World Footwear

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Grendene's sales decline in the second quarter

Sep 1, 2023 Brazil
Grendene's sales decline in the second quarter
Despite posting a weak second quarter performance in 2023, the Brazilian owner of the Melissa and Ipanema brands is pleased with its first half and confident for the remaining year
“The second quarter of this year was similar to the first three months of the year. The adverse domestic environment, as well as the global economic slump, continued to weigh on demand, affecting the Company's sales momentum”, reads the company's statement.

Therefore, in the second quarter of the current fiscal year, Grendene's gross revenue declined by 8.6%, totalling 586.2 million Brazilian reais (109.2 million euros), on a comparable basis to the same period of fiscal 2022 – the volume of pairs shipped fell by 15.4% to 26.8 million, while the gross revenue per pair rose by 8.1% due to price adjustments made in the domestic market.

In this period, its domestic gross revenue rose by 0.1% over the second quarter of 2022, reaching 499.3 million Brazilian reais (93.0 million euros), as the volume of pairs sold decreased by 4.7% to 23.2 million Brazilian reais and the gross revenue per pair rose by 5.1%. However, the number of pairs shipped to international markets fell by 50.7% in the three months to the end of June, reflecting a gross revenue decline of 39.1%, on a comparable basis to the same period of last year, despite an increase in gross revenue per pair of 23.5%.

Factoring in the precedent quarter performance, in the first half of 2023, its gross revenue was down only by 2.2% year-over-year, amounting to 1.24 billion Brazilian reais (230.9 million Brazilian reais). In addition, at home, the company recorded a 7.1% increase in gross revenue, but a 27.5% decrease, as compared to the first semester of the prior year.

Altogether, Grendene posted a 10.4% net revenue decline in the second quarter of fiscal 2023 to 463.6 million Brazilian reais (86.3 million Brazilian reais), as compared to a similar period in the previous year, and a 5% decrease year-over-year in the first half that amounted to 983.7 million Brazilian reais (183.2 million euros).

The company's second quarter gross margin, in turn, widened from 34.2% in the same period of last year to 40.9%, reflecting an increase of 6.7% that confirms the company's expectations “that it would take two to three quarters for the reduction in raw material prices observed since last year to have a greater impact on the Company's COGS”.

In the three months to the end of of June, the Brazilian company's net profit dropped by 12.9% from the same period of 2022, totalling 57.2 million Brazilian reais (10.7 million euros), while its recurring net profit grew by 15.4% year-over-year to 84.7 million Brazilian reais (15.8 million euros). Consequently, its first semester net profit fell by 5.7% to 180.4 million Brazilian reais (33.4 million euros), while its recurring net profit rose by 17.2% to 240.7 million Brazilian reais (44.8 million euros).

“We concluded 1H23 pleased with the results attained thus far, despite the challenging domestic and international market conditions. Our retail customers indicate that, although sales have declined at the forefront, Grendene's products are outperforming those of the competition, suggesting that we may be expanding our market share”.


Image Credits: shopmelissa.com

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