C&A Modas (CEAB3) Q2 2024 earnings summary

Executive summary

• Apparel net revenue grew 13.1% year-over-year in 2Q24, with same-store sales up 13% and gross margin expanding for the 10th consecutive quarter.

• Adjusted EBITDA rose 28.8% to R$359.5 million, and adjusted net income reached R$58.1 million, both significantly higher than 2Q23.

• Strong operational execution, rapid adaptation to atypical weather, and effective distribution drove double-digit sales growth in key campaigns.

• C&A Pay digital cards issued surpassed 6 million, now representing 26.9% of retail sales, with the portfolio growing 45.2% year-over-year.

• Continued deleveraging, with net debt/EBITDA ratio improving to 1.4x from 3.8x a year ago.

Financial highlights

• Consolidated net revenue increased 11.5% year-over-year to R$1,831.6 million in 2Q24.

• Apparel gross margin reached 57.7%, up 1.3 pp, and consolidated gross margin was 56%, up 2.5 pp year-over-year.

• Adjusted EBITDA margin (post-IFRS16) was 19.6%, up 2.6 pp year-over-year.

• Net income was R$83.9 million, up from R$4.2 million in 2Q23; adjusted net income was R$58.1 million.

• Operating expenses rose 10.7% but decreased 0.2 pp as a percentage of net revenue.

Outlook and guidance

• Management expects growth opportunities in 2H24 with the spring-summer collection and further benefits from the C&A Energy Strategy.

• Investment volume is expected to increase in the second half as Energy Strategy projects advance.

• Continued focus on merchandise gross margin expansion, operational discipline, and volume-based sales growth.