Vulcabras Azaleia, the Brazilian parent of the Olympikus brand of sports shoes that held the distribution rights for Reebok until the end of last year, has reported a net profit of 19.7 million reais (€5.36m-$5.71m) for the third quarter ended Sept. 30, compared with only R$2 million in the year-ago period.
Olympikus, which claims to be the biggest brand of athletic footwear in Brazil in terms of volume, but not in value, contributed to a 15 percent sales increase to R$363 million (€98.8m-$105.2m) for the group, which also owns the Azaleia brand of women's shoes and others. Vulcabras cited an expansion of Olympikus' distribution network, a deeper penetration of the retail stores and a well-received collection.
The gross margin of the group improved by 6.3 percentage points to 36.3 percent in the quarter, as compared to a year ago, continuing the progress made earlier this year. In the first nine months of 2016, Vulcabras reached a gross margin of 33.7 percent. Sales grew by 13.2 percent and net earnings jumped by 157.1 percent, excluding the company's discontinued operations in Argentina.
Meanwhile, a local report quotes Reebok's new Brazilian brand manager, Julian Slaguiro, as predicting a 10 percent sales increase for the brand in the country in its first year under the Adidas Group's full control. Targeting a broader consumer base, it plans to source 10 percent of its apparel and footwear products locally next year, much like Alpargatas is now doing for Mizuno (see the related story in this issue) because of the low level of the Brazilian real and the Brazilian anti-dumping duties on shoes coming from China.
Reebok has raised its marketing spend, sponsoring two Brazilian rappers. It has just opened a 180-square-meter flagship store in the El Dorado shopping mall of São Paulo. A second standalone store is planned for 2017, taking the total network of mono-brand stores in the country up to nearly 200 doors.