Alpargatas reported strong sales of its Havaianas flip flops in the United States and Europe continued to offset declining sales in Latin America in the fourth quarter. The company also reported higher sales of Mizuno and Timberland in its native Brazil.

Alpargatas reported consolidated net revenue of R$3.7 billion ($1.6 bn) for the full year, an increase of 8.3 percent, or 13.7 percent currency-neutral, over 2013.

Havaianas sales surge abroad

Havaianas' Slim Flower sandal for women

The Brazilian footwear company reported U.S. sandal sales increased 36.9 percent on a 53.7 percent increase in unit sales in the fourth quarter compared with the fourth quarter of 2013. Havaianas expanded in all channels, but growth was particularly strong in certain key accounts and at owned retail, where Havaianas ended the year with seven U.S. stores.

For the full year, Alpargatas' international sandals and accessories sales increased 3.8 percent to 34.8 million units thanks to a 20 percent increase in the United States and Europe. Alpargatas reported that a brand tracking survey conducted by Millward Brown in the third quarter of 2014 showed spontaneous brand awareness of Havaianas increased three percentage points among U.S. and European consumers.

Alpargatas attributed the gains to various factors, including:

  • ongoing marketing campaigns and actions;
  • expansion of mono-branded stores, including the opening of stores in the Farmers' Market in Los Angeles and in Linq in Las Vegas;
  • growth in sales to key accounts in the United States and Europe;
  • the start of direct operations in Germany, Austria, Belgium, Holland and Luxemburg;
  • partnerships with renowned brands such as Mara Hoffman and Valentino.
  • expansion to new product categories with the launch of Havaianas accessories and rain boots for children; and
  • launch of the 2015 sandals collection.

Despite strong growth in the United States and Europe, Alpargatas' international sales declined 10.3 percent compared with the fourth quarter 2013 due to challenges in Argentina and Venezuela.

Mizuno and Timberland post gains in Brazil
Alpargatas reported Sporting Goods sales reached R$371.0 million ($158 mm) during the fourth quarter, down 6.2 percent compared with R$395.6 million in the fourth quarter of 2013 despite gains by Mizuno and Timberland.

Unit sales of Mizuno increased 5.6 percent compared with the fourth quarter of 2013, due to a more aggressive sales plan. In-house brands Topper and Rainha, however, saw a drop in volume following a thinning of SKUs.

Same-store sales of Timberland grew 6.0 percent, compared with the fourth quarter of 2013, and were up 4.0 percent for the full year. Alpargatas attributed those gains to prioritizing sales with higher prices and margins. The company ended the year with 18 Timberland stores, including seven corporate stores and 11 franchised stores. Alpargatas' Timberland page on Facebook surpassed 1 million followers in December.

For all of 2014, Sporting Goods revenue reached R$1.41 billion ($600 mm), down approximately 2.1 percent from $R1.44 billion on a 5.1 percent decline in unit sales, which reached 187.1 million units.

Alpargatas attributed the decline to a more competitive market and excess inventory which led to discounting and lower average prices.

In 2015, Alpargatas will focus growing Sporting Goods sales by promoting Mizuno and Topper as regional brands and Rainha and Timberland in Brazil.

It will continue to work on strengthening Mizuno's leadership in the running performance segment and in other categories by increasing brand equity among runners through higher marketing investment; sponsorship of athletes, clubs and events; the implementation of a retail model and expanded footwear production in Brazil.

In addition to striving for greater growth and profitability, Timberland will act as a platform for new brands in Brazil.

The in-house Topper brand will strengthen its identity as a Latin American sports brand in key segments, such as soccer, running and tennis by expanding its assortment for those sports, as well as adjustments to the points of sale with a focus on communicating the products and developing distributors in other countries in South America. Topper will also expand its casual footwear line in order to boost the brand's perceived and aspirational value. Finally, the brand will drive business growth through the offer of apparel, accessories and balls.

Rainha will grow in the active running, casual and training footwear markets through investment in points of sale, media and sports relationships.