Lower exports throw Legacy Footwear into losses in September quarter

Declining exports of its products and electricity disruptions in the country in the past few months have caused the 100% export-oriented Legacy Footwear to turn a loss of Tk81 lakh in the July to September quarter of the ongoing fiscal.

In the same quarter of the last fiscal year, the company made a profit of Tk7 lakh. 

In the first quarter of 2022-23 fiscal year, its loss per share stood at Tk0.62 and net asset value per share at Tk9.21. 

In the last 2021-22 fiscal year, Legacy Footwear made an annual loss of Tk1.12 crore. Its loss per share stood at Tk0.86.

The company's Managing Director, Quazi Rafi Ahmad, told The Business Standard (TBS) that the demand for leather products has gone down globally. Most buyers have cancelled their purchase orders. 

"Also, power disruptions have hampered our production severely. We are trying to continue production with the help of gas-powered generators, which is costly."

"Although a large share is held by non-branded companies, we want to penetrate the local market as it has huge potential," he said.

"If we provide quality products at affordable prices, then it will not take us long to capture this market. And if we can capture even a small portion of this market within two or three years, our sales will increase quickly," he added.    

He said they want to start their local unit with approval from the Bangladesh Securities and Exchange Commission (BSEC). 

Though the company's MD says global demand for leather products has fallen drastically, data from the Export Promotion Bureau (EPB) says otherwise. 

According to EPB, the earnings from export of leather and leather products, in the July to September quarter of FY23, increased 21% to $327.97 million compared to the same quarter of FY22.

Earlier this year, Legacy Footwear decided to enter the local market by extending its plant, but the company could not start its local unit yet because of lack of funds.

Meanwhile, the firm has decided to increase its paid-up capital by Tk30 crore with issuing 3 crore ordinary shares among existing directors against cash consideration.

It wants to use these funds in the local unit as well as strengthen business subject to BSEC approval. 

Earlier, the company sought approval to increase its paid-up capital by Tk30 crore by issuing a convertible bond.

The company mentioned in its application that it initially wants to start a business on a small scale in the local market. To that end, it will produce synthetic leather shoes.

Legacy Footwear started its footwear business in 1996 as a 100% export-oriented company, but it could not establish itself in the export market. It got listed on the Dhaka Stock Exchange (DSE) in 2000. 

Instead, due to low export orders, it runs production only for three to four months a year. A team from the DSE found the factory of the company closed during an inspection.

The company also mentioned in its annual financial report that the cost of exporting shoes has increased. 

Companies like Apex Footwear have also focused on the local market alongside their export business. They are doing good business locally as well.