The Covid-19 pandemic has sucker-punched Bata Shoe Company, Bangladesh Limited.
The footwear manufacturer, which has been serving local customers since 1962, reported a massive quarterly loss for the first time in its history.
Bata suffered a staggering 85 percent year-on-year drop in revenue in the second quarter of this year. This occurred despite Eid-ul-Fitr – one of the largest festivals of the country, when retailers usually make up for a big part of their annual sales – having passed.
This quarterly loss has exceeded the company's total annual income of 2019.
"Generally, around 25 percent of business comes during the Eid festival, and at the same time, high value products also sell during this period which generates a high margin," a Bata official told The Business Standard.
He said the opportunities were washed out by the 66-day countrywide shutdown enforced to contain the spread of the deadly virus.
"For that reason, the company achieved only 15 percent of revenue against the same period last year which negatively affected profit," said the official seeking anonymity.
He said the operating costs remained the same.
In the April-June period, the company earned only Tk41.26 crore revenue, which had been Tk282 crore in the previous year at the same time.
The company posted a net loss of Tk73.51 crore in the second quarter.
In the first half of this year, the net loss of the company stood at Tk70.68 crore and its loss per share was Tk51.67.
However, in the first quarter of this year, the company witnessed a drop in net profit by 37 percent to Tk2.83 crore and earnings per share stood at Tk2.07.
Meanwhile, in the first half of this year, the company posted net operating cash flow per share of negative Tk5.85.
A senior officer of the company said from the beginning of 2020, "We had planned for the production schedule keeping Eid business in mind. From the organisation's point of view, it considered that there would be significant sales during the festival. Therefore, the company started to build its stock three months prior."
"However, due to Covid-19, the business has been affected and the cash-generating cycle hampered – resulting in a negative impact on the net operating cash flow," he added.
The company did not pay any dividends owing to a liquidity crisis triggered by a slowdown of business amid the pandemic.
It had earlier paid a 125 percent cash dividend as interim to its shareholders on the basis of its third quarter financial statement in 2019.
This interim dividend is considered the final dividend for the year that ended on December 31, 2019. So far, this is the lowest dividend paid by the company.
In 2017, the footwear manufacturer posted a net profit of Tk115 crore. It gave out a 335 percent cash dividend to its shareholders that year.
Despite its net profit coming down to Tk99 crore in 2018, Bata gave out a 345 percent cash dividend to its shareholders that year.
On Tuesday, the closing price of each of the company's shares was Tk693.20 on the Dhaka Stock Exchange, while its highest price was Tk998.80 within the last year.
The company, listed with the share market in 1985 and has paid-up capital of Tk14 crore.
Bata UK holds 70 percent of the total shares of Bata Shoe Company (Bangladesh) Limited.
Institutional, foreign and general investors hold 18.98 percent, 1.94 percent and 9.08 percent shares, in that order, of the company.