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

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.

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.