Azzas 2154 (AZZA3) Investor Update summary

Strategic vision and integration process

• Azzas 2154 is positioning itself as Latin America's largest fashion conglomerate, integrating 34 legacy and new brands under a platform-BU model, with a focus on honoring heritage, fostering creativity, and entrepreneurship.

• The integration process involved deep internal diagnostics, benchmarking with global fashion groups, phased structural changes, and the establishment of a governance model balancing autonomy and guidance for each business unit.

• The group is structured into four main business units plus an industrial BU, each led by a CEO with autonomy, supported by a central platform for shared services and strategic direction.

• Governance includes a board of directors with international benchmarks, independent members, clear roles, and committees for audit, compensation, sustainability, and strategy.

• Integration milestones included Day 1 and 100-day deliverables covering financial harmonization, technology, people, legal, and audit processes.

Value generation and operational synergies

• The primary value levers are revenue-driven, focusing on expanding footwear, handbags, accessories, and multi-brand apparel, with Phase 1 projects expected to add over R$1B in incremental sales by 2027.

• Synergy capture is organized in three phases: revenue growth, COGS and SG&A optimization, and further efficiency gains, with logistics, G&A, marketing, and IT as key levers.

• Investments include BRL 30 million in pre-deal expenses, BRL 44 million in integration and consulting, and BRL 11 million in communication, with a retention bonus for key talent.

• Tax optimization strategies leverage equity structure, goodwill, tax credits, tax losses, and cross-company legal settlements to reduce effective tax rates and improve cash flow.

• Technology integration is a priority, with a roadmap for unified ERP, data management, cybersecurity, and digital innovation to support business performance and customer experience.

Brand and channel management

• The portfolio is managed by maturity and growth potential, with capital allocation favoring high-growth brands and strong cash generators.

• Channel strategy is diversified: 25% of revenue from franchising, 28% from own stores, 20% from e-commerce, 25% from international, and 9% from other channels.

• Brand management emphasizes creative independence, innovation, and leveraging cross-brand synergies, with a focus on digital acceleration and D2C expansion.

• Hering and Farm are highlighted for digital growth, product innovation, and expansion into new categories such as proprietary footwear.

• Farm Rio's global expansion is anchored on a multi-channel approach, product differentiation, ESG, and innovation, with strong growth in the US and Europe.