Atacadão (CRFB3) Q2 2024 earnings summary

Executive summary

• Consolidated gross sales reached R$30.5 billion in Q2 2024, up 4.9% year-over-year, with adjusted EBITDA rising 20.2% to R$1.6 billion and net income group share at R$330 million.

• Atacadão led growth with a 10.2% YoY sales increase and 6.1% EBITDA margin, while Retail returned to positive like-for-like growth after portfolio and pricing adjustments.

• Sam's Club posted 16% YoY sales growth, and Banco Carrefour's credit portfolio expanded 19% YoY, with improved delinquency ratios.

• Annualized synergies from the BIG acquisition reached R$2.3 billion, surpassing the R$2 billion target 18 months ahead of schedule; synergy target raised to R$3 billion by end-2025.

• ESG initiatives advanced, including price freezes and food donations in flood-affected Rio Grande do Sul, and recognition for inclusion and biodiversity projects.

Financial highlights

• Net sales grew 8.1% year-over-year to R$28.0 billion; gross profit was R$5.2 billion (+2.6% YoY), with gross margin at 18.7% (-100 bps YoY).

• Adjusted EBITDA margin improved to 5.7% (+58 bps YoY); adjusted net income was R$151 million, and net income group share reached R$330 million, reversing a loss in Q2 2023.

• SG&A as a percentage of net sales decreased by 159 bps to 13.0%, reflecting cost-cutting and operational leverage.

• E-commerce GMV grew 41.3% YoY to R$2.9 billion, now 9.6% of sales, with 1P food sales up 71.4%.

• Levered free cash flow reached R$2.1 billion over the last twelve months; unlevered free cash flow (LTM) at R$3.8 billion, up 21.5% YoY.

Outlook and guidance

• Store opening guidance for Atacadão revised upward to 20 stores in 2024, all conversions from Retail, with accelerated rollout of B2C services.

• Club segment plans to open 7-9 stores in 2024.

• Capex for 2024 guided between R$2.3–2.6 billion, significantly lower than 2023, focusing on conversions rather than organic openings.

• Synergy run-rate target increased to R$3 billion per year by end of 2025, with further revenue synergies expected as converted stores mature.