Atacadão (CRFB3) Q4 2023 earnings summary

Executive summary

• Q4 gross sales were R$31.1bn, down 1.2% YoY amid food deflation; adjusted EBITDA was R$1.875bn at a 6.7% margin.

• Adjusted net income was R$520m; reported net loss was R$565m, mainly reflecting one-time asset-optimization expenses.

• Portfolio restructuring followed completion of 129 Grupo BIG store integrations and conversions; 104 unprofitable Retail stores had been sold or closed by end-January 2024.

Financial highlights

• Q4 net sales were R$28.1bn, down 0.3% YoY; gross profit fell 8.0% to R$5.6bn and gross margin declined 166 bps to 20.0%.

• Adjusted EBITDA declined 5.0% to R$1.875bn; margin fell 33 bps to 6.7%. SG&A decreased 9.2% to R$3.77bn, or 13.4% of net sales, down 131 bps.

• Q4 reported net loss was R$565m versus net income of R$426m a year earlier; adjusted net income was R$520m, down 5.4% YoY.

• FY23 gross sales rose 6.9% to R$115.5bn; adjusted EBITDA was R$5.7bn, down 13.7%, and adjusted net income was R$386m versus R$1.821bn in FY22.

Outlook and guidance

• Plan to convert ~40 hypermarkets into Cash & Carry and Sam’s Club stores by 2026, with ~20 conversions planned in 2024; mature-store EBITDA uplift estimated at R$10–15m annually per conversion.

• Plans called for 10–12 Cash & Carry store openings and 7–9 Sam’s Club openings in 2024.

• Target at least R$2bn in annualized synergies by end-2025; Q4 synergies were R$424m, equivalent to R$1.6bn annualized.

• Nineteen additional unprofitable stores were expected to close by Q2 2024; real-estate sales from 40 closed stores were expected to make cash impact neutral to positive by end-2024.