As we have said before, the devaluation of the real is allowing Brazilian companies to be more competitive abroad. One example is Vulcabras Azaleia, which reported higher exports last year, especially in the fourth quarter, allowing the company to reduce its losses.

For the company, which owns the Azaleia, Dijean and Olympikus brands and is the licensee of Reebok in three Latin American countries, the higher export business compensated for a decline in domestic sales of sports shoes under the impact of growing competition from the international sports brands.

Protected by the Brazilian anti-dumping duties on shoes and components from China, Vulcabras continues to rely on its own manufacturing operations in Brazil.  

The company reported a net loss of 126.7 million reais (€41.0m-$56.7m) for the 2013 financial year, ended on Dec. 31, down sharply from the loss of R$308.0 million recorded in 2012. Excluding exceptional charges, it still had a net loss of R$69.1 million (€22.4m-$30.9m), down from R$211.8 million, while booking positive operating earnings before amortization (Ebitda) of R$131.9 million (€42.7m-$58.9), compared with R$101.9 million in the previous year.

The total turnover of the group declined by 13.7 percent last year to R$1,533.7 million (€505.64m-$697.25m), with domestic sales falling by 19.0 percent to R$1,100.9 million (€362.93m-$500.37m) and foreign sales going up by 3.3 percent to R$432.8 million (€142.65m-$196.67m). In the fourth quarter, sales increased by 8.6 percent to R$423.5 million (€139.59m-$192.45m) as the foreign turnover jumped by 43.5 percent to R$113.4 million (€37.36m-$51.50m), while domestic sales declined by 0.3 percent.

Gross margins declined by 2.8 percentage points to 21.5 percent for the year and by 1.3 percentage points to 21.3 percent for the quarter. However, big cuts in the marketing budget, especially in the sports sector, and other cost reduction measures allowed Vulcabras to post better operating results before restructuring charges and other special items. Royalty fees and promotional expenses declined to 6.4 percent of the turnover in 2013, with a drop to 4.2 percent in the last quarter. The company also managed to reduce its huge debt in the course of the year by 21.1 percent to R$761.7 million (€250.90m-$345.91m).

The lower revenues generated by the company in Brazil last year were partly due to a decision to stop manufacturing apparel and slippers due to their low profit margins. Sports shoes remained the biggest category, representing 72 percent of domestic sales, but their sales were down by 13.0 percent to R$831.7 million (€274.15m-$378.00m) for the full year, with a drop in volume of 10.8 percent to 12.8 million. Sales recovered in the fourth quarter, rising by 1.3 percent to R$224.0 million (€73.76m-$101.71m), with growth of 13.1 percent in volume.

Vulcabras' sales of women's shoes, slippers and boots in Brazil declined by 22 percent to R$252.3 million (€83.12m-$114.61m) for the year and by 3.7 percent to R$79.1 million (€26.07m-$35.95m) in the quarter.

Turning to Argentina and other export markets, the company's sales of sports footwear rose by 2.0 percent to R$327.2 million (€107.83m-$148.69m) for the full year and by 52.9 percent to R$83.4 million (€27.51m-$37.94m) for the quarter. Volumes increased by 10.8 percent for the year and by 24.0 percent for the quarter.

Sales of women's shoes and related products outside Brazil went up by 12.7 percent for the year and by 20.0 percent for the quarter in spite of declines in volume of 6.1 percent and 19.0 percent, respectively, thanks to higher average prices.

The cuts in the marketing budget didn't prevent the company from launching a few co-branding and sponsorship deals, including one for Azaleia with a Brazilian actress, Grazi Massafera. Olympikus, which remained the biggest brand of athletic footwear in Brazil in terms of volume, benefited from the victories of the Brazilian volleyball team and the Cruzeiro football club, which it sponsors. For Reebok,

Vulcabras benefited from the growing popularity of Crossfit in Brazil and the brand's partnership with Alicia Keys, the famous American pop star (more in Shoe Intelligence).