Noted for its insistence on local manufacturing of athletic and women’s shoes, the owner of the Olympikus brand and licensee of Under Armour in Brazil completed the second wave of expansion of its two main factories in Brazil at the end of last year. While starting the second phase of its expansion program, it concluded in January the sale of another factory employing 950 people in Sergipe for 25 million reais (€4.5m-$4.9m) to another footwear company that will continue to make products for Vulcabras for a limited period of time.

The company previously had a total staff of more than 14,000, including administrative employees. The idea is to concentrate manufacturing at Vulcabras’ enlarged plants in Ceará and Bahia, which now measure 70,000 and 50,000 square meters, respectively. Both located in the Northeast area of Brazil, they will be used to make shoes for the company’s three brands – Olympikus, Azaleia and Dijean – and for Under Armour, for which Vulcabras has obtained the Brazilian license. A tax incentive granted by the government of the Ceará state has been extended through 2031.

In October, the company introduced five new models of Under Armour shoes developed in Brazil with its own technologies for greater profitability. One of them, the Charged Odyssey, came with a triple layer of cushioning. Vulcabras also said that it has implemented a new process to make knitted leather uppers for greater comfort and more efficient manufacturing.

For the fourth quarter of 2019, the first one in which the Brazilian group’s results were comparable with those of the corresponding period of the previous year following the Under Armour deal, Vulcabras has reported a 2.9 percent drop in its net income to R$ 45.1 million (€8.2m-$8.8m) on 5.6 percent higher net revenues of R$ 373.9 million (€67.8m-$72.9m).

Sales of athletic footwear rose by 4.8 percent in the quarter, representing 74.0 percent of the total turnover, while sales of women’s shoes increased by 4.0 percent to 15.6 percent of total revenues. Under Armour contributed higher sales with higher average prices. Sales of women’s shoes rose slightly in Brazil, due to higher average prices, but declined slightly abroad.

The quarterly gross margin declined by 2.0 percentage points to 35.8 percent and Ebitda fell by 12.9 percent to R$ 60.2 million (€10.9m-$11.7m). The number of units increased by 1.9 percent to 7.4 million, adding up items of footwear, clothing and accessories.

The results for the full 2019 financial year show a drop in the adjusted net profit of 12.1 percent to R$ 128.6 million (€23.3m-$25.1m). The 2108 results were weighed down by expenses of R$ 2.8 million for the acquisition of Under Armour’s business in Brazil.

The annual turnover increased by 8.9 percent to R$ 1,360 million (€246.7m-$265.1m), but the gross margin declined by 1.2 percentage points to 34.7 percent.

Vulcabras’ sales of athletic footwear went up by 6.6 percent to R$ 1,008 million (€182.9m-$196.5m) last year. Women’s shoes were up by 1.7 percent to R$ 195.6 million (€35.5m-$38.1m). Sales of apparel and other accessories more than doubled.

Taking advantage of an existing e-commerce platform established by Under Armour in Brazil, Vulcabras internalized the online sales operations of Olympikus and Azaleia. In addition to Azaleia and Dijean, Olympikus launched its own mobile app in the third quarter, yielding the first results in the last months of the year.

While reserving the Under Armour brand for the top tier of the athletic footwear market, Vulcabras continued to upgrade its offer under its more affordable Olympikus brand, notably with the launch at the end of the year of a new running shoe, the Corre 1 model, backed by a strong advertising campaign featuring a racing circuit in scenes in a paradise. Across the group, spending on advertising and marketing rose to 5.8 percent of revenues in the fourth quarter and 5.1 percent of revenues for the full year.

Vulcabras noted that its performance was relatively good in 2019 as the consumption of shoes and clothing increased by only 0.1 percent in Brazil in the course of the year.

The company said it is working on a strategy of portfolio diversification and expansion in South America. However, foreign markets represented just 8.5 percent of the group’s sales in the fourth quarter of 2019.

Noted for its insistence on local manufacturing of athletic and women’s shoes, the owner of the Olympikus brand and licensee of Under Armour in Brazil completed the second wave of expansion of its two main factories in Brazil at the end of last year. While starting the second phase of its expansion program, it concluded in January the sale of another factory employing 950 people in Sergipe for 25 million reais (€4.5m-$4.9m) to another footwear company that will continue to make products for Vulcabras for a limited period of time.