Azzas 2154 (AZZA3) investor relations material

Executive summary

• Continuing-brand gross revenue was R$3,581.4m, down 3.6% YoY, an improvement from the 7.8% decline in Q2.

• Gross margin expanded 2.1 p.p. to 56.8%; recurring EBITDA margin rose 0.3 p.p. to 16.4%.

• Operating cash generation reached R$385.2m, up 39.6% YoY; net debt and leverage declined sequentially.

• CADE approval of the proposed separation became final on November 4; corporate approvals and other conditions remain.

Financial highlights

• Q3 net revenue was R$2,844.2m, down 4.2%; gross profit was R$1,614.4m, down 0.6%, while recurring net income fell 5.3% to R$190.6m.

• Recurring EBITDA was R$466.4m, down 2.2%; EBIT rose 2.4% to R$327.8m.

• 9M recurring revenue was R$7,987.8m, down 6.8%; recurring EBITDA fell 18.4% to R$1,174.5m and recurring net income fell 40.1% to R$361.0m.

• Q3 recurring operating expenses excluding D&A were R$1,155.9m, nearly flat YoY, but rose to 40.6% of revenue, up 1.6 p.p.

Outlook and guidance

• Hering expected a return to growth in Q4, citing the Brasil T-shirt and high-summer collection as potential Christmas recovery drivers.

• Transformation priorities include global sourcing, faster product development, logistics automation, AI-enabled planning, omnichannel growth and disciplined inventory and working-capital management.

• Vans plans a leaner Spring/Summer 2027 range and first-half 2027 purchases 21% below first-half 2026; recovery benefits are expected mainly from Q1 2027.

• International Q4 priorities include holiday demand, Black Friday across three brands and expanding wholesale partnerships.

• TikTok Shop is planned for March 2027, with 400 store employees becoming creators and live-commerce activity through official accounts.