Alpargatas managed to improve its results in the first quarter of this year from the relatively high levels attained in the same period a year ago and in the fourth quarter of 2010, in spite of high raw material costs, mostly by upgrading its price mix and in other ways.

This policy paid off particularly in Europe, where the positioning of its Havaianas sandals is higher than in Brazil – more fashion-oriented than basic. Volumes grew by 36 percent in Europe in the quarter, but actual revenues in terms of euros went up by 45.6 percent, said the company, without releasing a specific sales figure. The growth will be higher in Europe for the second quarter, thanks in part to the introduction of new fashion lines and warm weather conditions, which accelerated retailers' reorders.

The Alpargatas group, which also owns brands such as Dupé and Topper and distributes Mizuno and Timberland in Brazil, posted a 30.5 percent increase in net income to 87.3 million Brazilian reais (€38.3m-$54.9m) for the first quarter ended March 31, in spite of a decrease in the gross profit margin to 46.4 percent and in the operating margin before amortization (Ebitda) to 18.0 percent.

Consolidated sales increased by 17.4 percent to R$586.7 million (€257.6m-$369.1m) in the quarter, as compared to the same period one year ago, but on a currency-neutral basis they went up by 21.4 percent. The prices of the shoes sold by the group increased on average by 12 percent in the period.

Seventy percent of the consolidated sales were generated in Brazil. The improvement was largely driven by Havaianas' growing penetration in the Brazilian and European markets and by a strong development in the premium segment of the sporting goods market in Brazil and Argentina.

The company's revenues in Brazil went up by 12.5 percent to R$201.0 million (€88.2m-$126.5m), but the gross margin declined by 1.7 percentage points to 49.1 percent because of a 13.3 percent increase in the cost of raw materials and due to higher wages. Alpargatas tried to compensate for the higher costs by using more waste materials in its sandals and by controlling its operating costs, but it invested more in communication.

Adding up exports from Brazil and the results of its subsidiaries in Argentina, the U.S. and Europe, the group's international turnover grew by 20 percent to R$177.3 million (€77.8m-$111.5m) during the quarter, with an increase in volumes of 9.8 percent. Sales in the U.S. rose by only 10.2 percent in U.S. dollars, however. The company hired new distributors in India and Pakistan, intensified its distribution in China and started distribution in Vietnam.

The revenues of Alpargatas Argentina went up by 24.4 percent to R$106.7 million (€46.8m-$67.1m) in reais, but jumped by 40.3 percent in Argentine pesos. The bulk was represented by athletic shoes, whose sales rose by 0.6 percent to 1,883,000 pairs, but with a jump of 103 percent in sales of premium items. The latter helped to compensate for the impact of higher cotton prices on sales of clothing in the country. The result was an Ebitda margin of 13.4 percent, up from 13.1 percent in the same period a year ago.

The balance of Alpargatas' foreign business marked a sales increase of 13.9 percent to R$70.6 million (€31.0m-$44.4m), with an increase in volume of 13.4 percent. The gross margin declined to 58.3 percent, 3.5 percentage points less than one year ago, while the Ebitda margin dropped to 18.9 percent from 20.5 percent.

Sandals represented 64 percent of the group's total turnover. In terms of volume, sales of sandals rose by 4.1 percent in Brazil to 47.8 million pairs, but they generated 12 percent higher revenues. Sales of sandals grew by 13.4 percent in the rest of the world to 7.6 million pairs.

The group's sales of athletic shoes increased by 4.1 percent to 2,175,000 pairs in Brazil, but their sales went up by 31.4 percent. The biggest growth was scored by Mizuno, which is particularly strong in performance running in the country, with increases of 74 percent in volume and 63 percent in revenues. Sales of Timberland products rose by 16 percent in volume and 30 percent in value. Topper improved by 13 percent in volume and by 15 percent in value in Brazil (more in Shoe Intelligence).