Bata India’s quarterly profit drops on sluggish footwear sales, higher costs

(Reuters) -Footwear retailer Bata India reported a drop in first-quarter adjusted profit on Monday, hurt by higher costs and as sluggish consumption trends dragged on sales growth.

In the reported quarter, Bata India recorded 47.8 million rupees ($545,251) expenses towards a voluntary retirement scheme at one of its manufacturing unit, and in the year-ago quarter, it logged a gain of 1.34 billion rupees from the sale of a land parcel.

Expenses were nearly 1% higher from a year ago, while revenue slipped 0.3%. That led consolidated profit before exceptional items and tax to drop 10% to 748.5 million rupees in the quarter ended June 30.

For more earnings highlights, click here.

KEY CONTEXT

A consumption slowdown in India’s urban centres have dragged margins for Bata, which sells items such as shoes, slippers, leather belts and bags.

The company has strived to maximise volume-led growth in recent quarters, reducing price points offered in stores to reduce decision-making fatigue, while adding more affordable footwear.

Bata said it is “optimistic about consumption recovery” for the rest of the year, after flagging weather-related “headwinds” in the first quarter, which likely hit footfalls in its brick-and-mortar stores.

PEER COMPARISON

Valuation (next 12 Estimates (next 12 Analysts’ sentiment

months) months)

RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div

growth (%) growth (%) rating* analyst price yield

s target** (%)

Bata India 48.77 19.01 8.59 30.95 Sell 10 0.95 1.61

Metro Brands 61.93 32.76 15.41 23.23 Buy 21 0.88 0.45

Relaxo Footwears 49.53 23.86 4.84 17.74 Hold 10 0.96 0.69

Campus Activewear 48.45 25.20 13.82 26.68 Buy 9 0.86 NULL

* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell

** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT

APRIL TO JUNE STOCK PERFORMANCE

— All data from LSEG

— $1 = 87.6660 Indian rupees

(Reporting by Ananta Agarwal and Hritam Mukherjee in Bengaluru; Editing by Harikrishnan Nair)

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