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Apex Footwear Limited plans to increase its textile and non-leather footwear production in line with the demand pattern developed during the pandemic.
It focuses on producing budget-friendly footwear instead of high-end products, as the consumers tighten their belts in the face of slower-than-expected economic recovery hit hardest by Covid-19.
Bangladesh’s leading brand in terms of quality adopted the policy after analyzing the recent market scenario both in local and overseas markets which shows a sharp rise in demand for budget-friendly footwear, according to its latest annual financial report.
Apex Footwear witnessed a significant increase of 23.73 per cent in the sales of its non-leather and synthetic footwear in fiscal 2020-21. The scenario is in stark contrast to that of the previous years.
The local shoemaker became a textile footwear exporter for the first time in the last fiscal year by exporting 3.79 lakh pairs of non-leather shoes to the United States and some European countries.
“Many consumers are choosing non-leather shoes instead of costly leather ones to reduce costs amid the financial crisis inflicted by the pandemic. As a result, the demand for textiles and non-leather footwear is increasing globally in addition to the local market,” the annual report noted.
The demand for athletic footwear is also on the rise as the viral disease made people health-conscious, it said.
Currently, athletic footwear holds 37.6 per cent of the global footwear market. It is expected to rise 2.1 per cent in the next year when the total market size would be $114.8 billion.
Now the company is trying to expand the non-leather business, increase investment in order to work with global brands, achieve the highest standards for sustainable growth, and strengthen the supply chain by reducing the number of goods in stock, according to the report.
Besides, it also plans to make its online presence stronger to cope with the changing market.
Export Scenario
Apex Footwear revenue from exports has been declining since fiscal 2019-19.
The pandemic-induced restrictions added more to its woes as the company is still struggling to reclaim good export performance.
The shoe maker’s exports slumped 12.87 per cent to Tk 508 crore in fiscal 2020-21, which was Tk 583 crore in the previous financial year.
The poor earnings were attributed to unfavorable business environment amid the fragile global supply chain and changes in consumer behavior, said the annual report.
Local Business
Apex Footwear is gradually strengthening its position in the domestic market. It has registered steady growth in earnings over the last six years, other than the FY20.
It defied the pandemic-induced shutdown to post an 11.8 per cent rise in sales revenue in FY21. Its earnings from domestic sales stood at Tk 668 crore , which was Tk 596 crore in FY20.
The performance of local business could have been much better had the second phase of shutdown not appeared in the scene, it said in the annual report.
Local footwear business missed the peak seasons -- Pahela Baishak and Ramadan -- for the second consecutive year. These two festivals generally contribute about 30 to 40 per cent to annual sales.
Risk and Opportunities
The footwear company is suffering from a backlog in the supply chain as retailers in the United States and some European countries still have unsold products in stock due to declining sales amid the lockdown.
The fact left an adverse impact on Apex’s fresh order chart.
On the other hand, in the last financial year, the company’s total loan increased Tk 194 crore, including long-term debt of Tk 154 crore.
The company mentioned fresh investments in building construction and machinery purchase behind the debt rise.
The global footwear market has grown to $384.2 billion by 2020, which will increase to $440 billion by the end of 2026. The annual growth rate is expected to be 2.3 percent.
Apex Footwear got listed with the capital market in 1993. Its share price increased 3.33 per cent to Tk 270 on the Dhaka Stock Exchange on Thursday.
