Bata Struggles To Keep Pace: Revenue Misses And Weak Demand Cloud Outlook

Bata India Ltd.’s recent performance has raised concerns among investors, as the company continues to struggle with revenue growth, competitive pressure and weakening financial metrics.

Once known for its dependable brand recall and strong offline presence, Bata now finds itself grappling with changing consumer preferences, a sluggish product refresh cycle and growing competition from trendier and more digitally savvy footwear brands. These factors together have put the company’s outlook under pressure, especially as the broader footwear space shows signs of healthier growth led by its peers.

A major issue for Bata has been its repeated inability to meet revenue expectations. For an extraordinary stretch of sixteen consecutive quarters, the company has missed its topline estimates. The gap has often been meaningful, from 7.2% in the second quarter of this financial year, 4% in quarter ended June, and around 7% in two of the quarters in fiscal 2024.

This persistent shortfall reflects a deeper problem: Bata is losing its edge in a market where customers, especially younger shoppers, are increasingly gravitating towards premium, stylish and more frequently refreshed collections offered by competitors.

The reasons behind these weak numbers are now clearer. Competition in the footwear space has intensified sharply, with players such as Campus and Metro capturing demand through better designs, aspirational branding and stronger digital presence.

In contrast, Bata’s range and in-store experience have not kept pace with evolving tastes. Younger consumers increasingly prefer premium or athleisure-driven labels, an area where Bata appears less compelling.

Adding to this, the company’s online traction remains muted, while peers are scaling their digital sales rapidly. This combination of softer appeal and weaker omni-channel execution has prevented Bata from capitalising on the growth seen across the industry.

The gap between Bata and its peers becomes even more evident when comparing annual revenue growth. In nine of the past quarters, Bata’s topline growth has remained below four percent, and in several quarters even slipped into negative territory.

Meanwhile, rivals have shown far stronger momentum. In the second quarter of this financial year, for example, Bata grew just 4.3%, whereas Campus delivered 16% and Metro 11.2%.

The contrast persists across earlier quarters as well, with Bata often posting flat or negative growth even as others expanded at healthy double-digit rates. This indicates that Bata’s slowdown is not due to industry-wide weakness but rather issues unique to its strategy and positioning.

Another concern for investors is the company’s declining return on capital employed (ROCE). Once a robust 20% in March 2023, it slipped to 19% in March 2024 and is projected to fall further to around 15% by March 2025.

This trend raises questions about the efficiency of capital deployment and the returns generated from new investments in stores, marketing and inventory. At the same time, total borrowings have been rising, adding further pressure on financial performance and signalling that Bata may be finding it harder to self-fund its growth plans.

In sharp contrast, peers have been focusing aggressively on premiumisation, offering attractive, fashion-led collections at higher price points, and building strong online ecosystems that cater to convenience-driven shoppers.

The stock’s performance mirrors the company’s operational challenges. Bata shares have fallen 37.56% over the past two years and 40.61% over the past three years, significantly underperforming the broader market and its peers.

The decline has been steady through the last few years. The stock fell 29.04% in fiscal 2023, 3.82% in financial year 2024 and 10.90% in the previous fiscal. Not just that the stock has slipped 18.51% so far in the current financial year. Such sustained erosion in market value reflects fading investor confidence and the absence of clear signs of a turnaround.