Vulcabras has reported a sales increase of 11.6 percent to 359.4 million Brazilian reais (€76.4m-$84.2m) for the third quarter of 2019, thanks in part to the higher-prices shoe that the company is selling with the Under Armour brand name in Brazil under its new contract with the American company. The Brazilian market represented 92.8 percent of the total turnover as sales in Argentina and elsewhere outside the country declined overall by 12.5 percent.
The quarterly gross margin decreased by 1.9 percentage points to 34.7 percent, due in part to lower average prices charged for the company's own brands. However, Ebitda jumped by 17.7 percent, accounting for 18.0 percent of sales, or 15.4 percent on an adjusted basis. The increase occurred in spite of 36.7 percent boost in marketing and advertising expenditures to 5.6 percent of net revenues. The bottom line showed a growth of 5.8 percent in net income to R$ 41.8 million (€8.9m-$9.8m).
In terms of volume, the number of pairs or pieces sold under its various brands, led by Olympikus, went up by 9.7 percent to 7.3 million units. In particular, the number of pairs of athletic footwear rose by 5.9 percent to 4,029,000 during the quarter and by 3.4 percent to 10,829,000 pairs in the first nine months of the year. They generated revenues of R$ 270.4 million (€57.5m-$63.4m) in the quarter, up by 11.0 percent, and R$ 733.6 million (€156.0m-$171.9m) in the nine months, up 7.2 percent.
Confronted with ongoing challenging domestic market conditions, Olympikus, which is still the leading brand of sports shoes in Brazil in terms of volume, maintained a strategy of expanding its offer of entry-level models. It also sponsored more running events in various states to become a leader in the running segment.
In the latest quarter, Vulcabras sold 1.1 percent fewer pairs of women's shoes, which carry the Azaleia and Dijean labels, but the volume went up by 7.7 percent to 4,559,000 pairs for the first nine months. Average prices were reduced. Sales were stable in Brazil and down in foreign markets.
Seeking synergies with Under Armour's own e-commerce operation, Vulcabras started to operate directly its olympikus.com.br and azaleia.com.br websites in Brazil last month. They were previously run by a third party.