Domestic footwear sector nears collapse
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WEDNESDAY, AUGUST 10, 2022
Domestic footwear sector nears collapse

Economy

Sajjadur Rahman & Ahsan Habib Tuhin
29 July, 2020, 12:00 am
Last modified: 29 July, 2020, 10:38 am

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Domestic footwear sector nears collapse

Market players said sales have decreased to 20 percent of the pre-Covid-19 numbers

Sajjadur Rahman & Ahsan Habib Tuhin
29 July, 2020, 12:00 am
Last modified: 29 July, 2020, 10:38 am
Workers are processing shoes at Lace Footwear Factory at Bhairab in Kishoreganj. File Photo: Rehman Asad/TBS
Workers are processing shoes at Lace Footwear Factory at Bhairab in Kishoreganj. File Photo: Rehman Asad/TBS

Over 30 footwear exporters have introduced local brands in the past decade to cash in on the rising disposable income of consumers. However, the once-thriving business has almost halted in recent months under the impacts of the novel coronavirus pandemic.

Some of those brands are: Bay, Hamco, Jennys, Fortuna, Crescent, Vibrant, Leatherex, STEP, Walkar, Orion, Falcon, Zeils, Shampan, etc. Most of their outlets now remain closed ahead of Eid-ul Adha, a season for sales.

Take the case of Jennys as an example. It has 45 outlets in Dhaka and other major cities in the country, but 35 are now closed. 

"If the pandemic goes for another six months, the sector will collapse," said Nasir Khan, owner of Jennys.

The situation is similar for other brands. Some of them keep their outlets open, but their sales are abysmal. 

Market players said sales have come down to 20 percent of the pre-Covid-19 time.

A severe slump in sales is also reflected in Bata, a multinational footwear brand that has over 260 outlets countrywide.

In the April-June quarter of this year, Bata earned only Tk41 crore in revenue in contrast to Tk282 crore in the same period last year, causing the company to incur a loss for the first time in Bangladesh.

The company also posted a net loss of Tk73.51 crore in the second quarter this year. In the first half of this year, its net loss stood at Tk70.68 crore, and its loss per share was Tk51.67.

A senior official at Bata said at the beginning of 2020, the company had planned for a production schedule, keeping Eid business in mind. From the organisation's point of view, it expected to have significant sales. Therefore, the company began to build stock three months earlier. 

However, the business has been affected and the cash-generating cycle was hampered due to Covid-19, resulting in a negative impact on the net operating cash flow, he added.

A senior officer at Apex Footwear said Apex, the largest local brand with around 220 outlets, used to sell products worth Tk2 crore, daily, just on the local market. Their sales dropped by more than 50 percent in the second quarter of this year due to Covid-19.

Why this slump?

Domestic brands would witness 40 percent of their annual sales just ahead of Eid-ul-Fitr. This time, their sales have been completely eroded by the countrywide shutdown.

"Eid-ul-Fitr used to give us cash flow for the whole year. But it was zero this year," said Jashim Md Al Amin, managing director at Zeils. He had 37 outlets, but now has only 27.

Pahela Baishakh, Durga Puja and Eid-ul-Adha are three other selling seasons that boost footwear sales in the country. However, they have missed out on these big occasions this year.

Domestic footwear market

The footwear sector had been growing at around 15 percent for the past decade – riding on the country's strong economic growth and rising purchasing power of consumers.

According to research by Eastern Bank Limited in 2019, the domestic market size of footwear was around Tk17,000 crore in the fiscal year 2018-19. Domestic demand for footwear was about 200 to 250 million pairs a year.

This steady rise in demand brought in investments from both foreign and local businesses. At least 15-20 new leather product and footwear factories were opening in the country each year.

Top News

footwear / sector / Collapse

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