MEXICO CITY — Talk about a pair of flip-flops.
Brazilian footwear and apparel company Alpargatas expects operating earnings to rise 15 percent to 652 million reals, or $200 million at current exchange, as it opens five new U.S. stores and boosts European distribution for its Havaianas sandals.
Revenues are expected to rise 20 percent to 4.1 billion reals, or $1.3 billion, as it boosts Havaianas and other footwear brand counters in 80 international markets, investor relations director Fabio Leite de Souza told WWD.
“We had good growth in the first and second quarter; our Havaianas sales are better than last year and Brazilian sales are improving,” he said, adding that Alpargatas stepped up exports in 2015 to offset losses in recession-stricken Brazil. International turnover increased 33 percent.
In Brazil, Havaianas’ demand is rising on the back of an aggressive price cutting and repositioning strategy to eclipse main rival Ipanema, Leite de Souza said.
He added Alpargatas recently launched a new line of fashion-forward yet lower-priced Havaianas to appeal to penny-pinching consumers in a country where clothing sales are forecast to decline 25 percent this year.
“We have a more aggressive pricing policy and have created a new family of products at the same price level as Ipanema,” Leite de Souza said, adding that simpler patterns and printings made them cheaper to produce. Retailing at around 20 reals or $6, the flip-flops give shoppers access “to a much more fashionable and stronger brand,” he boasted.
In coming months Alpargatas, bucking an otherwise dismal outlook for Brazilian apparel-makers and retailers, will focus on bolstering its presence in its key U.S. and European markets, as well as in Argentina, where 2015 sales surged 58 percent.
Plans are afoot to open five new stand-alone stores in the U.S., mainly in major markets such as Miami and Los Angeles, as well as in New York, New Jersey and Las Vegas to take the brand’s count to 15.
“Los Angeles is a huge market and we already have a store in Huntington Beach and stores in New York and Miami,” Leite de Souza said.
After selling 12 million pairs last year, Havaianas has more than 20 percent of the global premium sandal market, according to Leite de Souza.
Meanwhile, Leite de Souza denied speculation Alpargatas is mulling selling fashion brand Osklen, which it bought for 318 million reals in 2014, to help pay owner industrial group Camargo Correa’s rising debts and fines stemming from a state corruption probe.
“Osklen is not for sale,” he insisted. “It’s had a good first quarter and the second quarter is expected to be better.”
Osklen’s ambitious U.S. expansion plans for this year have been postponed until 2017 or beyond, he noted.
Analysts said Alpargatas’ outlook is improving due to aggressive cost-cutting and rising foreign exports. They added its other brands Rainha and Topper are doing well while it’s focusing on raising sales of its licensed Japanese Mizuno label.
Investors have welcomed the strategy, boosting Alpargatas’ shares by 42 percent in the past year.