In the first quarter of 2021, when it celebrated its 50th anniversary, the Brazilian shoe maker Grendene beat its own expectations by posting gross revenues of 644.3 million reais (€98.5m-$118.4m), up by 43.0 percent year-on-year, and selling 35.4 million pairs of shoes, up by 36.2 percent. Net revenues jumped by 40.6 percent to R$523.3 million (€80.0m-$96.2m).
Gross domestic revenues rose by 37.3 percent in value to R$471.7 million (€72.2m-$86.8m) and by 33.9 percent in volume to 27.3 million pairs. Revenues per pair were up by 2.5 percent to R$17.31 (€2.60-$3.20).
Gross revenues generated by exports surged by 61.3 percent to R$172.6 million (€26.5m-$31.8m) due to an absence of billing in the second half of March 2020, stemming from the outbreak of the Covid-19 pandemic, new distribution agreements resulting in an increase in markets and the depreciation of the Brazilian real against the U.S. dollar, which bolstered Grendene’s competitiveness. Gross revenues per exported pair jumped by 11.5 percent in Brazilian real but dropped by 9.1 percent in dollars. In volume, exports rose by 44.6 percent to 8.1 million pairs.
Grendene’s exports dramatically outperformed the rest of the country’s footwear industry, which only grew by 0.1 percent in volume in the first quarter. Consequently, the company’s share of Brazilian shoe exports rose to 25.4 percent in volume from 17.6 percent in the first quarter of 2020.
The company’s key Melissa brand saw a 13 percent year-on-year growth in gross revenues and a 5 percent increase in sales volumes during the quarter, when three Melissa Clubs were closed and two opened in its network of franchised stores. At the end of March, the fleet of Melissa Clubs totalled 345.
Despite the boom in sales, the company warned of a “strange feeling of déjà vu” and of history “repeating itself” in the quarter with the increase in Covid-19 cases and the imposition of even tougher restriction measures than during the first wave. In the quarter, Grendene also suffered from difficulties in obtaining supplies of raw material and subsequent price increases.
The expected normalization in the supply of its main raw material, resin, was delayed by a snowstorm that hit the Gulf of Mexico, where the world’s largest producers are located, by plant shutdowns stemming from programmed maintenance for some manufacturers and an increase in demand from China.
The cost of goods rose by 31.1 percent year-over-year in the first quarter, but lagged the top line because of contained labor costs. The increase in operating costs was also limited at 16.5 percent thanks to a “significant” reduction in variable expenses, which fell to 10.6 percent of revenues from 12.4 percent a year earlier.
Grendene improved its operating margins during the quarter, with the gross margin widening to 45.1 percent from 41.2 percent in the first quarter of 2020, the Ebitda margin expanding to 24.3 percent from 16.3 percent and the Ebit margin to 19.8 percent from 10.7 percent. The profit surged by 334.3 percent to R$129.2 million (€19.3m-$23.2m).
In the first quarter, Grendene completed the migration of the online stores of all its brands to a proprietary platform. The last online stores to be transferred were Melissa, Grendha and Cartago in February. It also opened in the Brazilian town of Fortaleza a second distribution center dedicated to digital sales. With the warehouse in Sobral, the company now has a total storage capacity of over 1,700 square meters, containing 175,000 shoes, for its online business. Grendene is now working on the placement of its products in online marketplaces through partnerships.