Bata and Servis Report a Huge Hit in Profits - Android

The household names in Pakistan for footwear—Bata and Servis—have felt the pinch of Covid-19 and its related lockdowns across the… Read More

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The household names in Pakistan for footwear—Bata and Servis—have felt the pinch of Covid-19 and its related lockdowns across the country as companies’ sales slumped significantly which impacted negatively on their incomes in 2020.

According to financial reports of the two companies, the retail segment referred to outlets and non-retail segments including manufacturing and distribution divisions received a severe jolt of economic slowdown as a result of the lockdown, declining demands in the local markets, and evading purchasing power of their customers.

The sales of these companies were severely affected in the second quarter due to the closure of various outlets and affiliated shops however sales picked up in the next quarter as a result of businesses reopening.

The losses translated into a trickle-down impact on the distributors and the direct and indirect employment of the companies.

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Bata Pakistan

Bata Pakistan has recorded a loss of Rs. 1.33 billion during the period of January to September 2020. The company made a handsome profit of Rs. 1.06 billion in the corresponding period of 2019. The share value of the company turned negative Rs. 140 (loss per share) as against the share value of Rs. 100 per share stood last year by the end of September 2019.

Both retail and non-retail divisions remained under pressure due to COVID-19 impact and turnovers of both the divisions declined by 29% and 63% respectively against the corresponding period of last year. Before the outbreak, Company had successfully launched a summer shoe line in both retail and non-retail divisions.

The company has decided to preserve its cash reserves to keep the liquid in cash and stay connected with the customers through social media and online campaigns.

Servis Industries

Servis Industries Limited witnessed a drop of 73 percent in profitability which declined to Rs. 250 million from Rs. 949 million. The group with various other subsidiaries including the business of exports, rubber, and tyre production spelled a consolidated profit of Rs. 819 million but there remained a downward trend in the profitability with 15% year-over-year (YoY) growth.

The earning per share stood at Rs. 10.66 as compared to Rs. 40.40 during the nine months in the separate financials of Service Industries Limited, whereas the earnings per share in the consolidated financial statements of Service Industries Limited and its Subsidiaries stood at Rs. 34.89 as compared to Rs. 41.26 during the nine months under review.

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The financial report stated that the economy of Pakistan is set on the path to recovery even with the threat of COVID-19 still increasing day by day with the expectation of a second wave in the coming weeks. The management of the company is working hard to optimize cost levels and finding new avenues of revenue generation in all segments of the company to maximize benefits for shareholders.

The two companies are likely to streamline their focus on e-commerce in order to sustain their business during lockdown and to maintain their revenue streams as much as possible.

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