Azzas 2154 (AZZA3) Q4 2025 earnings summary

Executive summary

• Gross revenue reached BRL 14.7 billion in 2025, up 7.1% year-over-year, driven by strong direct-to-consumer channels, premium women's apparel, and international expansion, with SSS growth of 7%.

• Recurring EBITDA was BRL 1.94 billion with a margin of 16.4% (+60 bps), and ex-Hering margin was 18.4% (+180 bps).

• Operating cash generation reached BRL 1.2 billion, with a 71% pre-IFRS EBITDA conversion and leverage reduced to 1.28x, even after BRL 500 million in dividend payouts.

• Focused on integration, operational simplification, and disciplined capital allocation, including a 31% CapEx reduction and significant one-off expense cuts.

• Strategic decisions included shutting down underperforming brands, restructuring business units, and portfolio simplification.

Financial highlights

• 2025 recurring EBITDA was BRL 1,941.1 million (+5.8%), margin at 16.4% (+60 bps); 4Q25 recurring EBITDA was BRL 501.1 million (-3.5%), margin at 15.4% (+10 bps).

• Net profit in Q4 totaled BRL 168 million, stable year-over-year, with a margin of 5.1%; recurring net income for 2025 rose 30.5% to BRL 770.7 million, net margin 6.5%.

• Operating cash generation in Q4 reached BRL 838 million, the highest since the merger, and BRL 1.2 billion for the year.

• Leverage reduced from 1.37x in Q3 to 1.28x in Q4.

• CAPEX was reduced by 31% to BRL 383.7 million.

Outlook and guidance

• 2026 will focus on stabilization, simplification, and execution, with Hering turnaround and profitable growth as key priorities.

• Continued focus on cash generation, operational efficiency, and ROIC as a central KPI for management incentives.

• Expecting healthy winter collection sales and strong performance in premium women's apparel and Arezzo brand.