Guararapes Confecções (GUAR3) Q4 2024 earnings summary

Executive summary

• Achieved record consolidated adjusted EBITDA of R$1.5 billion in 2024, up 44.7% year-over-year, with strong same-store sales growth and significant margin expansion, marking a successful turnaround and operational improvement since 2023.

• Net profit for 2024 was R$235.1 million, reversing the prior year's loss, and net debt was reduced by 53% to R$498.8 million, with leverage at 0.3x.

• Strategic focus on product innovation, democratization of fashion, asset optimization, and operational efficiency drove results, supported by major organizational changes and the adoption of OKR methodology.

• Operational efficiency, improved inventory management, and successful integration of Midway Financeira contributed to margin expansion and cash flow generation.

• Midway Financeira doubled EBITDA year-over-year, with portfolio growth and improved delinquency management.

Financial highlights

• Retail net revenue grew nearly 14% in Q4 2024, with apparel outpacing overall growth; consolidated net revenue reached R$9.6 billion for the year, up 9.5%.

• Retail same-store sales increased 11.3% year-over-year; gross margin expanded by 2 percentage points for the year.

• Retail adjusted EBITDA for 2024 was R$987 million (+32.9%), with a margin of 13.7% (+2.2 p.p.).

• Free cash flow generation was nearly R$910 million, with net debt reduced by over 50% to less than R$500 million.

• Net financial expenses (ex-IFRS16) fell 22.3% to R$285.8 million, reflecting lower debt.

Outlook and guidance

• Plans to continue sales and margin growth in 2025, leveraging ongoing operational improvements and brand investments, with a focus on experience, efficiency, and return on capital.

• Store expansion to remain steady in 2025, with acceleration expected from 2026 after further value proposition and brand adjustments.

• Midway portfolio expected to grow 5-10% in 2025, focusing on new customer acquisition and maintaining a healthy risk profile.