Alpargatas, the owner of Havaianas, has described their 2022 results as disappointing, with a combination of operational challengers and rising costs putting pressure on the flip-flop brand.
The company reported a significant drop in the demand for flip-flops, citing high inflation affecting consumers’ disposable income. While, its retail customers were left with higher stock levels – resulting in a sell-in volume drop of 7%.
Furthermore, storage costs hit the company with finished products accumulating and rental of external distribution centres needed.
A logistics bottleneck didn’t slow the flip-flop brand’s growth in Europe though. It ended 2022 with double-digit volume growth. Its gross margin was impacted due to the increase in costs and the Euro devaluation in the quarters most relevant to business in the region, which affected its EBITDA.
The company’s full-year net revenue increased 5.9% to £665.8m, compared to £620.9m in 2021. Some 33 million pairs of Havaianas were sold in international markets in 2022, up 5% against 2021. There was an increase in the volume of 11% in EMEA and 10% in APAC and LATAM distribution markets vs. 2021. The US and China recorded volume drops of 37% and 19%, respectively.
Alpargatas’ CEO released a statement explaining these figures “fell short of expectations”.
However, the group stressed that it would begin 2023 “prioritising our recovery of sustainable growth and focusing on simplification, efficiency gains, and operational excellence.
“We have advanced with the construction of operational pillars that will sustain our growth recovery. We evolved with delivering the ILEP (Industrial Excellence and Logistics Program), closed satellite factories, and opened our new Distribution Center. This DC is undergoing a ramp-up phase and will significantly benefit our logistics capacity, reducing our lead time for international customers by half and allowing us to reduce our inventory for finished products.”
The statement went onto state that the group plans to simplify and seek efficiency in all company operational and corporate areas.