Weak exports dragged down Grendene's sales for the third quarter, although they were offset by stronger sales in the domestic Brazilian market. Revenues were up by 10.7 percent from the year-ago quarter to 723.9 million Brazilian reais (€192.2m-$222.8m), building up to an increase of 9.4 percent for the first nine months of the year.
The parent company of Ipanema, Melissa, Rider, Grendha and Zaxy also posted a 1.4 percent rise in the volume of pairs sold during the third quarter. Volumes were up by 6.1 percent in Brazil, with a total of 36.5 million pairs of shoes sold in the country. In addition, domestic revenues rose by 15.0 percent to R$597.2 million (€158.5m-$183.8m), thanks to an increase of 8.3 percent in average selling prices.
According to Grendene, Brazil's economic crisis is easing, with unemployment falling along with interest rates and inflation, contributing to a recovery in household incomes. However, it noted that macroeconomic imbalances are persisting, accompanied by the government's “fiscal voraciousness,” which creates uncertainty about the future development of the Brazilian economy.
The gross margin for the quarter inched down by 0.8 percentage points to 48.5 percent, while the Ebitda margin dipped by 1.4 percentage points to 21.3 percent. Net income declined by 2.8 percent to R$146.7 million (€38.9m-$45.1m).
Outside Brazil, the company had to cope with a recent increase in the value of the Brazilian currency against the dollar. It sold about 1.5 million fewer pairs abroad and its export revenues dropped by 5.8 percent to R$126.7 million (€33.6m-$38.9m) in the quarter, with an increase in the average price in dollars of 10.3 percent.
The end of the Proapi export incentive program last March had a negative effect of R$13.6 million (€3.6m-$4.2m) on earnings in the quarter, though this was partially offset by higher export tax benefits of R$2.2 million (€584,002-$677,028) under the government's Reintegra system.
Grendene boasts that it has been maintaining its leadership in Brazilian footwear exports for the 15th year in a row, exporting 32.8 percent of the total volume of Brazilian footwear sent abroad in the first nine months of the year.