World Footwear


Grendene announces stable net sales and declining net income

Jun 6, 2014 Brazil
Grendene announces stable net sales and declining net income
The Brazilian group announced 1.6% variation in net sales, but with mixed performances in domestic and foreign markets. Net income is down 5.7%
During the first quarter of the year, Grendene’s gross revenue went up by 2.0% reaching 199.3 million euros, mainly motivated by a 30.8% increase in exports (from 41.6 million euros to 54.4 million euros). Foreign markets managed to consolidate its share in total gross revenue, going up from a 21.3% share registered in total sales in quarter one in 2013 to 27.3% in similar period in 2014. Overall net sales for the period went up by 1.6%, from 157.4 million euros in quarter one in 2013 to 159.9 million euros in similar period in 2014.

As volume of sales fell by 11.1%, from 52.6 million pairs sold during the first quarter of 2013 to 46.7 million sold in similar period in 2014, gross revenue was pushed by the increase on average price, up by 14.7%, resulting from a 14.2% increase in the price practiced in the domestic price, and a 24.8% growth in the exports price.

Net income declined 5.7%, from 33.1 million euros to 31.3 million euros.

As it can be read on the press release issued with the presentation of the financial results for quarter one, the company was expecting a difficult year and such is materialized in a “domestic market with small growth, inflationary pressures and pressures of competitors that try to recover the market share gained in recent periods, as well as the high comparison basis with 1Q13.”

Grendene pointed out that they maintained the position as Brazil’s leading footwear exports with a share of 43.6% of Brazilian footwear exported in during the first quarter of the year. Another fact of interest is the license agreement signed for the manufacture and sale of Olympikus sandals, and the launch of a brand of furniture TOG, which consists of 21 product families developed by a team of internationally recognized designers.

This set of results for the first quarter of the period follows a complete year of 2013 highly marked by sales increment both in volume (16.8% increase from 185.0 million pairs sold in 2012 to 216.2 million pairs sold in 2013) and value (net sales grew 16.2% from 609.7 million euros to 708.5 million euros). Net income in 2013 consolidated from the previous year, hitting 140.4 million euros (1.1% up from 139.0 million euros)

The Group is cautious about the forecasts for its performance during the rest of the year: “In 2014, the country is undergoing an electoral process for the choice of its president, it will host the World Cup and the Brazilian society will have to face great challenges in the infrastructure, education and the poor growth of the economy. In this context, 1Q14 was difficult, as expected, we raised the prices to pass the last year’s inflation and lost more volumes than we expected. For the year we expect small volume growth and a revenue growth lower than last year, but higher than the volume growth. It will be challenging to keep last year's margins since we began the year with costs higher than 2H13 and with prices not yet totally aligned. We also have to adjust our cost structure to the volumes actually demanded in this conjuncture. However, we are confident. In turbulent times, our growth has always occurred and one of our characteristics is the agility of adaptation. We believe in the potential of this market and for this reason we invest in the capacity expansion to meet the market demands. Domestically, we will keep our focus on strengthening our brands, achieving operational excellence and gaining market share. “

The company shares were last traded at 4.52 euros on the 5th of June at the São Paulo Stock Exchange (BM&FBOVESPA).

Founded in 1971, Grendene is one of the world’s largest producers of footwear. It has exclusive proprietary technologies in the production of footwear for the women’s, men’s and children’s markets. It owns several brands, such as Melissa, Grendha, Ilhabela, Zaxy, Rider, Cartago, Ipanema, Pega Forte, Grendene Kids and Grendene Baby. It also licenses the use of celebrity personalities, and characters in the world of children’s media. Grendene is a totally integrated operation, with six industrial locations and thirteen footwear factories, resulting in an aggregate capacity to produce 250 million pairs of shoes per year – it has its own mold-producing plant, a factory producing PVC for its footwear production, and distribution logistics serving both traditional and non-traditional distributors and retailers in the whole of Brazil, and in the export market.

For more information about Grandene please refer to the company's website.

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 5th of June.

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