The footwear sector is still struggling to cushion pandemic blows and return to the pre-pandemic level as demand continues to be on the lower side in both domestic and foreign markets.
Industry insiders say people now refrain from buying footwear unless it is necessary as they have tightened their belts losing purchasing power amid the pandemic.
That is why, the sector, which witnessed an over 40% fall in sales because of the pandemic, is yet to get on the recovery track.
The industry with about 12-15% annual growth is now counting losses.
Footwear brands such as Bata, Apex Footwear, Fortune Shoes, Fortuna, Bay, Hamco, Jennys, Crescent, Vibrant, Leatherex, STEP, Walkar, Orion, Falcon, Zeils, Shampan etc are going through a tough time with a thin presence of customers.
Their exports to major destination countries have drastically reduced owing to lockdowns imposed in those countries with the Covid-19 second wave taking a serious turn.
The situation is the same for non-branded companies who depend on only domestic sales.
Six companies of leather and footwear industries are listed on the stock exchanges. Of them, four are from the footwear industry and two from the leather industry.
Bata Shoe Company (Bangladesh) Limited, a publicly listed multinational, fell into a loss in the first nine months of 2020 due to the Covid-19.
Other three footwear makers' profits decreased in the first half of the fiscal 2020-2021.
"Covid-19 vaccine has been rolled out in many countries. We hope the bad time of footwear exporters will go by April this year," said Mohiuddin Ahmed Mahin, chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association.
He said, "Footwear product sales in both domestic and foreign markets have not improved yet although the pandemic situation is improving."
The financial disclosure of Bata for nine months in 2020 shows that its revenue decreased by 18% and incurred a loss of Tk122.06 crore and the loss per share stood at Tk89.23.
In January-March of 2020, Bata registered a net profit amounting to Tk2.83 crore and the earnings per share (EPS) was Tk2.07.
But in the second quarter (April-June), the company incurred a loss of Tk73.51 crore when the two-month shutdown was in effect. The earnings per loss stood at Tk53.74. Its net profit was Tk21.68 crore and the EPS Tk15.85 in the same period a year ago.
Seeking anonymity, a Bata official told The Business Standard, "Although sales slightly went up compared to what was during the shutdown, the company incurred a big loss."
Apex Footwear Limited's revenue decreased by 14% and the EPS decreased by 29% as its domestic sales and exports fell in the first six months of the current fiscal year.
In July-December, its revenue stood at Tk652.32 crore, down from Tk785.06 and the EPS decreased to Tk3.67 from Tk5.18 in the previous year's six months.
"People's income fell because of the pandemic, so did their purchasing power. They cut their expenses. So, they are not going to buy footwear products if not necessary," said Md Omar Faruque, company secretary of Apex footwear limited.
Sales and profits of Fortune Shoes Limited, an export-oriented footwear maker, also decreased under the Covid-19 impact. In the first half of the current fiscal year, the EPS decreased by 39%, while in the second quarter, it fell by 19%.
In October-December of this fiscal year, the export-oriented Legacy Footwear Limited's EPS increased by 105% and stood at Tk0.41 from Tk0.20 at the same time last year.
But in the first half of that year, its EPS stood at Tk0.09 with a 76% decrease from Tk0.39 over the same period of the previous year.
According to a research by EBL Securities Limited on the Bangladesh tannery and footwear industry in 2019, Bangladesh produces 378 million pairs of shoes each year.
The domestic market size of footwear is around Tk17,000 crore. Domestic demand for the footwear industry is around 20 to 25 crore pairs a year.
The domestic footwear industry has two sections – branded or organised footwear market and non-branded or unorganised footwear market. Unorganised footwear market still dominates the majority of sales.
However, the market share of branded footwear is increasing and currently stands at 30% of the total market.
The overall footwear market is growing at 12%-15% rate. Footwear business has cyclicality effects as almost 25%-30% footwear is sold during the Eid Al-Fitr period.
The research said consistent population growth ensures a steady increase in footwear demand.