The Coronavirus pandemic has not left any sector unscathed, be it at the global level or in Bangladesh. Even if the pandemic is now apparently losing its deadly grip world-over subsequent to the rollout of the vaccination, things are far from being normal.
If the readymade garment industry is struggling to cope with the fallouts of the pandemic — the apparel sector faced severe repercussion owing to alleged large-scale order cancellations and the consequent export debacle — for the footwear sector, the Covid wounds are showing little signs of healing yet as businesses continue to bleed thanks to weaker demand and low consumer spending on shoes.
As per industry insiders, people in general are refraining from buying footwear unless it is very necessary as they have tightened their purse strings after their purchasing power took a massive hit due to the pandemic. The result – the sector which once registered around 12-15 per cent annual growth is now counting losses after sales reportedly fell by more than 40 per cent because of the pandemic even as some recent reports suggest that business confidence in Bangladesh is improving and sectors have started recovering albeit at varying paces with pharmaceuticals, textile and financial sectors recovering faster while the sectors that need priority attention are reportedly leather and tannery, light engineering, wholesale, transport, garment, food processing, and real estate.
All these sectors should be given additional incentives, such as lower interest rate for a longer period, increased and eased up duty drawback facility, and increased export cash back facility, underlined a recent study.
Meanwhile, the President of the Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh, Md Saiful Islam, while interacting with the media reportedly maintained that profitability had drastically fallen as the sustainability of businesses has also declined.
Even though the cost of doing business has been increasing every quarter, the prices of export-oriented goods did not increase, said Islam while adding that even though the employment of the workers in the leather and leather goods sector had not been affected because of the stimulus package, he urged the Government to extend the repayment period for bank loans as local manufacturers could not do good business owing to the pandemic.
Almost all the renowned footwear brands such as Bata, Walkar, Orion, Apex Footwear, Fortune Shoes, Fortuna, Bay, Falcon, Zeils, Hamco, Jennys, Crescent, Vibrant, Leatherex, STEP, Shampan etc., apparently are going through tough times even as customers continue to give shopping a miss. Sales apart, their exports to major destinations have also drastically reduced owing to lockdowns that have been imposed till very recently, in many of parts of the West and rather strictly, so as to slow down the pace of the second wave of the pandemic.
The story is not very different for the non-listed — six companies of leather and footwear industries are listed on the stock exchanges, of which, four are from the footwear and two from the leather sector— and non-branded companies who depend on only domestic sales.
Meanwhile, as per reports, Apex Footwear Limited’s revenue reportedly decreased by 14 per cent and the EPS decreased by 29 per cent as its domestic sales and exports fell in the first six months of the current fiscal year even as in July-December, its revenue stood at Taka 652.32 crore, down from Taka 785.06 crore and the EPS decreased to Taka 3.67 from Taka 5.18 in the previous year’s six months.
Bata Shoe Company (Bangladesh) Limited, a publicly listed multinational, too fell into loss in the first nine months of 2020 due to COVID-19 even as other three footwear manufacturers’ profits reportedly also decreased in the first half of the fiscal 2020-2021.
COVID-19 vaccines have rolled out in many countries; we hope the bad time of footwear exporters will go by April this year, reportedly underlined Faruque even as a Bata official, on the condition of anonymity reportedly told an English daily that even though sales slightly went up compared to what it was during the shutdown, the company incurred significant losses.
The financial disclosure of Bata for nine months in 2020 shows that its revenue decreased by 18 per cent and it incurred a loss of Taka 122.06 crore and the loss per share stood at Taka 89.23 while in January-March of 2020, Bata registered a net profit amounting to Taka 2.83 crore and the earnings per share (EPS) was Taka 2.07, but in the second quarter (April-June), Bata reportedly incurred a loss of Taka 73.51 crore when the two-month shutdown was in effect. The earnings per loss stood at Taka 53.74 even as its net profit was Taka 21.68 crore and the EPS Taka 15.85 in the same period a year ago.
Sales and profits of another export-oriented footwear manufacturer, Fortune Shoes Limited, also reportedly declined under the impact of the Coronavirus pandemic even as in the first half of the current fiscal year, the EPS decreased by 39 per cent, while in the second quarter, it fell by 19 per cent.
In October-December of this fiscal year, the export-oriented Legacy Footwear Limited’s EPS increased by 105 per cent and stood at Taka 0.41 from Taka 0.20 at the same time last year even as in the first half of that year, its EPS reportedly stood at Taka 0.09 with a 76 per cent decrease from Taka 0.39 over the same period of the previous year.