The stock of shoemaker Bata India is on an indefatigable journey upwards, driven by good earnings, low debt, a real estate component and a market fondness for consumer-themed stocks. Bata has been in a restructuring phase over the past few years. It shut down unviable stores, aggressively expanded store network, opened large-format stores and revamped older stores.
In 2010, it opened 108 large-format stores, with total store count now standing at 1,200. It is this vast reach that gives Bata India an edge. A good part of the store network also lies in smaller towns and cities, where bulk of purchasing power in the lower-value segment lies. Bata has a strong standing in the value-for-money segment.
Even so, it is trying to break out of the value mould into the higher-margin premium footwear segment, focussing on its Hush Puppies outlet network and introducing brands such as Weinbrenner. The success of such a consumer perception shift remains to be seen.
Bata also earned Rs 109 crore in the March quarter by exiting its real estate joint venture for the development of its surplus land. It also managed to improve operating margins in FY-10 (January-December) to 14 per cent from 12 per cent the year before on lower raw material costs. Net margins consequently improved to eight per cent from the earlier 6.2 per cent.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.