The company maintained its leadership in Brazilian shoe exports in terms of volume during the first half of this year, but its share in the export volume declined to 35.8 percent from 40.0 percent in the same period a year ago. Grendene also lost some market share in the domestic market. Overall, its shoe deliveries fell by 18.0 percent to 39.1 million pairs in Brazil and by 35.3 percent to 20.3 million pairs in other countries over the six-month period, although their average selling prices rose by 4.1 percent at home and by 18.6 percent abroad.

It was the first time in four years that Grendene recorded a drop in the pairage sold. Overall, the company's net sales revenues declined by 17.5 percent to 561.1 million reais (€244.5m-$352.6m) in the first half, although the net income for the period increased to R$100.4 million (€43.8m-$63.1m). The gross margin improved by 6.2 percentage points to 36.6 percent, and the operating margin (Ebit) increased by 2.1 percent to 7.0 percent.

The situation deteriorated in the second quarter, when Grendene lowered its average prices in Brazil and in foreign markets. The group's sales fell by 20.0 percent to R$244.4 million (€106.5m-$153.6m), as compared to the same period a year ago, and net earnings declined by 3.1 percent to R$36.9 million (€16.1m-$23.2m). The gross margin went up by 5.0 percentage points to 35.0 percent, but the Ebit margin fell by 0.9 percentage points to 1.7 percent. Before accounting for amortization and depreciation, the Ebitda margin fell 0.2 percentage points to 4.7 percent.

The management says it underestimated the impact of the macroeconomic measures undertaken by the Brazilian government to contain inflation. Furthermore, the appreciation of the Brazilian real affected exports. Foreign revenues fell by 25.8 percent in the second quarter, but they would have gone down by only 16.7 percent if exchange rates had remained the same.

The results will likely be off for the full financial year. Grendene continues to target a compound average growth rate of between 8 and 12 percent a year in sales for the 2011-15 period, generating annual increases in net profit of between 12 and 15 percent. It feels confident because of the gradual improvement in the disposable income of the Brazilian population, planned investments, the impact on the economy from the World Cup of football in 2014 and the Olympic Games in 2016, and Grendene's proven ability to react to unfavorable economic conditions.