Legacy Footwear sales dip in H1 FY23

Legacy Footwear, an export-oriented footwear manufacturer, sales hit rock bottom during July-December of FY23 as the demand declined due to economic slowdown in the company’s export destinations.

During the July-December period of the fiscal year 2021-22, Legacy Footwear recorded better sales amounting to over Tk 3 crore in both Q1 and Q2.

However, sales dropped sharply during the July-December period of FY23. As per the latest financial disclosure, the footwear maker sold products of Tk 9 lakh in the first six months of FY23, which was Tk 6.83 crore in the same period of the previous year.

Sales were Tk 5 lakh in the Q1 of FY23 and Tk 4 lakh in the next quarter. In FY22, the Q1 sales were Tk 3.48 crore and that in Q2 were Tk 3.34 crore.

Although the financial condition of the company is fragile, it is not reflected in its share price. Instead, the price increased by 31 per cent in the last four trading sessions.

On March 20, the price of each share of the company was Tk 43, which rose to Tk 56.2 during last week’s closing session at the Dhaka Stock Exchange (DSE). As a result, Legacy Footwear was the top gainer last week among the companies with the highest increase in share prices.

Earlier last year, the small-cap company applied to the regulatory body Bangladesh Securities and Exchange Commission (BSEC) to raise capital through a convertible bond issue so that its paid-up capital reaches Tk 30 crore.

The company intends to produce synthetic leather shoes on a smaller scale in the local market as it suffered extensive loss for the first six months of FY23 caused by the lack of sales. Net loss after tax during this period was Tk 1 crore, while in the same period of the previous year, net profit was Tk 14 lakh.

When contacted to know about Legacy Footwear’s overall status, Company Secretary Abdul Baten Bhuiyan said that he would speak with the relevant department.

Any bond approval of a listed company has to be notified to the general investors via the DSE website. But no such approval has been given to Legacy Footwear in the previous year by the regulatory body BSEC.

According to a senior BSEC official wishing anonymity, “The company has not been performing well for more than 10 years. Therefore the commission was interested in learning about its improvement plans”.

“The commission has urged the company to raise money to boost its capital because its paid-up capital is now Tk 13 crore”, he added.

The BSEC rule is that a company should have paid-up capital of Tk 30 crore. Legacy Footwear has violated this rule.

In response to the query by the DSE authorities, the company has informed through a filing that there is no undisclosed price sensitive information for the recent unusual price hike and the increase in the volume of shares.

In the 2021–22 fiscal year, Legacy Footwear made an annual loss of Tk 1.12 crore. Its loss per share stood at Tk 0.86.

The company started its footwear business in 1996 as a 100 per cent export-oriented company. It got listed on the Dhaka Stock Exchange in 2000.

It also mentioned in its annual financial report that the cost of exporting leather goods has increased and the demand for leather footwear has dropped drastically in the European and American markets. In Thursday’s trading session, the price of the company’s each share stood at Tk 56.20 on the country’s premier bourse.