March 1 (Bloomberg) -- Grendene SA, Brazil’s biggest shoemaker by market value, surged to a record after reporting that profit jumped in the fourth quarter as sales increased in the domestic market.
Shares advanced 5.9 percent to 19.43 reais at the close in Sao Paulo, the highest price since the stock began trading in 2004. It was the best performance on the BM&FBovespa Small Cap index, which fell 0.9 percent.
Grendene’s net income rose to 168 million reais ($84.9 million) in the fourth quarter from 121.6 million reais a year earlier, according to a regulatory filing late yesterday. Sales in Brazil, from which the company derives three-quarters of its total revenue, advanced 24 percent to 616 million reais.
Sobral, Brazil-based Grendene’s main products are low-priced plastic flip-flops and sandals, which gave it an advantage over competitors that sell more expensive shoes as the economy slowed, said Marcelo Varejao, an analyst at brokerage Socopa Corretora.
“All economic indicators show that consumption in Brazil is slowing down, and in times like this companies with cheaper products suffer less than others,” Varejao said by telephone from Sao Paulo. “That’s what’s going on with Grendene.”
Brazil’s economy grew 0.6 percent in the fourth quarter, slowing annual growth to 0.9 percent in 2012, less than all major emerging markets, according to data released by the national statistics agency today. The quarterly gain compares with the median estimate of a 0.8 percent expansion from 37 analysts surveyed by Bloomberg.
Grendene has rallied 18 percent this year after doubling in 2012. The small cap index advanced 29 percent last year and has dropped 0.4 percent so far in 2013.
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