Thanks to several cost-cutting measures – including staff reductions – the parent company of Ipanema, Grendha, Rider and Melissa returned to profit growth in the latest quarter, after several months of declining earnings. The company also benefited from a one-off tax refund of 38 million reais (€8.3m-$9.2m). However, sales continued to decline, albeit at a slower pace. Grendene's net income surged by 48.4 percent to R$ 166.8 million (€36.4m-$40.2m).
Gross revenues from outside Brazil declined by 7.6 percent in the third quarter from the year-ago period to R$ 123.1 million (€26.8m-$29.6m). However, in terms of volume, shipments abroad increased by 6.6 percent to 7.7 million pairs, boosted by progress in other Latin American countries. Gross revenues per pair declined by 13.3 percent to R$ 16.08 (€3.5-$3.8), partly because of a 0.4 percent drop in the value of the real, which favored sales abroad but reduced the company's own revenues.
In Brazil, Grendene's gross revenues declined by 2.8 percent to R$ 582.7 million (€127.2m-$140.3m), while sales volumes dropped by 3.5 percent to 35.6 million pairs.
Overall, Grendene's net revenues in the quarter were down by 2,8 percent to R$ 582.2 million (€127.1m-$140.2m), on sales of 43.2 million pairs. The number of pairs exported as a percentage of the total volume was 18 percent.
The management said these figures mark a recovery from the weaker results achieved at the beginning of this year, and reflect the operational improvements achieved from the restructuring measures that it had undertaken, as well as a recovery in footwear consumption in Brazil.
All profit margins were higher than in the third quarter of 2018, despite the lower revenues. The gross margin gained 1.9 percentage points to 47.9 percent, and the Ebitda margin jumped by 11.3 percentage points to 30.2 percent.
Looking forward, the management expressed optimism in view of lower inventories at the retail level in Brazil.
To boost its digital strategy, the group has appointed an executive who has been working a long time at Grendene, Paulo Antônio Pedó Filho. Among some of his achievements, he successfully led the restructuring of Melissa at the beginning of the year 2000. Today the brand has 328 stores, 37 more units than in September 2018.
The company will also continue to focus on sustainable development. During the quarter, it launched a “Vegan seal” on products that do not include any material sourced from animals.