Write-offs of 64 million Brazilian reais (€12.0m) in raw materials and finished goods affected Q4 adjusted Ebidta at Alpargatas. The Brazilian footwear group ramped up its capital discipline in the latter months of 2023 because of a “significant reduction” in sell-ins, itself due to high levels of inventory at retail.
Ebitda slipped by 60 percent to R$59.5 million (€11.1m) as total revenues fell by 9 percent to R$991.8 million (€185.5m) from R$1,085.8 million for the period ended Dec. 31. Gross margin tumbled by 520 basis points to 35.7 percent. On a consolidated basis, Alpargatas achieved an Ebitda of R$67 million (€12.5m) and an Ebitda margin of 7 percent. Without the write-offs, Ebitda would have been R$144 million (€26.9m) and the adjusted Ebitda margin would have been 15 percent.
Year-over-year international volume slid by 48 percent, as pairage dropped by 60 percent in the EMEA and by 44 percent in distributor markets. International Ebitda was negative R$100 million. The main reason for the lower international results was a significant decline in volume, higher fixed distribution costs in Europe and a R$13 million write-off of finished goods. During Q4, the company’s inventory reached its lowest level since Q3 2021, at about R$1 billion.
For the full year, the Havaianas parent reported a 71 percent decline in Ebitda to R$198.2 million (€37.1m) from R$672.0 million, as gross margin slipped by 690 basis points to 39.9 percent. Annual sales volume was down by 10.5 percent to R$3,689.9 million (€690.0m) from $4,120.8 million, with sales in Brazil off by 6.8 percent to R$2,716.4 million (€507.9m) and down by 19.4 percent in international markets to R$973.6 million (€182.0m).
In the company’s Rothy’s business, Q4 net income was US$5.6 million against a loss of $4.2 million on 21 percent sales growth to US$65.1 million from $53.9 million. Gross margin expanded by 580 basis points to 59.4 percent. For the full year, the business suffered a US$9.5 million loss against a $36.1 million loss in FY22 on a 1.4 percent drop in net sales to US$180.3 million from US$182.8 million. The brand ended FY23 with 17 stores.
Going forward, Alpargatas says it will become more focused on its iconic products and “leverage the strength” of its Havaianas brand in primary markets. Internationally, the company intends to be “more focused and consistent” in priority countries.
