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Challenging external market weighs on Grendene’s full year results

Mar 4, 2024 Brazil
Challenging external market weighs on Grendene’s full year results
The owner of Melissa and Ipanema brands ended 2023 in the red, with the macroeconomic environment remaining unfavourable to consumption in the fourth quarter of last year
“The labour market remained constrained, high interest rates, and substantial levels of debt continued to have a negative effect on household consumption. In the absence of an improvement in the economic climate, Grendene's sales patterns during the 4Q23 mirrored those witnessed during the initial nine months of the year: a more resilient domestic market characterized by revenue and volume growth, contrasted with a challenging external market”, said the management.

Fourth Quarter Results

In the fourth quarter of fiscal 2023, Grendene’s gross revenue totalled 924.3 million Brazilian reais (172.0 million euros), reflecting a slight decrease of 1.5%, on a comparable basis to the same period of the previous year. In total, the company shipped 42.5 million pairs of shoes during the period, down by 2.4% year-over-year, with gross revenue per pair remaining stable at 21.73 Brazilian reais (4.04 euros).

The company said that its domestic gross revenue rose by 7.3% year-over-year in the last quarter of the year to 762.0 million Brazilian reais (141.8 million euros), while its international gross revenue declined by 28.8% year-over-year to 162.3 million Brazilian reais (30.2 million euros).  

Overall, in the last quarter of the prior year, Grendene’s net revenue reached 760.8 million Brazilian reais (141.6 million euros), decreasing from 763.7 million Brazilian reais in a similar period a year ago.

The Brazilian company reported a net profit of 243.0 million Brazilian reais (45.2 million euros) in the fourth quarter of 2023, which reflects an increase of 20.0% as compared to the same period of the previous year.

Full Year Results

In 2023, Grendene’s gross revenue declined by 3.5%, on a comparable basis to the prior year, reaching 3.0 billion Brazilian reais (558.8 million euros). Full year gross revenue from the domestic market totalled 2.45 billion Brazilian reais (455.9 million euros), up by 3.2% year-over-year, and its international gross revenue amounted to 555.5 million Brazilian reais (103.4 million euros), down by 25.0% year-over-year.

“In Brazil, the Kids line and the female and male segments, along with the Melissa brand, were the primary contributors to favourable results in Brazil, where revenue and volume increased substantially in comparison to the same period last year. In contrast, Ipanema and Pega Forte brands faced a decline in this period, indicating a decline in their respective sales performances”, added the company, looking at the performance of its brands.

Overall, the company’s net revenue last year decreased by 3.1%, reaching 2.43 billion Brazilian reais (452.1 million euros), as compared to the year 2022.

Grendene highlighted as well that there was a “robust growth in margins” and a return “to historical levels”, and the “company’s ability to adapt and operate in adverse situations”. Therefore, its full year gross profit margin improved by 4.4 percentage points to 44.5% from 40.1% in 2022.

In the twelve months to the 31st of December, the company reported a net profit of 557.7 million Brazilian reais, down by 1.8% as compared to 568.0 million Brazilian reais (103.8 million euros) in the prior year.

1 Brazilian real = 0.19 euros


Image Credits: fratinardi.it

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