Brazilian footwear company Vulcabras reported strong sales in the first quarter of 2021, rising for a third consecutive quarter despite the impact of the Covid-19 pandemic which led to the closure of physical retailing in the country at the beginning of March. Due to the lockdowns, a significant part of goods shipped to Brazilian stores ended up in the warehouses of transport companies and were not accounted for in first-quarter revenues, according to the company.
Net revenues were up by 30.7 percent to 311.9 million Brazilian reais (€49.1m-$59.3m), driven by strong domestic sales, up by 37.8 percent, while exports fell by 10.5 percent in the period. Domestic sales totaled 89.9 percent of total revenues, up from 85.3 percent the previous year, as foreign sales dropped to 10.1 percent from 14.7 percent.
Sales of athletic footwear rose by 45.1 percent in value to represent 82.8 percent of total revenues driven by the Olympikus and Under Amour brands. Vulcabras also registered the first revenues from the Mizuno brand. Vulcabras bought for R$32.5 million (€5.1m-$6.1m) Alpargatas’ rights to manufacture and market the Mizuno brand in Brazil and Argentina. Production started in mid-February in the company’s factory in Belo Horizonte. It is currently producing seven models of the Mizuno brand with the objective of reaching 34 models by the end of the year.
Sales of women’s footwear plummeted by 70.1 percent to represent only 2.9 percent of overall revenues against 12.6 percent a year earlier after the company sold the bulk of the business to its peer Grendene. Under the deal, Grendene signed a license agreement for the Azaleia brand owned by Vulcabras. The three-year agreement, which can be renewed for an additional three years, covers the production and sale of women’s shoes in Brazil and worldwide, except in Peru, Chile and Colombia.
Revenues stemming from slippers, boots and shoe components grew by 126.9 percent to represent 7.9 percent of the total, while sales of apparel and accessories inched up by 2.0 percent to contribute 6.4 percent of the top line.
Overall digital sales rose by 22.2 percent, contributing to 2.1 percent of revenues, down from a share of 2.3 percent a year earlier. During the first quarter, Vulcabras’ new distribution center dedicated to e-commerce came on stream. The facility is located in Extrema, in the state of Minas Gerais. The company pointed out that the region is becoming a “major” logistics hub thanks to its proximity to key consumer markets, network of carriers and favorable taxation. On March 16, Vulcabras launched its own e-commerce service for the Mizuno brand.
In volume, the company’s sales rose by 7.1 percent year-on-year to 5.1 million pairs/pieces. Athletic footwear grew by 22.0 percent to 64.0 percent of the total and women’s footwear dropped by 83.9 percent to 2.8 percent. Slippers, boots and shoe components surged by 87.7 percent to 19.0 percent of overall volumes and apparel and accessories were up by 9.9 percent to 14.2 percent.
Vulcabras’ gross margin grew by 1.7 percentage points to 34.0 percent. Operating profits were affected by higher production costs due to an increase in the price of raw materials as well as a surge in absenteeism in the company’s factories. Ebitda rose by 37.1 percent to R$37.3 million (€5.9m-$7.1m), but the Ebitda margin fell by 0.6 percentage points to 12.0 percent. Net profit rose by 64 percent from the same period last year to R$14.6 million (€2.3m-$2.8m) thanks to the higher operating profits.
“We remain confident with the good performance of our brands, and with the start of Mizuno operations Vulcabras consolidates itself as the largest manager of brands and sporting goods in the country,” the company claims.