Apex Footwear financial analysis: finance cost takes 79% of operating profit, FY2025 audit qualified (Oct 2026)

Investment considerations: a growing retail brand and a recovering export unit, carried by BDT 18.7bn of debt

Apex Footwear Limited (AFL) does two different businesses inside one company. Its export unit makes leather and textile athletic footwear for foreign brands, mostly in Europe, and its domestic unit sells footwear and other products through its own Apex outlets, franchises and dealers in Bangladesh [1 p.49] [1 p.126]. The statement of profit or loss is printed with columns for the Export Unit, the Domestic Unit and the Total [1 p.98], which lets an investor see how differently the two halves earn. In FY2024 (year to June 2024) the domestic unit made BDT 10,160m of revenue at a 37.1% gross margin and the export unit BDT 4,819m at 15.9% [1 p.98] [17].

The defining fact for shareholders is the balance sheet. Borrowings were BDT 17,341m at June 2024 and BDT 18,723m at December 2025, against cash of about BDT 100m [1 p.97] [7 p.2]. Most of it is short-term: short term borrowings were BDT 14,971m at December 2025 [7 p.2], funding inventory of BDT 15,255m, which is half of total assets [17]. The interest on that debt absorbs most of what the business earns before financing, so net profit has stayed between BDT 63m and BDT 177m a year for a decade on revenue of BDT 12-17bn [5 p.23] [1 p.38].

Business: an export shoe factory and a national shoe retailer in one company

AFL's own timeline places its incorporation and first export factory (1,000 pairs a day) in the 1990s, followed by listing on both Bangladesh exchanges, backward linkage into leather, components and outsoles, capacity of 5.5m pairs a year and later 15,000 pairs a day, and the start of commercial production for the domestic market [1 p.20]. It is part of the Apex group founded by the late Syed Manzur Elahi, who was a sponsor and the founding chairman until his death on 12 March 2025; his son Syed Nasim Manzur is managing director and Golam Mainuddin became chairman on 23 April 2025 [10].

The export unit makes footwear to order. In FY2024 it shipped 2,767,707 pairs against 3,957,251 in FY2023, including 827,042 pairs of textile athletic footwear [1 p.49] [1 p.50]. Management wrote that it 'struggled to ensure smooth order flow from its major customers in Europe throughout the year to fill its capacity at sustainable prices' [1 p.49], and its FY2025 plan was to pivot to the US, India, China, the Middle East and Japan [1 p.50]. Export revenue per pair was about BDT 1,741 in FY2024 against BDT 1,804 in FY2023 [17]. The company does not publish its buyer list or a buyer concentration figure in the pages we read.

The domestic unit is a branded retailer. At June 2024 it had 247 retail outlets (255 a year earlier), 245 franchises (220) and 109 wholesale dealers (90) on the integrated-report page [1 p.39]; the notes to the accounts give 113 wholesale dealers and 358 retail sales dealers [1 p.126], so the two pages use different dealer definitions. Four new outlets opened in FY2024 against 11 in FY2023 [1 p.39]. Around 25% of domestic sales come in the month of Ramadan; the company says export sales have no such peak month [8 p.1].

Capacity is large relative to output. Note 39 gives a two-shift attainable capacity of 37.7m pairs/pieces of shoes, sandals and other products and 25.9m used in FY2024, a utilisation of 63.93% (65.22% in FY2023) [1 p.126]. The same note's text gives the attainable capacity as 36.2m, so the note is internally inconsistent; we quote the table. These are pairs and pieces across both units, not export pairs.

Ten years: revenue up 3% a year, net margin stuck near 1%

Nine audited years tell a consistent story: revenue grew 2.5% a year from FY2016 to FY2024 and net profit 10.8% a year, but from a base so small that the net margin never exceeded 1.2% [5 p.23] [1 p.38] [17]. Revenue peaked at BDT 15.9bn in FY2018, fell 25.3% in FY2020 when COVID-19 closed shops and cancelled orders, and reached a new high of BDT 16.5bn in FY2023 before the FY2024 export slump [4 p.42] [1 p.38].

The gross margin moved up a level, from 19.9-22.1% in FY2016-FY2019 to 26.8-30.3% in FY2020-FY2024 [17]. The mix explains most of it: the domestic unit, which earns a gross margin near 37-40%, grew from 59% of revenue in FY2022 to 68% in FY2024, while the export unit earns 12-16% [17]. A higher gross margin did not reach the bottom line, because the domestic unit also carries the outlet costs and most of the interest.

Export and domestic: export pairs fell 30% in FY2024 and rose 30% in Q3 FY2026; domestic sales grew on price

Export revenue is pairs times price times the taka. FY2023 was the high point: export revenue rose 35.0% to BDT 7,139m [17]. In FY2024 it fell 32.5% to BDT 4,819m as pairs dropped 30.1% and revenue per pair fell about 3.5% [1 p.50] [17]. The quarterly table in the annual report shows the fall was steepest early in the year: pairs -50.1% and revenue -41.5% in Q1 FY2024, easing to -18.5% and -13.7% by Q4 [1 p.50]. The national picture was similar: Bangladesh's leather, leather goods and footwear exports were USD 961.5m in July-May FY2024, 14.2% lower, the report says citing the Export Promotion Bureau [1 p.49].

Even at lower volume, the export margin improved: export gross margin was 15.9% in FY2024 against 13.3% in FY2023, and export operating margin 8.9% against 7.0% [17]. Two lines did it. Export sales commission fell from BDT 274.1m to BDT 150.3m [1 p.121], and the export unit's raw materials consumption fell from BDT 1,856.2m to BDT 1,090.4m, faster than revenue [1 p.118]. Foreign-currency sales are recorded at the exchange rate of the transaction date [1 p.107], so taka depreciation feeds straight into export revenue per pair.

Domestic revenue is outlets times sales per outlet, plus franchises and dealers. It grew 8.1% in FY2024 to BDT 10,160m, with leather product volume down 1.49% and synthetic and other products up 1% [1 p.50], so almost all of the growth was price and mix. By quarter, domestic sales rose 17.6%, 5.2% and 26.8% in Q1-Q3 FY2024 and fell 9.6% in Q4 [1 p.50]; about 25% of domestic sales come in Ramadan [8 p.1], so the quarter Ramadan falls in moves the comparison. Domestic revenue is reported net of VAT: BDT 1,247.3m of VAT was deducted from gross domestic sales of BDT 11,406.8m in FY2024 [1 p.118].

In FY2026 the export unit has driven growth again. Q3 FY2026 (January-March 2026) export turnover rose 40.33%, BDT 503.01m, with 239,202 more pairs (+29.51%), while domestic sales rose 6.22% (BDT 258.02m) and total revenue 14.10% (BDT 761.32m) [8 p.5]. From these changes, Q3 FY2026 revenue works out to about BDT 6,157m and nine-month revenue to about BDT 15.59bn [17]; the Financial Express reported nine-month sales of BDT 15.60bn, up 14% [13], which matches. Full-year FY2026 revenue has not yet been published in the corpus.

Line items: materials, the shop network and interest decide the result

Cost of goods sold is mostly materials. In FY2024 raw materials, accessories and components and packing together cost BDT 7,461m, 49.8% of revenue, against 68.3% in FY2023 [1 p.118] [17]. The ratio is distorted by inventory movements: the export unit's opening and closing raw material stock were both about BDT 3.7bn, so purchases (BDT 1,103.4m) were close to consumption [1 p.119]. Direct labour rose 4.3% to BDT 1,363.3m while volume fell, and is now 9.1% of revenue [1 p.118] [17].

Selling cost is the retail network. Marketing, selling and distribution expenses were BDT 2,839.6m in FY2024, 19.0% of revenue [1 p.98]. The largest items are outlet expense (BDT 774.6m), depreciation on right-of-use assets for leased shops (BDT 595.1m), staff salaries (BDT 478.2m), advertisement (BDT 212.0m) and electricity (BDT 205.3m) [1 p.121]. Outlet expense plus right-of-use depreciation came to 9.1% of revenue [17]. Lease payments of BDT 885.1m sit in financing cash flow under IFRS 16 [1 p.100], so the occupancy cost of the shops is split between operating expenses and finance cost.

Finance cost is the line that decides profit. It rose from BDT 756.3m in FY2022 to BDT 911.8m in FY2023 and BDT 1,011.0m in FY2024 [2 p.93] [1 p.98], and was BDT 598.8m in H1 FY2026 against BDT 478.6m a year earlier [7 p.3]. It includes interest on lease liabilities as well as bank interest. Short-term borrowings rose 10.2% in FY2024, which the company attributes to deposits for new outlets and depots, lease renewals and finished goods inventory for the local business [1 p.52]. History gives the sensitivity: on FY2024 borrowings of BDT 17.3bn, each 1pp of interest rate is about BDT 173m a year, against FY2024 profit before tax of BDT 272.4m [17].

Quarterly finance cost has been uneven. Q1 FY2026 finance cost was BDT 421.3m and Q2 FY2026 BDT 177.5m [6 p.3] [7 p.3], while interest paid in cash in H1 FY2026 was BDT 624.5m against BDT 477.5m a year earlier [7 p.5]. The quarterly statements do not explain the Q2 drop. The FY2025 audit qualification on capitalised borrowing costs, covered in the balance sheet section, concerns the same line.

Tax is high relative to profit. The effective tax rate was 39.7% in FY2022, 52.3% in FY2023 and 35.2% in FY2024 [17]. Export income is taxed by deduction at source on export collections, which is treated as the final tax [1 p.107]; the FY2024 fall came from the cut in that deduction from 1.00% to 0.50%, which reduced export current tax by BDT 93m [1 p.51]. Because the deduction is on collections, not profit, export volume raises tax even when export profit is thin: export current tax was BDT 49.4m on export profit before tax of BDT 82.9m in FY2024 [1 p.98]. In Q1 FY2026 the tax charge was 63.36% of profit before tax, and the company said the provision on domestic sales rose 40% after a rate change in the Finance Act [10].

FY2026: profit up 15% to BDT 155m, operating cash flow negative

H1 FY2026 (July-December 2025) grew at every level down to net profit. Revenue rose 13.8% to BDT 9,432m, gross margin slipped to 25.7% from 26.6%, operating expenses rose only 2.2%, and profit from operations rose 30.7% to BDT 761m [7 p.3] [17]. Finance cost rose 25.1% and tax rose 79%, so profit after tax rose 30.3% to BDT 78.5m (EPS 3.99) [7 p.3].

The second half was smaller but positive. Nine-month profit after tax was BDT 89.18m, so Q3 FY2026 earned BDT 10.68m (EPS 0.54 against 0.49) [8 p.6]. The board then reported FY2026 EPS of 7.91, which on 19.65m shares is about BDT 155m, so the April-June 2026 quarter earned about BDT 66m (EPS 7.91 less nine-month 4.54 = 3.37) [10] [17]. The same quarter of FY2025 earned about BDT 66m on the same basis (FY2025 EPS 6.90 restated less nine-month 3.56). The fourth quarter carried the year in both years.

Cash went the other way. Operating cash flow per share was BDT 91.86 in H1 FY2026 and BDT 122.92 for nine months, then BDT -96.97 for the full year [10], so roughly BDT 1,906m of operating cash outflow for FY2026 on 19.65m shares [17]. The company explained the nine-month decline by higher payments for materials, labour, utilities and income tax [8 p.8]; the full-year explanation in the press is 'higher payments to suppliers, employees and others' [13]. The FY2026 cash flow statement is not yet in the corpus, so the split between inventory, receivables and other items is not known.

Ratios: ROE 2-6%, interest cover 1.2-1.4x, inventory over a year of cost

Returns. ROE on average equity was 2.0%-5.5% between FY2017 and FY2025; it fell to 3.6% in FY2024 because the land revaluation more than doubled equity, not because profit fell [17]. Excluding the revaluation surplus, equity was about BDT 2.2bn at June 2024 [1 p.97], and FY2024 profit would be about 8% of it [17].

Coverage and leverage. The company's own printed interest coverage ratio has been 1.24x-1.40x in every year from FY2016 to FY2024 [5 p.23] [1 p.38]. Our computation (profit from operations divided by finance cost) gives 1.26x for FY2024 and 1.27x for H1 FY2026 [17]. Net debt to equity was 5.5x at June 2023, 2.5x at June 2024 after the revaluation, and 2.7x at December 2025 [17].

Working capital. Inventory was 396 days of cost of goods sold at June 2023, 461 at June 2024 and about 397 at December 2025 on annualised H1 costs; receivables were 41 days and trade payables only 22 days at June 2024 [17]. The cash conversion cycle of about 481 days at June 2024 is funded by short-term bank debt, not suppliers. At June 2024 the stock was BDT 4.3bn of raw materials, BDT 2.2bn of accessories, BDT 1.5bn of work-in-process and BDT 4.8bn of finished goods, of which BDT 4.6bn sat in the domestic unit [1 p.118] [1 p.119]. The auditor's key audit matters in the FY2022 report covered inventory valuation and found no issue [3 p.79].

Cash conversion and payout. Operating cash flow was 2.1x profit in FY2023 and 14.8x in FY2024 [17], but the ratio flatters the company because interest paid (BDT 878.4m) and lease payments (BDT 885.1m) are classified as financing [1 p.100]. After capex, lease payments and interest, FY2024 cash flow was about BDT -9m and FY2023 BDT -2,494m [17]. Cash dividends were 35% of par in FY2020-FY2024, 25% for FY2025 and 15% for FY2026, with stock dividends of 10%, 25% and 15% [1 p.38] [10]; the cash payout on printed EPS fell from about 50% before FY2020 to 19% for FY2026 [17].

Against Bata: lower gross margin, higher operating margin, BDT 17bn more debt

The peer used here is Bata Shoe Company (Bangladesh), a listed footwear maker and retailer with a December year end. The table compares each company's latest audited year from its own filing and quotes each company's printed label: Apex's FY2024 (year to June 2024) and Bata's 2025 (year to December 2025). The years do not match and the businesses differ (Apex exported about a third of revenue in FY2024), so the comparison is about structure, not performance in the same period.

Three differences stand out. First, Bata's gross margin of 42.6% is above Apex's 30.3%, because Apex's export unit earns 12-16% [17]. Second, Apex's operating margin of 8.5% was higher than Bata's 4.5% in the years compared, when Bata's profit for the year fell to BDT 11.6m from BDT 295.7m [9 p.128]. Third, Bata's balance sheet shows no bank borrowings, only lease liabilities of BDT 2,230.5m, and its finance costs were BDT 257.4m [9 p.127] [9 p.128]; Apex had BDT 17.3bn of borrowings on top of BDT 2.8bn of lease liabilities [1 p.97]. Apex carried inventory of 461 days against Bata's 217 [17].

On market multiples, as facts only: APEXFOOT at BDT 161.3 is 23.5x FY2026 EPS and 0.52x June 2026 NAV, both on the post-bonus share count [16] [10]. BATASHOE at BDT 883 is 1,039x its 2025 EPS of 0.85 and 4.68x its December 2025 NAV per share of BDT 188.72 [16] [9 p.127] [9 p.128]. Apex's own year-end P/E, as printed by the company, ranged from 19.4x (FY2024) to 47.7x (FY2017) [1 p.38] [5 p.23].

Balance sheet: short-term debt funds inventory; the FY2025 audit was qualified on borrowing costs

Debt structure. At December 2025 short term borrowings were BDT 14,971.3m, long term borrowings BDT 3,331.6m plus a current portion of BDT 419.6m, and lease liabilities BDT 2,820.7m [7 p.2]. The FY2024 auditor made loans a key audit matter, noting they were about 79.72% of total liabilities and that the company uses loans 'to operate the business and also, to acquire non-current assets'; the procedures found no issue [1 p.93]. Long-term borrowings have been falling (BDT 5,628m at June 2023 to BDT 3,751m at December 2025) while short-term borrowings rose (BDT 11,670m to BDT 14,971m) [17], which shortens the maturity of the funding.

Revaluation. In FY2024 the company revalued land and booked BDT 3,682.8m of surplus through other comprehensive income (BDT 3,197.7m in the export unit, BDT 485.1m in the domestic unit), less BDT 147.3m of related tax [1 p.98]. Property, plant and equipment rose by BDT 4,161.2m, of which BDT 3,682.8m was land [1 p.51]. NAV per share went from BDT 217.85 to BDT 474.37 [1 p.97]. The surplus is not cash and does not reduce the interest bill; it is two-thirds of equity [17].

Audit qualification. For FY2025 the auditor gave a qualified opinion: 'Property, Plant and Equipment include borrowing costs amounting to BDT 827,155,544, which have been capitalized without complying with paragraph 22 of IAS 23, as explained in note 3.2, resulting in net profit and total assets being overstated by the same' [11]. DSE published the notice on 2 November 2025 [10]. For scale, FY2025 profit derived from the announced EPS was about BDT 136m [17]. The FY2025 annual report with note 3.2 is not in the corpus, so we cannot say over how many years the BDT 827m was capitalised. The FY2024 auditor (Hoda Vasi Chowdhury & Co.) rotated out after three years; the board recommended M.J. Abedin & Co. for FY2025 [1 p.52].

Related parties. The FY2024 related-party note lists lease rental to Apex Tannery Ltd. (BDT 33.0m), insurance with Pioneer Insurance (BDT 51.6m), lease rental to Apex Enterprises (BDT 3.6m) and medicines from Apex Pharma (BDT 1.3m) [1 p.124]. It shows no leather purchases from the listed Apex Tannery; AFL has its own tannery unit [1 p.51]. In the nine months to March 2026, lease rental to Apex Tannery was BDT 24.75m [8 p.8]. Directors' remuneration was BDT 26.0m in FY2024 [1 p.124]. Contingent liabilities were bank guarantees of BDT 43.1m and outstanding letters of credit BDT 310.2m at June 2024 [1 p.126].

Governance: founder family 31%, a BDT 5bn preference-share plan, smaller cash dividends

Ownership. At 31 March 2026 sponsors and directors held 31.01%, institutions 28.82% and the general public 40.17% of 19,653,046 shares [8 p.4]. After the founder's death his 1,150,495 shares were transmitted in equal parts to Syed Nasim Manzur and Munize Manzur, taking Syed Nasim Manzur to 1,656,040 shares (10.53%) [10]. In early 2025 the founder had declared and completed a purchase of 50,000 shares [10].

Capital actions over 24 months (DSE news, 1-Nov-2024 to 31-Oct-2026). The sweep found: FY2024 dividend 35% cash and 10% stock (bonus shares credited 17-Dec-2024); FY2025 25% cash and 25% stock (AGM 26-Nov-2025, bonus credited 4-Dec-2025); FY2026 15% cash and 15% stock recommended on 27-Sep-2026 (DSE post) with record date 15-Oct-2026; CRISL ratings of AA/ST-3 in December 2024 and December 2025; and on the same day as the FY2026 results a board decision to issue redeemable preference shares of up to BDT 500 crore (BDT 5bn) to refinance existing loans, and to amend the Memorandum and Articles, both subject to shareholder and BSEC approval [10]. The sweep found no board approval of new factory capacity or a capex budget in that period; capex fell from BDT 1,040.9m in FY2023 to BDT 854.6m in FY2024 and BDT 187.8m in H1 FY2026 [1 p.100] [7 p.5]. The FY2024 report lists capital commitments of only BDT 29.5m contracted and BDT 25.1m approved, for nine proposed outlets [1 p.126].

The Daily Star quoted a company official as saying the board had only given preliminary approval and that the structure and terms of the preference shares had yet to be finalised [12]. A BDT 5bn issue would be about a quarter of December 2025 borrowings [17]; whether it lowers the interest bill depends on the dividend rate, which has not been disclosed.

What's next: the AGM on 29 November, the preference-share vote, and LDC graduation in 2029

Policy. The UN General Assembly adopted Bangladesh's move of LDC graduation from 24 November 2026 to 24 November 2029 on 29 October 2026 in New York (30 October in Dhaka) [14] [15]. The date matters for the export unit, whose major customers are in Europe [1 p.49]: trade terms tied to LDC status now run three years longer, which bears on export revenue. The tax deduction at source on export collections is the other policy lever on the export line, as the FY2024 cut from 1% to 0.5% showed [1 p.51]; it moves income tax.

Financing. The preference-share plan needs shareholder and BSEC approval; no meeting date for that vote has been announced [10]. If it proceeds, finance cost falls and preference dividends replace part of it. The FY2026 annual report will be the first filing to show how note 3.2 on capitalised borrowing costs was treated after the FY2025 qualification, which moves finance cost and property, plant and equipment.

Trading. Exports were growing again in Q3 FY2026 [8 p.5]; the FY2026 annual report will give full-year export pairs and revenue. Domestic sales depend on Eid seasons; the company says about 25% of domestic sales come in Ramadan [8 p.1].

Events already passed, outcome not yet in the filings: the FY2026 audited statements were considered by the board on 26 September 2026 (passed); the corpus does not yet hold them, and whether the FY2026 opinion is qualified is unknown [10].

Risks: interest, export orders and inventory matter most

Each risk below is tied to the line it moves and to evidence in the filings. The common thread is that a small change in operating profit or interest moves net profit by a large share, because profit before tax was only BDT 272m on BDT 15bn of revenue in FY2024 [1 p.98].

FAQ

What does Apex Footwear do?

It makes footwear for export to foreign brands and sells footwear and other products in Bangladesh through 247 own outlets and 245 franchises (June 2024) [1 p.39] [1 p.98].

How much did Apex Footwear earn in FY2026?

EPS was BDT 7.91 against 6.90 restated, about BDT 155m of profit [10].

Why is Apex Footwear's net margin so low?

Finance cost on its borrowings took 79% of operating profit in FY2024 [1 p.98] [17].

Was the FY2025 audit qualified?

Yes. The auditor said BDT 827.2m of borrowing costs were capitalised without complying with IAS 23 [11].

What dividend did Apex Footwear declare for FY2026?

15% cash and 15% stock, record date 15 October 2026, AGM 29 November 2026 [10].

Who owns Apex Footwear?

Sponsors and directors 31.01%, institutions 28.82%, general public 40.17% at March 2026 [8 p.4].

Which results does this note use?

Audited statements to FY2024, un-audited Q1 and Q2 FY2026 statements, Q3 FY2026 notes, and DSE-announced FY2025 and FY2026 EPS. The FY2025 and FY2026 annual reports are not yet in our corpus.

Sources

1. Apex Footwear Limited Annual Report 2023-2024 (year to 30-Jun-2024) · link · accessed 2026-10-31
2. Apex Footwear Limited Annual Report 2022-2023 (year to 30-Jun-2023) · link · accessed 2026-10-31
3. Apex Footwear Limited Annual Report 2021-2022 (year to 30-Jun-2022) · link · accessed 2026-10-31
4. Apex Footwear Limited Annual Report 2019-2020 (year to 30-Jun-2020) · link · accessed 2026-10-31
5. Apex Footwear Limited Annual Report 2018-2019 (five-year highlights FY2015-FY2019) · link · accessed 2026-10-31
6. Apex Footwear Limited un-audited Q1 FY2026 statements (three months to 30-Sep-2025) · link · accessed 2026-10-31
7. Apex Footwear Limited un-audited Q2 FY2026 statements (six months to 31-Dec-2025) · link · accessed 2026-10-31
8. Apex Footwear Limited Q3 FY2026 explanatory notes (nine months to 31-Mar-2026) · link · accessed 2026-10-31
9. Bata Shoe Company (Bangladesh) Limited Integrated Annual Report 2025 (year to 31-Dec-2025) · link · accessed 2026-10-31
10. DSE news archive, APEXFOOT, 1-Nov-2024 to 31-Oct-2026 (company disclosures) · link · accessed 2026-10-31
11. DSE: 'Qualified Opinion' of Apex Footwear Limited for the year ended 30 June 2025 · link · accessed 2026-10-31
12. The Daily Star, 'Apex Footwear to raise Tk 500cr through preference shares' (Sep-2026) · link · accessed 2026-10-31
13. The Financial Express, 'Apex Footwear's profit up 15pc on higher sales, exports' (28-Sep-2026) · link · accessed 2026-10-31
14. The Daily Star, 'Bangladesh gets 3 more years for LDC graduation' (Oct-2026) · link · accessed 2026-10-31
15. The Business Standard, 'Bangladesh gets 3 more years for LDC graduation' (Oct-2026) · link · accessed 2026-10-31
16. AnalystBro price data (TradingView feed): DSE:APEXFOOT and DSE:BATASHOE daily bars to 29-Oct-2026 · link · accessed 2026-10-31
17. AnalystBro model for this report (workbook tabs below) · link · accessed 2026-10-31