“The Company's priority at the moment is to focus on strengthening internal processes to handle greater operational complexity, seeking better coordination between commercial efforts, our production chain, and supply processes. We expect that better timing should be reflected in higher cost efficiency, and lower capital employed in inventories, as well as meeting the specific demands in our various sales channels and geographies with more precision. We consider that this focus on greater cost and capital allocation efficiency and better coordination of our operational planning process are structural and fundamental components to support our growth recovery trend”, reads the company’s statement.

First Quarter Results

In the first quarter of 2023, Alpargatas' net revenue amounted to 905.2 million Brazilian Reais (165.6 million euros), down by 2.7% on a comparable basis to the same period of last year. The increase in revenue per pair was able to partially offset the decline of 13.4% in sales volumes recorded in this period.

Havaianas, in particular, saw its net revenue decline by 1.5% in the three months to the 31^st of March to 894.3 million Brazilian reais (163.6 million euros), on a comparable basis to the same period of the prior year. In Brazil, the brand's net revenue was up by 1.6% to 575.3 million Brazilian reais (105.2 million euros), while international revenue decreased by 6.8% to 318.9 (58.4 million euros). In the homologous period, Rothy's revenue totalled 31.2 million Brazilian reais (5.71 million euros), down by 3.0% as compared to the first quarter of 2022.

The company's first quarter gross margin contracted by 4.5 percentage points year-over-year to 43.1%, “still greatly impacted by the turnover of manufactured products at a higher average cost during the past year, in addition to additional storage costs in Brazil that we expect to reduce throughout the year as our inventory drops”.

Alpargatas reported that its normalized EBITDA stood at 65.8 million Brazilian reais (12.0 million euros) in the first quarter of the current fiscal year, reflecting a decrease of 62.4% as compared to the same quarter last year, while the EBITDA margin narrowed by 11.6 percentage points to 7.3%. “Results were impacted by the lower volume sold in the quarter, in addition to pressures on operating costs and expenses”, noted the company.

The Brazilian company also posted a net loss of 199.7 million Brazilian reais (36.5 million euros) in the first quarter of the year, against a profit of 112.1 million Brazilian reais (20.5 million euros) registered in the same period of the previous year.  

CEO Resignation

In a separate notice to the market, Alpargatas revealed that it is looking for a new CEO, after accepting Beto Funari's resignation on the 27^th of April.  The reasons for the resignation request were not disclosed. Meanwhile, board member Luis Fernando Ziegler de Saint Edmond will replace Funari on an interim basis.