C&A Modas (CEAB3) Q2 2025 earnings summary

Executive summary

• Achieved 17% same-store sales growth in apparel, with strong performance in Women's and ACE categories and gross merchandise margin expanding by nearly 2 percentage points year-over-year.

• Adjusted net income rose 113.2% year-over-year to BRL 124.7 million, with margin nearly doubling from 2Q24.

• Record free cash generation reached BRL 185 million, up 192.2% year-over-year.

• ROIC for the last twelve months was 20.4%.

• Net debt to EBITDA ratio dropped to 0.3x, the lowest since IPO.

Financial highlights

• Apparel net revenue grew 32.9% over two years and 17.4% year-over-year; Beauty net revenue increased 64.2% year-over-year.

• Merchandise gross margin rose 1.9 percentage points to 56.3% year-over-year.

• Adjusted EBITDA (pre-IFRS 16) reached BRL 426 million, with a 2.1 percentage point margin expansion to 15.3%.

• Operating expenses as a percentage of net revenue decreased, reflecting improved cost management.

• Cash position at quarter-end was BRL 1 billion, with a 73% reduction in net debt.

Outlook and guidance

• Plans to accelerate investments in store renovations and new openings, targeting 20 renovations in 2025 and 30 in 2026.

• Aims to open at least five more stores in 2025 and 15-20 in 2026, focusing on shopping malls.

• Logistics strategy to implement four urban hubs and one main distribution center by 2027, with BRL 200-250 million CapEx.

• C&A Pay penetration expected to reach 30-35% in the medium term, with focus on customer experience and risk management.

• Continued focus on operational execution, sales growth, and gross margin expansion.