Azzas 2154 (AZZA3) Q1 2026 earnings summary

Executive summary

• 1Q26 results were below expectations, with significant revenue and EBITDA declines mainly due to underperformance in Vans and Hering, while most other brands, especially premium women's apparel and international operations, showed strong growth.

• Excluding Vans and Hering, group revenue was stable, indicating challenges are brand-specific, not structural.

• Strong cash generation and working capital improvements were achieved, with operational cash generation of BRL 148 million and a BRL 220 million year-over-year improvement.

• Management remains confident in brand strength and expects recovery in the second half of 2026, with new product launches and operational improvements underway.

Financial highlights

• Gross revenue reached BRL 3.12 billion, down 4.4% year-over-year; net revenue was BRL 2.48 billion, down 8%.

• Gross profit was BRL 1.35 billion, down 8.6% year-over-year, with a gross margin of 54.5%.

• Recurring EBITDA was BRL 328.5 million, down 23% year-over-year, with a margin of 13.2%.

• Recurring net income was BRL 63.9 million, down 45.7% year-over-year, with a net margin of 2.6%.

• CapEx reduced by 27% year-over-year, focusing on high-return projects.

Outlook and guidance

• Expectation of gradual acceleration in sell-in and revenue growth from Q2, with a strong recovery anticipated in Q4 2026.

• Hering's turnaround is expected to materialize from Q3 with new collections and a major product launch in September.

• Vans brand expected to return to growth by 4Q26 following strategic and operational changes.

• EBITDA margin recovery will be driven mainly by top-line normalization, reduced deductions, and Hering's improved performance.

• Cash generation is expected to remain strong, with further improvements as inventory levels normalize.