Bata stumbles, Apex shines amid Jul-Sep challenges
An intense financial showdown unfolded recently between two of Bangladesh's footwear giants, Bata Shoe Company and Apex Footwear, during the July to September quarter of this year. The contrasting performances of these companies showcased the shifting dynamics of the local footwear market.
Bata, which has held the title of Bangladesh's oldest multinational shoe manufacturer, reported significant losses attributed to challenges faced during the quarter. Specifically, the company posted losses amounting to Tk13 crore, reflecting a loss per share of Tk9.34. This marked a stark decline compared to the same period last year. Bata's revenues plummeted by over 18%, reaching only Tk153 crore. The company attributed this decline to disruptions caused by unforeseen events, particularly social unrest which had led to significant operational setbacks and lost working days.
Despite the heavy losses, Bata declared an interim cash dividend of 340%, based on results from January to September 2024. This decision seems to have been made with the hope of providing some relief to investors, even amid the troubling news of declining revenue and profitability.
On the flip side, Apex Footwear had much brighter news to share. The company reported over 20% growth, with quarterly revenue hitting Tk423 crore. This success can be largely credited to proactive management strategies and diversification of export markets, allowing Apex to weather the storm of the same socio-political instability affecting Bata.
Apex saw its local sales revenue rise by 9%, reaching Tk221 crore, and its exports surged by around 36% to Tk202 crore. The net profit grew by 26%, totaling Tk2.82 crore, which translated to earnings per share of Tk1.98. Omar Faruque, company secretary of Apex, mentioned the extensive sales network across the country as pivotal to sustaining growth during this tumultuous quarter.
Market analysts have pointed out Apex Footwear's competitive advantage, noting it is one of the few Bangladeshi companies certified by the Leather Working Group, providing it with credibility and appeal among foreign buyers. This certification allows them to command higher prices and contributed to Apex’s ability to navigate the troubled waters of economic turmoil.
While Apex capitalized on its strengths, analysts highlighted Bata's lagging performance, linked to its struggle to innovate and adapt to the changing market. The company's challenges paint a concerning picture of its current state, as local competitors intensify their efforts to capture market share.
The stark contrasts between these two companies' performances not only highlight their individual strategies but also spotlight the larger trends within the Bangladesh footwear market. Analysts note the decline of Bata signifies the increasing competition and the need for traditional companies to rethink their approaches to maintain relevance.
Amidst rising interest rates, which add another layer of complexity to the operational environment, Apex is diversifying its export destinations to include the United States, India, and the Middle East, aiming to recover from disappointing previous quarters. Faruque explained how last year, the company missed export targets owing to decreased orders from key markets like Europe and Japan.
With such contrasting fortunes unveiled during this brief but telling quarter, the market is watching closely to see whether Bata can pivot effectively or if Apex will continue its upward trend, potentially surpassing its long-standing rival. The financial fates of these two companies encapsulate more than just numbers; they reflect the broader economic realities, consumer trends, and the innovative spirit required to succeed and thrive.
The ramifications of these findings invoke questions about the very future of traditional footwear brands like Bata – facing their struggles against up-and-comers such as Apex who are not just keeping pace but setting new benchmarks for growth.
With the market poised for thrilling competition and the stakes higher than ever, it’s safe to say the episode of Bata and Apex is just beginning. The outcome of their battle amid adversity might set the course for many years to come, influencing strategies and approaches not just within their boards, but across the industry.
