé) were sold during quarter one, an increase of 7.0% compared to similar period in 2012, and despite the negative impact of operational problems occurred in one of the plants in Brazil. Brand Muzino' sales grew 8.6% in the period under analysis; Topper increased by 1.4% and Timberland 10.8%.

This set of good results is in line with the full year results achieved in 2013: sales volume of 270.5 million units (an average annual growth of 5.4% since 2009), which generated net revenue of 1 131.1 million euros (an average growth rate of 15.5% per year since 2009). Net income in 2013 reached 111.7 million euros (an average annual growth of 24.25% since 2009).

According to Alpargatas, the second quarter will be marked by the launch of a new global sandals collection and by the premiere of a clothes line by brand Havaianas. To support this, new directly operated stores will be opened. The company is expecting Europe and the US to be strong clients for the Spring/Summer sales, taking into consideration the orders booked so far. Alpargatas Argentina should be in a stronger position to resume profitability.

The company shares were last traded at 3.96 euros on the 26th May at the São Paulo Stock Exchange (BM&FBOVESPA).

Alpargatas has its origins in 1907, when Scotland born Robert Fraser moved to Brazil and founded the Sociedade Anonyma Fábrica Brazileira de Alpargatas e Calçado. In the 10s the company started to produce alpargatas, a type of footwear that became very popular in the coffee plantations, and that was the motor of the company business in the early days. In the 30s the company launched the first leather shoes. The following decades were characterized by consistent launching of new products and brands and a strong brand awareness exercise in Brazil. Havaianas sandals, its most popular type of footwear, were launched in the 60’s and reached the historical record of 100 million pairs sold in the 90s. Recently, the group acquired a significant participation at Alpargatas Argentina and opened own operations in the US and Europe.

For more information about Alpargatas please visit the website:
http://ri.alpargatas.com.br/default.asp

Please note the company posts results in Brazilian real; Conversion to euros was made applying the exchange rates presented by the European Central Bank on the 26th of May.

Company profile

Name

Alpargatas

Activity
Manufacturing, marketing and distribution of sports footwear and related items

Portfolio of brands
Havaianas, Dupé, Topper, Rainha, Mizuno, Timberland, Sete Léguas, Meggashop Outlet, Osklen

Foundation year
1907, as Sociedade Anonyma Fábrica Brazileira de Alpargatas e Calçado

Founder
Robert Fraser

Listing
BM&FBOVESPA (São Paulo Stock Exchange)

Stores operated (as at end March 2014)
613

Employees (as at the end of 2013)
19 700

Contact Information
Av. Dr. Cardoso de Melo, nº 1336, 7º andar
04548- 005 São Paulo
http://ri.alpargatas.com.br/default.asp

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