Bata posts consecutive quarterly profits as pandemic wounds heal

Bata Shoe Bangladesh is coming out of the pandemic blues as the company posted consecutive quarterly profits for the first time since the pandemic dragged it into the losing territory in 2020.

As daily life got back to normalcy in the latter part of last year, and schools fully reopened earlier this year, the footwear manufacturer managed to sell more and earned over Tk5 in profit per share both in the October-December and the January-March quarters.

However, owing to the two losing quarters earlier in 2021, the company came out with Tk5.01 in annual loss per share.  

The multinational shoe company, for the first time in its six-decade history in Bangladesh, had faced drastic losses in 2020 when its annual sales dropped by 41% due to a nationwide shutdown and a prolonged homestay of the masses.

Again in 2021, recurring Covid-19 waves ate into the company's major sales as the two Eid festivals that contribute to more than one-third of Bata's annual sales were lost to lockdowns.

Also, a prolonged school closure deprived the school shoe champion company of sales.

In the meantime, economic reopening in various quarters helped Bata increase sales, but it barely helped recover the bottom line as it had to clear old stocks at discounts, amid the fact that the mass people's attitude towards buying new shoes was not in favour of the company.

A quarter of meagre profits was followed by bigger losses due to return of sales disruptions.

The company, in the first quarter of this year, sold shoes and a few other accessories worth Tk215 crore which was Tk184 crore in the first three months of 2021 when there had been no lockdown but the business environment was not good enough for the company.

Despite the loss of a big chunk of its Eid sales due to the virus resurgent both during the Eid-ul-Fitr and Eid-ul-Adha, the company almost turned around in 2021 with an annual loss of TK5.01 per share, while in 2020 its annual loss had skyrocketed to Tk96.94.

Before the pandemic shock, Bata saw sales profit drops due to its sales channel overhauling through adopting its outlet dependency model and opting out of the model of wholesaling to dealers and franchisees.

However, Bata's board of directors recommended 25% final cash dividends for 2021 while it had already disbursed 75% interim cash dividends for the year.

For the year, Bata shareholders in Bangladesh are getting Tk10 cash as dividends against each share having a face value of Tk10.

At the end of March, Bata's net asset value per share stood at Tk257.34, while its shares closed 2.1% higher at Tk929 on Tuesday on the Dhaka Stock Exchange.

Bata has been serving the Bangladesh market since 1962 and the very company Bata Shoe Bangladesh was incorporated in 1972 following the independence of the country.

It is one of the operating companies of the worldwide Bata Shoe Organisation (BSO) and a subsidiary of Bafin (Nederland) BV in the Netherlands holding 70% of the company's shares.