Apex Footwear Limited posted a 21% year-on-year growth in profit in the first quarter (July-September) of this fiscal year, despite a drop in both the export and local market sales.
Its quarterly earnings per share (EPS) increased to Tk2.40 from Tk1.98 a year ago.
Internal cost control alongside a drop in raw material costs helped the company more than offset the revenue drop in the quarter.
The lockdown impacts
The listed footwear maker's quarterly revenue dropped 29% in the July-September quarter to Tk282 crore, which was nearly Tk400 crore in the same period of 2020.
In the July-September period of 2020, there was no lockdown, while 41 days of the same three months this year were lost into the lockdown, imposed by the government to curb the second wave of Covid-19.
Export revenue in the July-September period of this year dropped 39% year-on-year as it shipped 29% fewer pairs of shoes, compared to the first quarter of the previous fiscal year, according to the latest disclosure.
Also, the local market sales through its vast countrywide outlet network dropped 17% year-on-year.
The reduction in costs
"The good part is that we were able to reduce the cost of goods sold by 7.34% year-on-year, while other operating expenses reduced by 4.30%," Apex Footwear explained to its shareholders how it improved the bottom line.
Its finance costs dropped 9.02% while it also saved in tax expenses.
"The net result of cost reduction in most of the areas has given support to earn more profit and better EPS compared with the same period of last year despite a significant reduction in aggregated sales revenue," said the company.
Over the same period, the company also improved in its net operating cash flow as it had to make less payment against material purchases and spent less internally.
Apex Footwear at a glance
Apex began its journey in the early 1990s to pioneer footwear exports from the country. Adopting global standards in manufacturing, it won bulk buyers in the developed markets of both the East and the West. It also had a strong partnership with Italian company Adelchi that ended in the 2010s.
To hedge between the global market risks that loomed after the financial crisis a decade ago and the opportunities growing in the local market, the company began increasing its efforts in the local market in the mid-2010s.
It has already built nearly 250 owned sales points in the local market intending to lead the market, beating multinational player Bata and presently, Apex is breathing on the neck of its local market competitor.
On the other hand, having 135 global buyers, Apex alone contributes 15% to the country's leather footwear exports.
In the latest quarter, around 37% of its revenue came from exports.
Apex has already established 9 in-house brands to set fashion trends for its diverse customer base in the fast-growing local market.
For Omni-channel retailing the company has also established its e-commerce platform for online sales.