Covid-19: Bata faces first-ever loss in history

For the first time in its history, Bata Shoe Company (Bangladesh) Ltd reported a big loss in the last financial year that ended on 31 December, 2020, due to the slowdown in business amid the Covid-19 pandemic.

The footwear manufacturer, serving local customers since 1962, recommended a 25% cash dividend to its shareholders for last year, which was also the lowest payout in its history.

The company set 12 August as the annual general meeting date and 22 June as the record date for approval of annual accounts and dividends.

In the January-March quarter of this year, it continued to face losses as business did not recover. But the declining financial results and dividend payouts did not impact its share price due to the floor price mechanism, which was imposed by the securities regulator to curb massive falls in stock prices during the pandemic.

Its share price remained stuck at the floor price of Tk693.2 each on the Dhaka Stock Exchange since March this year. 

In a statement published on the websites of the stock exchanges, Bata said it had been going through a crisis in its overall business since 2020, which had pushed its earnings down. 

It said earnings had seen a drastic fall as retail business had come to a halt during last year's major festivals, such as Eid-ul-Fitr, Eid-ul-Adha, Puja, and Pahela Baishakh, due to the countrywide lockdown. Retail sales account for 25-30% of the company's yearly business.

The statement also said an estimated 77% of the rural business leaders, such as dealers and wholesalers, had particularly been impacted by Covid-19, causing business to fall. This, for the first time in history, resulted in the company's business going down by 41% last year.

"Novel coronavirus has changed the spending habits of people, who are now spending more on daily essentials instead of buying other products. It will take a long time to return to normalcy," said a Bata official seeking anonymity.

Last year, the company's loss per share was Tk96.94 and the year before, its earnings per share (EPS) was Tk36.11.

In the January-March quarter of this year, it incurred losses of Tk4.9 crore despite its revenue increasing by 13% to Tk184.29 crore, compared to the same period in the previous year. 

It said it had incurred losses in this quarter due to discounted sales and increased unavoidable expenses caused by the second wave of Covid-19.

Bata's main rival - Apex Footwear Limited - also experienced a marked fall in revenue and profit in the January-March quarter of the current year as exports and local sales decreased due to the pandemic.

In this period, Apex's net revenue decreased by 13% to Tk283.1 crore. Its net profit stood at Tk1.14 crore and EPS at Tk1.02, which were Tk1.3 crore and Tk1.16 respectively a year ago.