Grendene, which claims to be the largest manufacturers of synthetic sandals in the world, completed on Friday its public offering on the Sao Paulo stock exchange as investors bought up 2,595,652 shares, offered as a greenshoe allotment by the Grendene family to respond to strong demand for the stock. The publicly traded amount has thus gone up to 19.9 percent of the total equity of 100 million shares. Another secondary offering is expected within three years’ time to at least 25 percent under local stock market regulations.

The Grendene family, which founded the Brazilian company in 1971, sold a first lot of 17,304,348 shares on Nov. 3 at the same price of 31.00 reals a share, but the share price increased by 12 percent on the first day of trading and remained around Friday’s level of 33 reals for several week. The stock price hit 35 reals, valuing the company at 3.5 billion reals (e966m-$1,285m), just as the company announced somewhat disappointing results for the 3rd quarter, while maintaining its projections for the full financial year. Company officials attributed them partly to strong expenditures on advertising, involving no less than 12 different TV campaigns in Brazil, designed to stimulate sales in the critical 4th quarter.

Grendene’s total sales increased by 20.2 percent to R$416 million (e115m-$153m) in the 3rd quarter, with volume deliveries up by 24.6 percent to 39 million pairs and their average price down 3.6 percent to R$10.57 per pair. The company sells shoes under a variety of brands including Grendha, Ipanema, Karina, Melissa and Rider. Nearly 70 percent of the company’s export volume is directed at the USA, Paraguay and Mexico, but Grendene also has a substantial business in Europe.

While the group’s domestic revenues increased by 33.8 percent in the quarter, export sales fell by 37.6 percent to R$41 million (e11m-$15m) in spite of a 1.4 percent increase in volume. Company officials attribute this to the 5.3 percent appreciation of the Brazilian real against the US dollar over the last nine months, the shift to a simpler product mix for export markets, the switch from direct sales to a distributor in the USA and the strong success of certain Melissa models a year ago in the USA and Europe, particularly in El Corte Inglès’ department stores in Spain.

Grendene’s adjusted net income declined by 42.1 percent to R$48 million (e13m-$18m) in the latest quarter – or from 28.3 to 14.6 percent of sales. The gross margin dropped from 49.9 to 45.5 percent. Operating results before amortization and depreciation (Ebitda) fell by 19.8 percent to R$92 million, but they still represented a nice margin of 28 percent – better than that of a big Brazilian competitor, Sao Paulo Alpargatas, which markets the Hawaianas line of sandals.

For the full 9-month period ended Sept. 30, Grendene reports a 5.4 percent lower adjusted net profit of R$135 million (e37m-$50m), equal to 16.6 percent of sales, and 6.1 percent lower Ebitda of R$207 million (e57m-$76m). Sales were up 23.7 percent for the period to R$1,021 million (e282m-$375m), with export revenues down 11.2 percent to R$184 million (e51m-$68m). The gross margin declined from 46.7 to 41.4 percent.

Grendene is Brazil’s largest footwear manufacturer in terms of volume, with an installed capacity of 150 million pairs, which is being expanded. It claims an 18 percent market share in Brazil and accounts for 15 percent of its total export volume.