The year 2020 is perhaps better forgotten by the footwear brands in Bangladesh. When almost all the major brands and retailers in the realm of fashion and footwear the world over have taken a massive hit on account of store closures and falling sales, owing to coronavirus, the scenario hasn’t been any different for the footwear brands in Bangladesh either, especially the big names like Bata and Apex, both of which witnessed their sales falling significantly.
Lately, the country has seen a large number of homegrown brands like Apex Footwear, Bay, Hamco, Jennys, Fortuna, Crescent, Vibrant, Leatherex, STEP, Walkar, Orion, Falcon, Zeils, Sampan, etc gaining traction in terms of popularity and market share. Among the multinationals, Bata Shoe (Bangladesh) Limited is also considered a big name in the footwear sector in the country.
As per a study, the domestic market size of footwear in Bangladesh was around Taka 17,000 crore in the fiscal year 2018-19 and domestic demand for footwear was about 200 to 250 million pairs a year.
However, the pandemic has changed the very dynamics of the domestic footwear market with almost all major players suffering major sales blues during this festive season (Pohela Boishakh, Eid-ul-Fitr and Eid-ul-Azha), as consumer spending on fashion and footwear hit an all-time low subsequent to the countrywide shutdown (imposed by the Government to restrict the spread of the pandemic) amidst reports of large-scale job losses and salary cuts – all of which impacted footwear sales big time, and it seems brands including Bata, Apex and the likes have been at the receiving end of the same.
“The leather industry is still in a vulnerable position as domestic demand has yet to rebound,” said Nasir Khan, Chairman and Managing Director, Jennys Shoes, adding, “I closed 40 out of 65 outlets across different districts and divisional cities where operational costs exceeded revenue.”
The fallout of the pandemic has been rather telling on the footwear giant Bata Shoe, which sunk into losses for the first time in its 58-year stay in Bangladesh. As per reports, the company
missed the country’s main shopping season after people’s income was wiped out by the coronavirus pandemic.
As per a study conducted by BRAC, earnings of 51 per cent households in the country plunged to zero while a massive 95 per cent people suffered losses in income due to the COVID-19 outbreak.
Established in 1972 by Sir Fazle Hasan Abed, BRAC is an international development organisation based in Bangladesh. Known formerly as the Bangladesh Rehabilitation Assistance Committee, then as the Bangladesh Rural Advancement Committee, and later as Building Resources Across Communities, BRAC, which was reportedly initiated at Shallah Upazillah in the district of Sunamganj as a small-scale relief and rehabilitation project to help returning war refugees after the Bangladesh Liberation War of 1971, the organisation currently has its existence in all 64 districts of Bangladesh as well as 11 other countries in Asia, Africa and the Americas.
As per media reports, Bata’s sales dropped 85.37 per cent to Taka 41.24 crore in the second quarter of 2020. Sales dropped 55.37 per cent to Taka 204.92 crore in the first half of the year. Due to the collapse in sales, Bata Shoe sank into losses in the April-June period, giving up Taka 73.51 crore, whereas it had netted a profit of Taka 21.68 crore a year earlier.
Half-yearly loss stood at Taka 70.68 crore against a profit of Taka 26.14 crore year-on-year.
“As far as I know, this was the first time we fell into losses,” maintained Hashim Reza, Company Secretary, Bata Shoe, speaking to the media.
According to the financial report of the company, about 25 per cent of Bata Shoe’s business comes during the Eid festivals, and keeping this in mind, it ramped up stock 3 months before Eid-ul-Fitr, the largest religious festival in Bangladesh. But the hopes soon dashed after the Government imposed a countrywide lockdown on 26 March to contain the soaring cases of COVID-19 infections.
By the time, the economy was partially opened on 31 May, the shopping season was all but over. Even though the Government allowed limited opening of shops ahead of Eid-ul-Fitr, the turnout was rather low and so were the sales, said a store manager of the company in Dhaka before going on to add that the store normally posts revenue of Taka 30 lakh on Eid-ul-Fitr during normal times, but it was a mere Taka 2 lakh this time around.
The reversal in fortune for the company, a subsidiary of the Switzerland-based ‘The Bata Company’, came even as it was gaining optimism about the country of late. Buoyed by the steadily growing economy, which was the fastest in Asia last fiscal year, and a comparatively young population, Bata opened its first-ever sneaker outpost anywhere in the world in November last year in Dhaka. The store, dubbed B-sneakers, is on the Dhaka’s Gulshan Avenue.
Bata is the lone franchisee of internationally renowned brands such as adidas, Nike, Hush Puppies and Skechers in Bangladesh and has a network of 261 retail stores in the country. It also has its own sneaker brands, Power and North Star. Coincidentally, its store at Bashundhara City Shopping Centre is touted to be the world’s largest Bata store.
The story has been somewhat similar for Apex Footwear as well, the earnings of which have suffered significantly on account of the pandemic.
As per reports, net profits of Apex Footwear, a publicly traded company, witnessed a sharp decline by 48.49 per cent in the fiscal year ending on 30 June 2020, with the company’s sales dropping significantly due to COVID-19, both in domestic and export markets.
According to the Apex’s financial statement for the fiscal year 2019-20, the local giant in footwear and leather goods manufacturing made net profits of Taka 6.32 crore, down by 48.49 per cent, which had been Taka 12.27 crore in the FY19. Consequently, earnings per share (EPS) of the company declined by 48.50 per cent to Taka 5.62, which had been Taka 10.91 in the previous fiscal year.
The company saw a decline in earnings as it had missed sales during the last Eid-ul-Fitr, the main season for sales, due to the countrywide lockdown enforced to halt the coronavirus epidemic. “The sharp fall of earnings was caused by lower sales during the April-June period this year as the country went through a shutdown to stop the spread of coronavirus,” underlined Md. Omar Faruque, Company Secretary, Apex Footwear, while adding that usually, around 40 per cent of sales are done during Eid-Ul-Fitr.
But due to the pandemic, the company missed the prime sales as well as general sales, as people avoided shopping, Md. Omar Faruque said further.
Apex Footwear is a sister concern of the Apex Group and manufactures and retails quality footwear in the country. It sells footwear and leather goods through its 260 sales points across Bangladesh.
Apex, which was listed on the Dhaka Stock Exchange in 1993, also exports leather goods and footwear to 135 global clients in Europe, North America and Japan.
Going by the existing situation, it is but unlikely that there would be any major change in sales volumes in the near future, more so considering the fact that consumer spending is yet to show any major change with people still in the ‘wait and watch’ mode while anticipating an early emergence of vaccine that could bring life back on track again.