Grendene net revenues grew by 35.2 percent to 330.5 million reais (€131.6m-$162.9m) in the second quarter. Gross sales revenues rose to R$417.7 million (€166.3m-$205.8m) from R$309.1 million in 2011, 26.5 percent of which came from the domestic market and 76.1 percent from exports. The net profit jumped by 61.4 percent to R$59.5 million (€23.7m-$29.3m).
The Brazilian footwear manufacturer, which specializes in rubber sandals, maintained its leading position in Brazilian footwear exports in terms of volume, with 34.6 percent of all the Brazilian footwear exported in the quarter, up from 31.1 percent last year.
The gross margin reached 41.8 percent, up from 35.0 percent in the second quarter of 2011. The operating margin (Ebit) was 9.6 percent, against 1.7 percent in the year-ago period. Ebitda was 12.0 percent, against 4.7 percent. The net margin was 18.0 percent versus 15.1 percent in the second quarter of 2011.
Advertising expenses represented 8.6 percent of revenues in the quarter, in line with the company's plans, up by 42.6 percent in the year-earlier period.
In the domestic market, the general demand for low-ticket products with a good cost-benefit ratio, especially in footwear, remained strong, in spite of stagnating economic conditions.. The company sold 25 million pairs on the domestic market, 31.0 percent more than in the year-ago period.
The company exported 7.8 million pairs in the quarter, 4.2 percent more than in the same period of 2011. In foreign markets, the company continued to use a strategy of growing through products with higher added value, as shown by growth in average prices in terms of U.S. dollars. The more favorable exchange rate allowed the company to raise its export prices by 69.0 percent in reais and by 37.3 percent in U.S. dollars in the quarter. For the full first half of the year, its export prices rose by 33.7 percent in reais and by 16.9 percent in dollars.
A positive factor for the company's results in the second quarter was a stabilization or slight reduction in the cost of raw materials, which had instead increased in the first quarter. Greater productivity rates were reached, as evidenced by a decrease in the cost of sales per pair of 4.7 percent, against an average decrease in the domestic price per pair of 3.9 percent.
The foreign exchange effect had a positive effect of R$17.7 million (€7.0m-$8.7m) in the second quarter. Gross export revenues increased by 43.1 percent before considering the exchange effect and by 76.1 percent after considering this effect versus the second quarter of 2011.
On July 16, Grendene signed a memorandum of understanding with another Brazilian firm, Jelly, for the development of a network of franchised Melissa stores in Brazil.
Also during the latest quarter, Grendene was recognized as the “Best Mattel Licensee of the World” at the Global Summit of Mattel in Miami. Grendene was recognized in two categories for its Latin America licenses: Best Barbie Marketing Campaign and Best Hot Wheels Licensee.