Bata fell face down, loss 122 crore

Footwear giant Bata Shoe has incurred losses for the first time in Bangladesh as it Delivery of low quality products, can't hold customers trust'including lockdown that missed the country's main shopping season after people's income was wiped out by the coronavirus pandemic.

The sales collapse of the shoes, a basic item, indicated the deep scar the pathogen has created for the economy and its people since the government revealed the country's first coronavirus cases on March 8.

Earnings of 51 per cent households in the country plunged to zero while a massive 95 per cent people suffered losses in income due to the coronavirus outbreak, a recent study of Brac found. The ongoing flood has added another blow.

Bata's sales dropped 85.37 per cent to Tk 41.24 crore in the second quarter of 2020. Sales dropped 55.37 per cent to Tk 204.92 crore in the first half of the year.

Due to the collapse in sales, Bata Shoe sank into losses in the April-June period, giving up Tk 73.51 crore, whereas it had netted a profit of Tk 21.68 crore a year earlier.

Half-yearly loss stood at Tk 70.68 crore against a profit of Tk 26.14 crore year-on-year.

"As far as I know, this was the first time we fell into losses," said Hashim Reza, company secretary of Bata Shoe.

About 25 per cent of Bata Shoe's business comes during the Eid festivals, according to the financial report of the company.

So, it ramped up stock three months before Eid-ul-Fitr, the largest religious festival in Muslim-majority Bangladesh.

The hope soon dashed after the government imposed a countrywide lockdown on 26 March to contain the soaring cases of coronavirus infections.

By the time, the economy was partially opened on 31 May, the shopping season has gone. Eid-ul-Fitr was celebrated on 25 May.

Though the government had allowed the limited opening of shops ahead of Eid-ul-Fitr, the turnout of the panicked people was low, so were the sales, said a store manager of the company in Dhaka, requesting anonymity.

The store normally posts revenue of Tk 30 lakh in Eid-ul-Fitr during normal times but it was Tk 2 lakh this year.

The sales are rising centring Eid-ul-Azha, which is only three days away, but it can't match the revenue stream recorded during normal times before the pandemic hit, he added.

The situation is slowly getting better compared with the previous months, Reza said.

"So, what happens after Eid-ul-Azha would indicate whether the situation is getting back to normal or not," he added.

Md Belal Ahmed, a customer, normally buys shoes for himself and his family members from Bata, local brand Apex or other branded shops.

"But this year I decided not to buy any branded shoe as the financial condition is not very sound," he said.

Bata Shoe manufactures and sells leather, rubber, plastic, canvas footwear, hosiery and accessories items.

The reverse in fortune for the company, a subsidiary of the Switzerland-based The Bata Company, came although it has become more optimistic about the country of late.

Buoyed by the steadily growing economy, which was the fastest in Asia last fiscal year, and a youth population, Bata opened its first-ever sneaker outpost anywhere in the world in November last year. The store, dubbed B-sneakers on the capital's Gulshan Avenue.

The multinational shoe company has been serving the local customers since 1962. Currently, Bata Shoe Company (Bangladesh) operates two manufacturing facilities: one in Tongi and the other in Dhamrai.

With a production capacity of 160,000 pairs of shoes daily, its annual sales stood at about 30 million pairs before the pandemic.

Bata is the lone franchisee of internationally renowned brands such as Adidas, Nike, Hush Puppies and Skechers in Bangladesh. It has its own sneaker brands: Power and North Star.

It has a network of 261 retail stores in Bangladesh. Its store at Bashundhara City shopping centre is the world's largest Bata store.

Shares of Bata, which was listed on the Dhaka Stock Exchange in 1985, closed unchanged from the previous day at Tk 693 yesterday.