C&A Modas (CEAB3) Q3 2024 earnings summary

Executive summary

• Achieved robust Q3 2024 results with 16.7% net revenue growth to R$1.8 billion, led by strong apparel performance and omni-channel initiatives.

• Apparel gross margin reached a record 55.1%, with consolidated gross margin at 54.4%, and adjusted EBITDA margin expanded by 4.4 p.p. to 17.6%.

• Adjusted net profit was R$52 million, reversing a loss from Q3 2023.

• Leverage reduced to 1.0x from 2.9x in 3Q23, reflecting improved financial discipline.

• Strong customer engagement: app monthly active users up 120%, and NPS up 5 p.p. year-over-year.

Financial highlights

• Net revenue grew 16.7% year-over-year to R$1.8 billion, with apparel same-store sales up 18.9%.

• Consolidated gross margin reached 54.4%, the highest for a third quarter, with 13 consecutive quarters of gross margin expansion.

• Adjusted EBITDA grew 55.2% year-over-year to R$316 million, margin at 17.6%.

• Adjusted net income of R$52 million, a sharp reversal from prior year.

• CAPEX increased 73.5% year-over-year, focused on digital, technology, and store remodeling.

Outlook and guidance

• Continued focus on omni-channel growth, store remodeling, and digital expansion, with new collaborations and Christmas campaign planned for Q4.

• Ongoing focus on increasing sales per square meter and gross margin expansion over the next two years.

• Strategic phase-out of mobile phone kiosks in Electronics, with Beauty category expected to offset declines.

• No significant macroeconomic headwinds expected to alter growth trajectory.

• Commitment to sourcing 50% of assortment through the Push & Pull supply model achieved for 2024.