COVID-19 impact | Only 15% of market operational at the moment, says Relaxo Footwears MD Ramesh Kumar Dua
In a post-earnings call, Dua has informed that the company is operating only three out of its eight production facilities due to the COVID-related restrictions.
May 24, 2021 / 07:33 PM IST
The second wave of the pandemic has yet again hit the domestic footwear industry, which has seen a decline in sales as retail shops across the country remain shut due to lockdowns.
According to Ramesh Kumar Dua, Managing Director and Wholetime Director, Relaxo Footwears, out of its eight manufacturing plants, only three are operational at the moment.
“It is a very chaotic environment and only 10-15 percent markets are open at the moment and our business is largely impacted,” he said while addressing investors in a post-earnings call.
Dua shared that closed footwear as a category will remain impacted this year also; however, it will have a minimal impact on Relaxo Footwears given that the company draws only 15 percent of its sales from it.
Given the unpredictability of the situation, it is difficult to project an impact on the business but if lockdowns ease from next month, recovery can be expected from July, he added.
The revenue of the footwear industry in FY21 dropped by 10-15 percent due to the first wave of the COVID-19 pandemic, ICRA had said in a note. Towards the end of the year as the economy reopened, the market had seen improved sales and the branded segment had reported a 90 percent recovery. With the second wave now, its future again hangs in the balance.
On top of the demand woes, the industry is also struggling with price hikes in raw materials. According to Dua, the company has increased the prices of its products by 8-10 percent depending on the category and may consider further raising prices if the situation does not improve.
Relaxo Footwears reported its earnings for the fourth quarter ended March 21. The company registered over a 97 percent jump in its profits in Q4 at Rs 102 crore as compared to Rs 51.80 crore in the corresponding period last year. Its revenue from operations climbed by over 38 percent during the period to Rs 747.68 crore as opposed to Rs 540.58 crore in Q4, FY21.