Surging sales of flip flops and closed toe versions of Havaianas shoes in its native Brazil enabled Alpargatas to grow net revenues 8.4 percent to RLS1.01 billion ($285 million) in the second quarter ended June 30.
Unit sales of its flagship Havaianas and Dupé brands increased 26.2 percent in Brazil despite a backdrop of low consumption and economic retraction. Growth was boosted by a 30.7 percent increase in sales of closed-toe shoes by the two brands, which are best known for their sandals.
That growth easily offset an 11.6 percent decline in unit sales at Alpargatas’ Sandals International segment, where sales declined year over year due to cooler spring weather and lower sales to distributors in Angola, Argentina and Australia. Sales in the United States and the EMEA (Europe, Middle East and North Africa) region, where Alpargatas distributes directly, were less affected. The exchange rate offset the reductions, and there was a slight increase in revenue in Brazilian real.
Mizuno, Other Sports Sales Off Sharply
Unit sales of sports footwear in Brazil declined 34 percent, to 2.38 million pairs, because discounts conceded by Mizuno in Q2 2015 made for tough comps, but gross margins improved amid strong demand and higher prices across all channels.
Weak Peso Hit Argentine Unit
In Argentina, sales volume was lower than in Q2 2015 due to the retraction in the market, affecting inventory turnaround at large footwear retailers. Revenue in local currency increased 31.2 percent; however, a 12.9 percent decline in the value of the Argentine peso to the real resulted in lower reported revenue. Gross margin was better, primarily due to the apparel business. In spite of tighter control over SG&A, EBITDA margin was impacted by the increase in provisions.
The strong growth in Brazil drove Alpargatas consolidated net revenue up 8.4 percent, its consolidated EBITDA up 191.7 percent and its consolidated net income up 31 percent compared with the second quarter of 2015. Gross margin grew 220 basis points to 44.2 percent.
