C&A Modas (CEAB3) Q3 2025 earnings summary

Executive summary

• Apparel net revenue grew 8.9% year-over-year, with same-store sales up 8.1% and merchandise gross margin expanding by 1.9 percentage points to 54.6%.

• Beauty category net revenue surged 50.9% year-over-year, marking the sixth consecutive quarter of over 50% growth, while electronics revenue declined due to the phase-out of smartphones.

• Adjusted net income increased 41.7% to BRL 73.6 million, with margin expansion of 1.1 percentage points and pre-IFRS 16 EBITDA margin rising to 10.9%, up 0.9 percentage points year-over-year.

• Cash generation reached nearly BRL 243 million, with a nine-day improvement in the cash conversion cycle and net debt-to-EBITDA ratio reduced to 0.1x, the lowest since IPO.

• ROIC reached 21.7% for the quarter, reflecting strong operational execution.

Financial highlights

• Merchandise gross margin improved by 1.9 percentage points to 54.6%, with apparel gross margin up 0.3 percentage points year-over-year.

• Adjusted EBITDA reached BRL 209 million, up 4.5% year-over-year, with a 0.2 percentage point margin expansion.

• Capex totaled BRL 146 million, up nearly 80% year-over-year, with 81.7% allocated to Energia projects, mainly for store renovations and logistics.

• Net debt/EBITDA dropped to 0.1x, with net debt down 89.6% compared to 3Q24.

• ROIC for the last twelve months reached 21.7%.

Outlook and guidance

• Management remains optimistic for Q4, citing fresh inventories, agility in assortment, and omni-channel strategy as competitive advantages.

• Beauty and non-seasonal categories are expected to continue driving growth, with further expansion and innovation planned.

• Store expansion is set to accelerate in 2026, with an even more ambitious plan than 2025 and continued rollout of the Energia store model.

• Ongoing investments in technology, logistics, and store renovations, with focus on dynamic assortment, CRM, and AI-powered features for digital channels in 2025.

• Payout increases may be considered starting in 2026, depending on investment agenda and economic conditions.