Bata yet to overcome Covid’s impact

Multinational footwear manufacturer Bata Shoe Company Bangladesh Ltd has yet to overcome the damage Covid-19 has caused its business.

The footwear manufacturer, serving local customers since 1962, is continuing its quarterly loss this year.

The novel coronavirus has forced the company to earn losses, said an official of the company.

Bata Shoe made a loss of Tk51.37 crore in the third quarter this year, which was Tk73.51 crore in the second quarter.

At the end of the first three quarters, the net loss of the company stood at Tk122.06 crore, and its loss per share was Tk89.23.

The company official said, "We are trying to sell products through our own outlets instead of dealers. It is difficult to make profit this way, if sales are not high. Due to the novel coronavirus, sales have been low for months, incurring huge losses.

However, their sales have improved in the third quarter compared to the second quarter of this year.

In the July-September quarter this year, Bata Shoe's sales revenue was Tk139.84 crore, which was only Tk41.26 crore in the second quarter.

In the first three quarters of this year, revenue of the company stood at Tk344.77 crore, 45% lower than the same period of previous year.

The company official said although there is no lockdown at present, there is still fear among the people. That is why they have not achieved the sales target.

"The novel coronavirus has changed the spending behaviour of people. People are now spending more on daily essentials, instead of buying other products. It will take a long time to return to normalcy," he added.

Generally, around 25% of the company's total profit is made during the Eid festival, as expensive shoes are sold at the time, generating a high margin. However, during the last Eid festival, Bata could not earn a profit due to the 66-day, April to May, countrywide shutdown enforced by the government to tackle the deadly virus.

It is unlikely that the company will make profit by the end of this year, said the official of the company.

Meanwhile, Bata Shoe did not pay any dividend for the 2019 calendar year, owing to a liquidity crisis triggered by the pandemic.

It had earlier paid a 125% cash dividend as interim to its shareholders on the basis of its third quarter financial statement in 2019.

This interim dividend was considered the final dividend for the year that ended on 31 December, 2019. Thus far, this was the lowest dividend paid by the company.

In 2017, the footwear manufacturer posted a net profit of Tk115 crore and paid a 335% cash dividend to shareholders that year.

Despite its net profit coming down to Tk99 crore in 2018, Bata gave out a 345% cash dividend to its shareholders that year.

On Sunday, the closing price of each of the company's shares was Tk693.20 on the Dhaka Stock Exchange, while its highest price was Tk922 in the last year.

The company, listed with the share market in 1985, has paid-up capital of Tk14 crore.

Bata UK holds 70% of the total shares of Bata Shoe Company (Bangladesh) Limited.

Institutional, foreign and general investors, hold 19.14%, 1.82% and 9.04% shares of the company, respectively.