Vulcabras posted double-digit growth in the last three months of 2020, despite the impact of the pandemic on the shoe market in Brazil. Revenues rose by 22.8 percent from the year-ago quarter to 459.1 million Brazilian reais (€66.7m-$79.4m) and net income jumped by 21.1 percent to R$54.6 million (€7.9m-$9.4m).

After production restrictions imposed in the spring and early summer due to the pandemic, Vulcabras resumed full operations at its factories in July, capitalizing on a robust order backlog. It managed to lift overall sales in the second half, but its sales of women’s shoes were lower as the company prepared to exit the business, except for a small activity in South America, to focus on sports with its Olympikus brand and the distribution of Under Armour in Brazil. As previously reported, Vulcabras will now focus on sports shoes and apparel, after signing a license agreement with Grendene for the Azaleia brand.

The company maintained the price of its products in the new collections sold in the second half of the year, while granting longer payment terms to support its clients in the process of resuming their retail operations. The company claimed once more that its business model, which relies for the most part on in-house shoe production at two modern factories in the Brazilian Northeast, is giving it a unique agility in responding to the Covid-19 crisis, positioning it as an attractive “smart choice” for domestic retailers, helping them with their re-stocking process more than other vendors that rely on imported products. The management believes that these efforts provided market share growth for its brands.

During the quarter, e-commerce rocketed by 81.3 percent to R$14.5 million (€2.1m-$2.5m). The company is planning to invest further in the development of online sales, with a new distribution center in Extrema, which will enter into full operation in the second half of March. The new distribution center will have a logistics operation dedicated to all the brands’ e-commerce. It will also handle the distribution of finished products purchased from third parties, imported and domestic.

In Brazil, the group’s sales advanced by 24.3 percent in the quarter, with growth in almost all categories except for women’s footwear. With the reopening of physical stores, even with restrictions on access and opening hours, retail sales once again were the main source of revenues. Abroad, sales increased by 6.6 percent to account for 7.4 percent of turnover, compared with 8.5 percent in the fourth quarter of 2019. Argentina showed strong growth.

Overall sales of athletic shoes progressed by 21.7 percent to R$334.1 million (€48.6m-$57.8m) in the fourth quarter, but the company’s two brands of women’s shoes, Azaleia and Dijean, recorded a drop of 7.2 percent to R$53.2 million (€7.7m-$9.2m). Sales of work shoes and other types of footwear rose by 87.5 percent to R$33.0 million (€4.8m-$5.7m), while sales of apparel and accessories jumped by 59.0 percent to R$38.8 million (€5.6m-$6.7m).

Despite the return to former production levels and the recovery of the order backlog, the gross margin was still negatively impacted by higher costs of goods produced due to increased absenteeism and higher raw material prices. It inched down by 3.1 percentage points to 35.8 percent. The Ebitda margin remained flat at 16.1 percent of revenues.

For the full year, sales were off by 13.3 percent to R$1,179.2 million (€173.1m-$206.2m). The gross margin fell by 5.2 percentage points to 29.5 percent and net income dropped by 77.9 percent to 31.5 million (€4.6m-$5.5m).

On Jan. 29, 2021, Vulcabras completed the acquisition of Mizuno’s licensed operations in Brazil. With the integration of this brand into its sports portfolio, as well as the licensing of the Azaleia brand to Grendene, Vulcabras said it has concluded its strategic transition, which began in 2018 with the acquisition of the right to use the Under Armour brand name in Brazil.