The pandemic, it seems, has pulled the ground out from under the feet of Bata Shoe.
The shoe manufacturer, which has been a signpost in the country’s retail landscape for as long as one can remember, sank into losses for the first time in its 58-year-old history in Bangladesh in its April-June quarter thanks to the countrywide shutdown from March 26 to flatten the curve on coronavirus.
The shutdown was lifted on May 30, but it seems the reopening of the economy has not swung Bata Shoe back in the black: it posted a loss of Tk 51.4 crore between July and September. A year earlier, it logged in a profit of Tk 4.9 crore.
But when viewed against the previous quarter, Bata’s performance improved: it had registered a loss of Tk 73.5 crore.
Bata Bangladesh’s performance is in line with its Indian counterpart: on Tuesday, Bata India posted a loss of Rs 44.4 crore for the quarter that ended on September 30 as against a loss of Rs 101.1 crore in the previous quarter. A year earlier, it had posted a profit of Rs 71.3 crore.
Between July and September, the shoe manufacturer logged in sales of Tk 139.8 crore, down 18.1 per cent year-on-year.
“COVID-19 impacted the overall business,” the company said in its third-quarter financial statement.
Eid tends to be a major occasion for sales, and Eid-ul-Azha, which took place during the quarter, was more or less a washout thanks to the continued presence of the lethal pathogen in the country.
Celebrations were subdued, and a large portion of the population saw their purchasing power curtailed for job losses or pay cuts.
Bata tends to be the footwear of choice for school uniforms and all educational institutions have been shut since March 17 and are unlikely to open anytime soon.
Sales from that avenue are likely to elude Bata Shoes for a while.
The third quarter's numbers mean Bata Shoe remains firmly in the red with three-fourths of its 2020 financial year gone. Bata’s financial year runs the same as the calendar year.
“Generally, about 25 per cent of the business comes during Eid-ul-Fitr and at the same time, high-value products sell during this period, which generates a high margin. These opportunities were washed out for pandemic,” Bata had said in its second-quarter earnings report.
Bata Shoe declined to comment for the report.
“As we inch back to a semblance of normalcy, we are mindful that this is going to be a slow and steady recovery,” said Sandeep Kataria, chief executive officer of Bata India, on Tuesday while unveiling the third-quarter result.
Seeing how Bata Bangladesh’s performance has been mimicking its Indian counterpart’s so far this year, its sales for the rest of 2020 is likely to flounder, setting the much-loved shoemaker up for its first loss-making year.
The company, which got listed in 1985, gave 125 per cent cash dividend for its 2019 financial year, when it saw a profit of Tk 49.4 crore.
Shares of Bata Shoe closed at Tk 693.2 on Wednesday, which is the same as the previous day.
