Bata incurs first loss in 59 years of Bangladesh operations

Bata Shoe Company (Bangladesh), one of the country's most widely known footwear brands, suffered losses for the first time in 59 years of operations as it had to shutter outlets during the main sales seasons amid the coronavirus outbreak.

The multinational company, which launched operations here in 1962 in the then East Pakistan, saw its sales dip 41 per cent, or Tk 350 crore, year-on-year to Tk 508 crore in 2020 from Tk 857 crore. Despite incurring losses, it announced a 25 per cent cash dividend for shareholders.

Bata, a subsidiary of Bafin (Nederland) BV in the Netherlands that holds a 70 per cent share, incurred losses of Tk 132 crore in 2020 just after logging Tk 49 crore in profits the previous year.

"Bata Bangladesh has been going through a crisis in overall business in 2020, which has pushed the company's earnings down," the company said in its disclosure.

The earnings took a drastic fall due to the loss of retail business during 2020's major festivals -- Eid-ul-Fitr, Eid-ul-Azha, Puja and Pahela Baishakh -- due to a countrywide lockdown for the Covid-19 pandemic.

The festival sales cover 25 to 30 per cent of the company's yearly business.

An estimated 77 per cent of rural business leaders like dealers and/or wholesalers have been particularly impacted due to Covid-19, which led to them losing their business, it said.

The company's business went down by 41 per cent in 2020, the disclosure added.

"As all our export markets were closed due to Covid-19, we could hardly export anything in 2020 [Tk 11 million]," said Iftekhar Mallick, head of marketing at Bata Bangladesh.

Responding to a question on the steps being taken to return to profits, he said Bata was categorically focusing on its omnichannel approaches to be present at all customer touchpoints.

"We're proud to say that we have the largest online footwear store in Bangladesh," he said, adding that batabd.com has more than 2,000 assortments and remains open 24/7.

The customers can order anytime and get products delivered home for free.

"We're noticing a rise in demand lately, especially post Ramadan and the trend is expected to continue as consumer confidence improves. If there's no Covid restriction in the coming quarters, we're hoping to turn around by the end of this year," Mallick added.

Sales revenue slightly rose in the first quarter of 2021 by 13 per cent year-on-year to Tk 184 crore.

Clearing of aged merchandise through offers of bulk discounts also gave a boost to sales, the company said.

However, Bata incurred losses of Tk 4.90 crore in the quarter. It was in profits of Tk 2.83 crore in the same period the previous year.

The company said the loss was incurred due to discounted sales and increased unavoidable expenses due to the second wave of Covid-19.

In the quarter, net operating cash flow per share increased year-on-year mainly for increased business.

A top official, preferring anonymity, said it has been trying to return to profits but the emergence of the pandemic's second wave meant that it would take time.