“The first half of 2023 brings the implications and developments of the same root causes identified and discussed in the last quarterly disclosures. 2Q23 specifically, reveals the consequences, above all, of the high levels of inventories in the channel, which kept the gap between the sell-in and sell-out and the resulting diseconomy of scale, in addition to the inefficiencies brought about by a higher level of expenses than desirable compared to our current sales volume. Although, on the one hand, we are confident regarding our ability to make the necessary adjustments considering these variables, on the other hand, we are aware that none of these adjustments are immediate and that, therefore, we will still feel the effects of these developments until the necessary changes have been fully implemented”, reads the company's statement.

Alpargatas Results

In the first six months of the current fiscal year, Alpargatas' revenue totalled 1.83 billion Brazilian Reais (347.2 million euros), which reflects a decline of 8.0% on a comparable basis to the same period of fiscal 2022. In the second quarter alone, the company's revenue decreased by 12.7% year-over-year to 926.4 million Brazilian reais (175.7 million euros), with the volume of pairs sold dropping by 20.8%.

Havaianas, in particular, posted a first half revenue of 1.81 billion Brazilian Reais (343.4 million euros), down by 7.4%, as compared to a similar period in 2022, driven by a 12.5% year-over-year revenue decline in the second quarter of 2023 to 919.2 million Brazilian Reais (174.4 million euros). Overall, in this six-month period, the brand performed better at home than in international markets, posting a decrease in value of 5.8% and 9.8%, respectively, and of 16.3% and 21.1%, respectively, in volume.

Meanwhile, Rothy's reported a 6.6% drop in net sales over the first half of the year to 84.8 million Brazilian Reais (16.1 million euros), as compared to the first half of the prior fiscal year.

Alpargatas' gross profit amounted to 766.5 million Brazilian Reais (145.5 million euros) at the end of June, down by 23% on a comparable basis to a similar period in 2022, with its gross margin contracting by 8 percentage points to 41.9% in this period; in the second quarter alone, the company's gross profit decreased by 32% year-over-year to 377.6 million Brazilian Reais (71.6 million euros) and its gross margin narrowed by 11 percentage points to 40.8%.

In the first half of fiscal 2023, the Brazilian company posted a net loss of 252.8 million Brazilian Reais (48.0 million euros), as compared to a net income of 84.6 million Brazilian Reais (16.0 million euros) in the same period of the previous year. In the second quarter, Alpargatas swung to a net loss of 53.1 million Brazilian Reais (10.0 million euros) from a net income of 63.8 million Brazilian Reais (12.1 million euros) recorded in the same quarter of 2022.