This February, Brazilian footwear giant Alpargatas, owner of Havaianas, released its earnings report for Q4 2021 and for the full year. The annual revenue rate increased 3.5-fold, driven by Havaianas, which grows at an annual rate above 14 percent. Recurring net income climbed 29 percent (2018-2021) from a historical annual growth rate of 5 percent (2012-2017), while the net income margin widened to 18 percent from 9 percent. Return rates also soared. Return on Capital Employed (ROCE) advanced to 29 percent (2021) from a 12 percent historical average (2017), while Return on Equity (ROE) went up to 23 percent from 16 percent in the same period.
“The numbers are the result of a long-term strategy. Three years ago, we established that Alpargatas’ long-term value creation thesis would be based on leveraging the strength of desired and hyper-connected brands such as Havaianas. In this short period, we have proved this thesis as we accelerate the brand’s growth and restructure the business portfolio,” says Chief Executive Officer Beto Funari.
The portfolio expanded with the arrival of Rothy’s, a digital-first sustainable footwear brand with high growth potential, in December 2021. The acquisition of this U.S. brand boosts the company’s presence in international markets, in high-growth footwear categories and in the direct-to-consumer channel.
In 2021 Havaianas reached a historic volume of 260 million pairs, an increase of 13 percent vs. the previous year. Havaianas International also set a milestone of 31 million pairs sold, rising 38.8 percent vs. 2020.
In 4Q21, net revenue climbed 7 percent year-over-year to R$1.1 billion (US$208 million), the highest comparison base in its history. In the full year, net revenue totaled R$3.9 billion (US$739 million), advancing 25.7 percent vs. 2020. In international markets, net revenue climbed 41.5 percent to R$1.2 billion (US$227 million).
In 4Q21, consolidated net income soared 391 percent year-over-year to R$303 million (US$58.9 million). In 2021, consolidated net income expanded 445.8 percent vs. the previous year to R$692.6 million (US$131 million). The increase, totalling R$565.7 million (US$107.1 million), is explained by higher operating income (EBITDA) and reductions in non-recurring items, financial results, and discontinued operations.
For APAC the company also posted strong growth: up +33 percent in volume, +35 percent in net sales and + 54 percent in EBITDA. Online sales doubled versus YA and we opened 102 retail stores/POP UP during the year, with a strategy focused on more community/smaller shopping malls, mainly in SEA.
Alpargatas made progress in the four strategic pillars defined by the company: global, digital, innovative, and sustainable. International Havaianas markets accounted for 32 percent revenue in 2021, an increase of 5pp compared to 2018.
Online channels (DTC and B2B) reached 30 percent of sales in international markets. The Havaianas global flagship is already the brand’s third largest individual sales channel, enjoying high levels of engagement, conversion, and net promoter scores across all digital platforms.
“We have invested a lot in innovation. The flip-flop portfolio has grown by more than 30 percent in the last three years, driven by innovations on a global scale. The portfolio of sandals, flats, sneakers, complemented by accessories and apparel, increased by more than 200 percent in the period,” says Funari.
The company also advanced the ESG agenda in 2021, structuring the Sustainability and Reputation area. This area is responsible for defining and monitoring priorities and reporting the progress of more than 100 ongoing initiatives to the Sustainability Committee, seeking to reduce environmental impacts and support the circular economy, diversity, and inclusion.
“We implemented the program to collect products in key markets and accelerated launches of products with more recycled content. Moreover, we support socio-environmental initiatives with special collections such as Pride (partnering with NGO All Out) and in partnerships with Ipê Institute and Conservation International,” adds the CEO. The company has a positive outlook for 2022. “We will continue our long-term value creation cycle with a focus on accelerating growth in Havaianas and Rothy’s.”