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Bata reports 26% year-on-year loss

  

While Bata India returned to profit in the December quarter, after losses in the preceding two quarters, they were still down 75 per cent from a year ago.

Importantly, the decline in revenue persisted with a year-on-year drop at nearly 26 per cent in Q3. Bata has taken several initiatives to accelerate recovery, such as ramping up sales through digitally enabled platforms, which now account for about 15 per cent of total sales.

Unfavorable product mix and inadequate improvement in sales meant gross profit margins contracted by as much as 913 basis points to 51.5 per cent. One basis point is one-hundredth of a percentage point. Earnings before interest, tax, depreciation and amortization (Ebitda) margins fell even more, by 1,260 basis points, to 19.1%. That’s primarily owing to a relatively faster increase in other expenses and employee costs as a percentage of revenue.

To be sure, the margin outlook isn’t bright either. “Inferior product mix (away from formals and fashion and more towards open style footwear), is likely to put further pressure on profitability," said analysts from ICICI Securities in a report on 11 February.

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