Even without including sales in Brazil of Timberland, Topper and Rainha products, which were discontinued earlier this year, Alpargatas suffered a drop of 29.9 percent to 936,000 in the number of pairs of sports shoes sold in the country during the third quarter of this year. Sales of these products in Argentina fell by 21.3 percent to 1,502,000 pairs.
The company's remaining sporting goods operations are the distribution of Mizuno in Brazil and Argentina and of Topper in Argentina. Alpargatas said that the demand for its more basic models of Mizuno shoes was not fully met, but the situation should improve in the coming months with the progress of a new program of domestic production.
In Argentina, Alpargatas had to face the opening up of the market to imports of sports shoes that use cemented technology, which allowed some major international brands to gain market share in that country. Alpargatas is reviewing its sourcing strategy to adopt solutions that will allow Topper to be more competitive in this product segment.
Sales of sports apparel under these brands declined at lower rates. On the other hand, Osklen, the surf-inspired sports apparel brand of the group, saw its sales increase during the period by 18.6 percent in the physical retail circuit and by 54.1 percent through e-commerce.
Sporting goods have come to represent only about 5 percent of sales for Alpargatas, whose main business now is the Havaianas brand of rubber sandals. The group's total net revenues in Brazil increased by 5.8 percent to 678.2 million reais (€187.6m-$199.7m) during the third quarter, as Brazilian customers rushed for this kind of product in view of the difficult economic situation in the country. Sales in Argentina fell by 34.3 percent to R$194.2 million (€53.7m-$57.2m).
Sales of sandals in other countries declined by 25.7 percent to R$110.4 million (€30.5m-$32.5m), due primarily to persistent problems in Angola and Venezuela. The volume of sandals and Havaianas brand extensions grew by 11.4 percent in Europe, the Middle East and Africa, and by 18.7 percent in the U.S., thanks in part to higher stock replenishment by major clients in Europe because of hot summer weather conditions.
Average selling prices in Europe and the U.S. increased by about 5 percent leading to higher gross margins. The terrorist attacks in France and the devaluation of the pound sterling didn't help Havaianas in Europe, but company officials expect a sales increase of about 10 percent in the region in local currencies for the full financial year.
The group's total revenues declined by 9.4 percent to R$982.8 million (€271.9m-$289.5m) in the quarter. The gross margin dropped by 1.2 percentage points to 42.6 percent and the Ebitda margin eased down by 0.6 points to 13.1 percent, but the net income margin rose by 1.6 points to 8.6 percent.
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