In a sign of consumer spending having normalized — at least for small ticket items, Relaxo Footwears posted results for October-December that were even better than those of the same period in 2019.
Revenue rose 12%, or Rs 72 cr, on year to Rs 672 cr, while net profit was up Rs 44 cr, or 66%, at Rs 90 cr.
With this, revenue for the last nine months of 2020 is down only 14% at Rs 1611.
The company said it was able to improve its profitability for Oct-Dec quarter due to cost-cutting measures put in place during the lock-down imposed in early 2020.
It, however, said it remained cautious about the future, given the rising raw material prices.
Relaxo, which makes sandals and low-priced shoes for daily use, was supposed to have been hit hard by the lock-down as people don’t wear out their footwear if they don’t venture out much.
However, two quarters of repressed demand seemed to have helped the company’s sales in the final three months of 2020. The quarter also saw the impact of a shift in festival season from late October to early November.
“COVID-19 cases have started coming down sharply increasing mobility along with continuous improvement in economic activities,” said Managing Director Ramesh Kumar Dua.
“Demand conditions have started improving across categories and geographies. Benign raw material prices along with our continued focus on administrative expenses has led to expansion in PAT margins by 437 bps YoY in Q3FY21.
“The successful rollout of vaccine gives further hope for the betterment of the economy, however, we continue to remain cautious about the rising raw material prices.”
The Rs 72 cr increase in the top line translated to a gain of Rs 47 cr in operatiing cash profit (EBITDA) to Rs 149 cr.
Relaxo said its liquidity position was ‘comfortable’ and had zero net debt. “We continue to provide assistance to our dealers, distributors and vendors,” it added.
The company’s results are likely to assuage concerns about any long-term slow-down caused by the COVID-19 lockdown imposed in late March.