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Alpargatas consolidates revenue growth

Jan 5, 2015 Brazil
Alpargatas consolidates revenue growth
The Brazil-based company posted consolidated net revenue up by 4.5% in the third quarter of the year. Net income totaled 17.2 million euros, down by 25% from similar period last year
During the third quarter of the current financial year the company sold a total of 70.4 million pairs / pieces (footwear and apparel), with the domestic market taking the largest slice (86.5%). The Alpargatas business in US had the most dynamic performance in volume terms, growing 34.5% from similar period last year. Total volume of sales for the nine months period ended at the end of September totaled 198.1 million pairs (a 3.2% increase from similar period in 2013). 

Consolidated net revenue for the quarter totaled 278.7 million euros, growing 4.5% from similar period last year. The company underlines the advance of international operations to explain this good set of results, with growth in all the indicators for Alpargatas Argentina, Alpargatas Europe, Alpargatas USA and exports, operations which jointly accounted for 29.2% of the consolidated net revenue for the quarter.

In Brazil, Alpargatas' quarter results were reasonable “considering that the quarter had a more favorable macroeconomic environment (exchange rate, inflation and consumer confidence) with strong sales". Sales volume increased 13.6%, driven by 15.2% growth in sandals in the quarter on quarter comparison, as well as the recovery of sports footwear sales from mid-August. Net revenue for the Brazil business increased by 4.2% totaling 197.2 million euros.

For the first nine months of the year, consolidated net revenue totaled 801.7 million euros, up by 7.7% on the same period in 2013 (or 13.6% discounting the exchange variation).

At the end of September 2014, the Alpargatas store chain in Brazil totaled 478 units, 66 more than the 412 in existence at the same time last year and 11 more compared with the end of June 2014. Havaianas brand heads the list with 366 stores, followed by Osklen (74). Meggashop and Timberland own 21 and 17 stores, respectively. Havaianas retail posted an 11.1% increase in net revenue over similar period in 2013, on a same store basis, due to the success of the new sandals collection. In the first nine months of 2014, Havaianas retail saw impressive revenue growth of 27.5%.

Alpargatas Argentina's performance in the third quarter of 2014 underscores the success of the turnaround and the company's resilience given the uncertain and challenging environment in the country in recent years. The growth in revenues and profitability in pesos during the quarter is the “result of the application of an efficient pricing policy, manufacturing productivity, investment in innovation for Topper products, success in sports marketing and strong control of operational expense” according to Alpargatas. Net revenue for the business in Argentina grew an impressive 50.6% in Argentinian pesos compared with the third quarter in 2013. Converted to Brazilian reais, this represents an increase of only 0.6% compared with similar period in 2013, reflecting the heavy impact of the strong appreciation of the Brazilian currency.

The Alpargatas business in other international markets (Europe and US) continues an excellent revenue performance, growing by 15.9% in the third quarter and 28.8% in the nine months period ended by the end of September.

The company shares were last traded at 2.12 euros on the 5th of January at the São Paulo Stock Exchange (BM&FBOVESPA).

For more information about Alpargatas please visit the company's website.

Note: The Company announces their results using the Brazilian real. An exchange rate of 3.2433 was applied, as announced by the European Central Bank on the 2nd of January 2015.

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