Bata, the country's renowned and oldest footwear manufacturer, is shifting to retailing. The new move will lessen the company's dependence on dealers.
Bata Shoe Company (Bangladesh) Limited says it is now focusing on cash sales. However, the decision to shift has meant Bata's being on a bumpy ride. Business has been dull following its suspension of wholesale on credit.
The company witnessed a 12 percent fall in sales in the first nine months of this year. Bata also recorded a 61 percent drop in profit owing to deferred tax during the period. It led to a fall in Bata's share by 4.09 percent.
The footwear manufacturer traded a total of Tk630 crore in the period January-September 2019, while the year-on-year sale amounted to Tk715 crore. Mohammad Hashim Reza, Company Secretary of Bata Shoe (Bangladesh) Ltd, stated that Bata owes a considerable amount to dealers.
"The footwear manufacturer, therefore, decided on cash sales from this year. The shift has led to a decline in trade," Reza added.
Till December 31, 2018, Bata owed the dealers a total of Tk201 crore. The auditor of the company suggested that the company emphasise a realization of the dues. Bata has realized Tk60 crore in the last nine months, while its pending dues are still at a figure of Tk141 crore.
Hashim Reza says Bata is shifting toward retail sales under its own management. The company will gradually reduce its dependence on dealers.
"The footwear market is currently going through a bumpy ride. With many dealers and businessmen flooding the market with illegally imported shoes from China and India, local producers are feeling the pressure," claimed Reza.
Bata posted a net profit of Tk33 crore in the last nine months while its Earnings Per Share (EPS) stands at Tk24.06. The company's year-on-year net profit was Tk84 crore while the EPS amounted to Tk61.51.
The year 2017 was good for the footwear manufacturer as it gained a net profit of Tk115 crore. It handed over a 335 percent cash dividend to shareholders in that year.
Despite the net profit edging down to Tk99 crore the following year, Bata gave a 345 percent cash dividend to shareholders.
On Tuesday, riding on news of dull sales, Bata's share price at the Dhaka Stock Exchange dropped 4.09 percent. The closing rate of the share was Tk879.80 on the day.
It is noteworthy that Bata's share dropped 15 percent, or Tk1,033, in the last three months.
The company, listed with the share market in 1985, has a paid-up capital of Tk14 crore. Bata UK holds 70 percent of the total shares of Bata Shoe Company (Bangladesh) Limited.
Institutional, foreign and general investors hold 19.36 percent, 1.83 percent and 8.81 percent shares, in that order, of the company.