Alpargatas posts flat sales in 2016 as it struggles in Argentina

Havaianas owner Alpargatas ended 2016 with revenue of R $4.05 billion ($1.31 billion), up 0.4% on the previous year as decreasing shoe consumption in Argentina dented revenue at the company’s second largest division.

Havaianas

Sales grew in 2016 at a lower rate than the previous year, when they jumped by double digits, as revenue plunged by 24.1% in Argentina and by 3.3% in international markets (excluding Argentina).

Sales in Brazil benefited from the 2016 Olympic Games in Rio, reaching a 12% sales increase to R $2.63 billion ($845 million) in the year, driving the company’s growth despite a retraction in consumption.

Particularly interesting was the sales growth of Alpargatas’ sandals division in the Brazilian market, with a 19.6% increase in the period driven by higher sales and increased prices.

Despite the company posting flat sales, Alpargatas said net income grew by 36.2% to R $358.4 million ($116 million), while EBITDA increased to R $595.8 million ($193 million), up by 5.8% on the previous year.

Alpargatas sold more than 250,000 pairs of sandals in the period, representing a 7,4% increase in 2015 when it sold roughly 237,000. The number of shoes sold jumped by 11.5% in Brazil and declined by 17.1% in international markets. The company’s Havaianas brand extension reported similar results.

According to the retail group, international sandals volume was impacted mainly by export markets and the North American operation, particularly affected by the transition to direct distribution in Canada and lower offer to the off-price channel.

Sales volumes in the EMEA region grew by 93.3% due to increased sales to distributors. The company also opened its second European sandals distribution centre in Belgium in the period.

Alpargatas opened 29 Havaiana stores in Brazil and 17 overseas, totalling 578 stores worldwide for the brand. In total, the group operates 698 stores.

The company’s clothing, footwear and accessories brand Osklen reported a 7.3% increase in sales in the year due to the expanded store portfolio and a good performance of its e-commerce channel.

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