Grendene posted gross revenues that were down by 10.0 percent in the last quarter of 2015 against the same period in 2014. Total gross revenues for the parent company of Ipanema, Melissa, Rider and Grendha decreased by 18.8 percent to R$530.6 million (€125.7m-$136.4m) in Brazil, but gained 14.6 percent to R$265.6 million (€62.9m-$68.2m) across foreign markets.
In terms of volume, deliveries were off by 20.8 percent in Brazil and by 7 percent on the export front. On the other hand, the depreciation of the real produced a foreign exchange gain of R$89.7 million (€21.3m-$23.0m) for the Brazilian group in the latest quarter.
Excluding discounts and taxes, net revenues fell by 1.4 percent to R$674.9 million (€188.8m-$204.7m). However, the Brazilian company managed to keep healthy margins, partly through increases in average selling prices in terms of reais of 2.5 percent at home and 23.3 percent abroad.
The Brazilian group said that the economic situation in Brazil worsened in the past few months and consumers' confidence was strongly affected by growing unemployment. This resulted in a weak end-of-year season in the footwear sector as store operators bought little, and sold even less.
Outside Brazil, Grendene said that volatility increased due to the uncertainty relating to the economic performance of China and the ongoing slowdown in Latin America, the Middle East and Africa.
The gross margin improved by 1.8 percentage points to 51.8 percent, while the operating margin increased by 1.9 percentage points to 27.2 percent before amortization (Ebitda). This improvement reflects an overall increase of 9.0 percent in unit prices.
For the year 2015, the group's gross revenues were down by 3.3 percent overall. While it registered a decline of 8.6 percent to R$1,899.2 million (€450.4m-$488.1m) in Brazil, exports were up by 13.9 percent to R$730.8 million (€173.2m-$187.7m).
The devaluation of the real also had a positive impact on the company's results for 2015, with a foreign exchange gain of R$214.5 million (€50.8m-$55.1m).
Net income jumped by 22.1 percent to R$603 million (€143.0m-$154.9m), giving Grendene an operating margin of 23.0 percent before amortization (Ebitda).
Grendene's recent diversification into furniture did not work out. The results reported by the group for the quarter and the year were adjusted to exclude the effects caused by losses on investments in a new furniture company, A3NP, which totaled R$46 million (€10.9m-$11.8m) in the last quarter and R$52 million for the year. It explained that this business has not reached breakeven and that no new investments would be made, except for the ones that are required to sell its stake or close down this subsidiary. The partners in the operation decided against its refinancing.
After a difficult end of the year in Brazil, the group said that it is not seeing any sign of improvement for 2016 and expects that the country's economic situation will deteriorate throughout this year.
It added that any increase in margins would have to come from increased productivity and cost efficiencies because increasing volumes would likely be difficult to achieve. On the other hand, the company expects to grow steadily across foreign markets as the depreciation of the Brazilian currency is expected to continue to boost exports.