Alpargatas reported an 11.6 percent increase in net revenues from continuing operations to 1,131.7 million reais (€276.9m-$307.6m) for the fourth quarter ended Dec. 31. Topper and Rainha, two loss-making sports brands being sold by the group, are not included in the figures for Brazil, where the group's sales fell by 3.9 percent to R$730.9 million (€178.8m-$198.7m) due to the economic recession in the country.
Benefiting also from the appreciation of the dollar, the euro, and even the Argentinean peso from the beginning of December, operations outside Brazil came to represent 41 percent of the total turnover and an even higher proportion of the group's profits. In terms of local currencies, Alpargatas' quarterly revenues increased by 6.2 percent in the U.S., by 11.2 percent in Europe, the Middle East and Africa (EMEA) and by 24.7 percent in Argentina.
The company booked a 62.2 percent increase for its Argentinean subsidiary, up to R$2,191.4 million (€536.2m-$595.5m). The international sandals business, represented mainly by sales of Havaianas sandals to foreign distributors and through its subsidiaries in the U.S. and Europe, grew by 47.0 percent to R$109.4 million (€26.8m-$29.7m).
The quarterly gross margin improved by 0.9 percentage points to 42.2 percent, and the best score was achieved by the international sandals operations, where it grew by 9.7 points to 61.4 percent. It helped these operations to turn around in the quarter from a loss to a profit before amortization of R$4.8 million (€1.2m-$1.3m), or an Ebitda margin of 4.4 percent.
Higher operating profits and margins were obtained by Alpargatas Argentina. However, the Ebitda margin in Brazil fell by 5.3 percentage points to 13.0 percent in the quarter, leading the group to report a 33.7 percent lower net income of R$55.4 million (€13.5m-$15.0m) for the period. Adding the losses of discontinued operations, net earnings were down by 43.6 percent to R$47.8 million (€11.7m-$13.0m).
Generally better figures were reported for the full 2015 financial year. The consolidated net income from continuing operations inched up by 0.7 percent to R$287.0 million (€70.2m-$78.0m), due in part to expenses of R$21.4 million (€5.2m-$5.8m) related to the group's recent change in ownership.
The total net revenues from continuing operations increased by 16.6 percent to R$4,126.2 million (€1,010.3m-$1,120.8m), including increases of 2.0 percent in Brazil to R$2,440.9 (€597.7m-$663.0m), 58.1 percent to R$1,018.7 million (€249.3m-$276.5m) in Argentina and 33.1 percent for the international sales business to R$666.6 million (€162.7m-$180.4m).
The group's gross margin rose by 1.6 percentage points to 42.6 percent for the year. The Ebitda margin deteriorated in Brazil, falling to 13.2 percent of sales. It improved by 4.2 percentage points to 18.2 percent for the international sandals operations, and by 2.7 percentage points to 11.1 percent in Argentina.
Alpargatas' sales of sporting goods declined by 18.3 percent to R$16.1 million (€3.9m-$4.4m), including a 27.1 percent decline in Brazil to R$7.94 million (€1.9m-$2.1m). In particular, the licensed Mizuno brand suffered a drop of 61 percent in its footwear sales due to a declining market and price competition.
The Havaianas brand became a more important contributor to the group's sales and profits last year. It opened 26 more stores in Brazil and 15 more abroad, making a total of 532 doors. Havaianas became a licensed brand for the 2016 Olympic Games in Rio de Janeiro, coming out with a line of 14 designs that has been on sale since last July.
Together with the lower-priced Dupé brand, Alpargatas sold a total of 234.8 million pairs of sandals last year, 6.5 percent more than in 2014, and at higher average prices. Volumes fell by 7.3 percent to 200.9 million in Brazil and by 1.4 percent to 33.9 million pairs in other markets, but foreign sales of Havaianas sandals alone went up in volume by 11.4 percent in the U.S., by 12.6 percent in Europe and by 2 percent in other export markets. European deliveries benefited from the takeover of the distribution in Germany, Austria and the Benelux countries.
According to Alpargatas, Havaianas' share of the Brazilian market grew by two percentage points last year. Sales of non-footwear products under the brand rose by 61.4 percent in the country, but dropped by 9.9 percent elsewhere. The brand has been gaining brand awareness overseas in the last three years, says the group, mentioning increases measured at 27 percentage points in Australia, 16 points in Italy, 13 points in Spain, 10 points in the U.K. and Japan, six points in France and three points in the U.S.
The divestiture of Topper and Rainha should be completed in April.