Bata eyes to cash in e-commerce platform to grow further

Multinational company Bata is considering increasing its products sale through e-commerce platform due to ongoing demand of the consumers and revenue decline amid Covid pandemic.

Bata’s sales dropped 41 per cent in the last year while its e-commerce grew 269 per cent at the same time. As the company incurred losses in the last year, now it planned to make its own e-commerce platform to take advantages of the technology during pandemic situation.

Company chairman Rajeev Gopalakrishnan said in a statement that, “We took measures to facilitate the operations of Bata e-commerce and reengineered the operational stream which led us to lead the footwear industry online as well.

In 2020, our growth was 269 per cent compared to the last year which clearly indicates that we took the shop at consumers’ homes.”

With all the changes around the globe, we have a plan to achieve more than 10 per cent of our total turnover next year, he added. ‍

The information was obtained by analyzing the annual report for 2020 and the unaudited financial statement of the company for the first quarter of this year.

According to the annual report, Bata’s about 35 per cent of business comes during the eid festivals.

But for the spread of Covid-19 last year, the company showed loss for the first time in Bangladesh market. Last year Bata’s total loss was Tk 132.51 crore, which was profit Tk 49.39 crore in the previous year.

Although the company’s revenue decreased, the cost of goods sale and administration expenses have not decreased in line with the company’s businesses which led to a fall of Bata’s EPS.

In 2020, its EPS was negative Tk 96.94 which was positive Tk 36.11 in 2019.  

Despite loss for investor’s interest, Bata recommended a 25 per cent cash dividend for the year 2020 from the retained earnings. This recommendation will be approved in the AGM scheduled to be held on August 12.

The company has introduced a new business model using its pandemic experience. In this context, the annual report said, to maximize the wholesale business and to minimize the chances of losing market share, the company has given long-term credit to the dealers in 2019.

As a result, the cash collection to turnover ratio has dropped. This was reflected in the company’s consolidated profit growth which slowed down.

From this experience, Bata pioneered in this industry started to move from dealerships into a distribution model.

The new distribution model is a complete cash model, de-risking receivables from the market. By the end of 2021, Bata is targeting to cater to the entire unorganized market through a distribution model.

As a result, in the first quarter (January-March) of the current year, Bata saw a better business performance, where revenue growth was 12.59 per cent and profit growth was 73 per cent.

In January-March, 2021, Bata’s revenue earning was Tk 184.29 crore, which was Tk 163.68 crore, same time of the previous year.

Meanwhile, profit after tax for January-March of this year was Tk 4.9 crore. In the same period of previous year it was Tk 2.8 crore.  

Bata Shoe Company (Bangladesh) Limited started its operation in Bangladesh in 1962. Currently Bata operates two manufacturing facilities – one in Tongi, Gazipur and the other in Dhamrai, Dhaka.

According to the Bata website, with a production capacity of 1,60,000 pairs of shoes daily, the company annually sells about 3 crore pairs of shoes.