Bata India posts first profit drop in two years on sluggish demand

Khadim India

09/08/2023 13:09

BENGALURU, Aug 9 (Reuters) - Footwear maker Bata India
 BATA.NS  reported its first drop in profit in eight quarters on
Wednesday, as soft demand dragged its revenue growth to a
nine-quarter low.
    The company's consolidated profit fell 10.5% to 1.07 billion
Indian rupees ($12.92 million) in the April-June quarter, while
revenue from operations increased just 1.6% to 9.58 billion
rupees.
    That was the slowest revenue growth since the March-quarter
of 2021 as the company, which is better known for its formal
shoes, grapples with a growing consumer preference for casual
wear.
    Bata has lagged its peers due to a slow pace of innovation
and ebbing brand pull, while its lower-price products have grown
at a slower pace, brokerage Ambit Capital had said in a note in
May.
    As a result, say analysts, it has struggled with high
inventory, which forced it into an early end-of-season sale.
    Compounding its problems, Bata's expenses increased 4.5% in
the quarter, while inventory costs spiked to 3.83 billion
rupees. 
    Relaxo Footwears  RLXO.NS , which owns the Sparx sports shoe
brand, had hiked prices to counter the increased costs, which
helped it post an increase in profit last quarter.
    Bata's peers Khadim India  KHAD.NS  and Campus Activewear
 CAMU.NS  will announce their results later this month.
    Shares of Bata, a unit of its Netherlands-based namesake
parent, closed 3.2% lower ahead of the results.
    That cut its gains for the year to 3.1%, which is still more
than its peers. Relaxo's shares have inched up 1.6%, while
Khadim has dipped 0.5% and Campus Activewear has slumped about
30%.
 
 ($1 = 82.8270 Indian rupees)

 (Reporting by Biplob Kumar Das in Bengaluru; Editing by Savio
D'Souza)
 ((Biplobkumar.das@thomsonreuters.com; 9101861583;))