Increasingly known internationally for its Havaianas brand of rubber sandals, Alpargatas reported a rise of 8.3 percent in total revenues to 3.71 billion reais (€1,061m-$1,155m) for the past year, with growth of 13.7 percent in local currencies.
The company booked net income of R$280.2 million (€80.2m-$87.2m) for the year, down 9.6 percent from 2013, due especially to the higher cost of rubber because of the devaluation of the real.
The company's turnover in Brazil increased by 6.1 percent to R$2.57 billion (€735.3m-$800.1m), and the growth rate increased to 10.0 percent in the fourth quarter. This was partly due to higher sales of sandals and the consolidation of Osklen, a surf-inspired lifestyle brand positioned in a high segment of the fashion market, following an increase in its stake to 60 percent in November. Alpargatas is preparing Osklen for international expansion.
Marketed under the Havaianas and Dupé brand names, its sales of sandals rose by 3.5 percent in the country to 216.8 million pairs last year, resulting in an 8.5 percent increase in revenues thanks to an improved sales mix. Sandals represented 59 percent of Alpargatas' sales in Brazil last year.
By contrast, the share taken by sporting goods in the domestic turnover declined to 38 percent from 43 percent in 2013, due to the removal of some products from the collections of Alpargatas' two house brands, Topper and Rainha, and a more competitive market, which forced the group to offer discounts in order to reduce inventory levels. Alpargatas is also the licensee of Mizuno and Timberland in Brazil.
The total volume of sports shoes and apparel sold by the company in Brazil was off by 5.1 percent for the full year and by 13.5 percent in the fourth quarter. Its sales of Mizuno shoes went up by 5.6 percent in the latest quarter, due to a more aggressive sales campaign.
Alpargatas has extended its license for Mizuno for 13 years, with an option for 13 more years and the possibility to cover other Latin American countries in the future, besides Brazil and Argentina. It plans to start opening Mizuno stores and to expand its local production of Mizuno shoes.
The company sold more apparel and accessories under the Topper and Rainha brands. It plans to strengthen Topper's identity as a Latin American sports brand with a presence in global football, running and tennis, and to introduce a line of casual shoes.
Alpargatas' Timberland stores, of which there were 18 at the year-end, booked a 6.0 percent increase on a same-store basis thanks to higher average prices.
The total revenues of the group went up by 9.9 percent in the fourth quarter to R$1,060 million (€303.4m-$330.0m), leading to a 16.8 percent increase in net income to the equivalent of 8.0 percent of sales. The gross margin improved to 40.9 percent and the operating margin before amortization (Ebitda) rose to 14.4 percent.
In Argentina, Topper raised its market share by one percentage point in volume and by two points in value as its footwear sales increased by 10.2 percent to 6.5 million pairs. Alpargatas' total revenues in Argentina jumped by 42.4 percent in the fourth quarter in terms of pesos, but translated into reais, they grew by only 12.9 percent.
In reais, the group's sales rose last year by 6.7 percent to R$644.4 million (€184.4m-$200.6m) in Argentina and by 23.9 percent to R$500.8 million (€143.3m-$155.8m) in other countries. The Havaianas brand enjoyed an increase of three percentage points in spontaneous consumer awareness in the U.S. and Europe, thanks to a variety of marketing initiatives.
Alpargatas' sales of sandals and accessories outside Brazil and Argentina grew last year by 3.8 percent to 34.8 million units, but dropped by 8.3 percent in the last quarter. In the U.S and Europe, volumes went up by 20.0 percent, driven by a 53.7 percent increase in the U.S.
In terms of local currencies, Alpargatas' revenues increased by 22 percent in Europe last year, but they were down by 15.1 percent in the fourth quarter. Conversely, U.S. sales were up by 17.3 percent for the year and by 36.9 percent in the quarter.
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