Azzas 2154 (AZZA3) Investor Update summary

Strategic vision and integration process

• The group positions itself as Latin America's leading fashion house, uniting 34 legacy and entrepreneurial brands with a focus on long-term value creation, creative autonomy, and honoring historical legacies.

• The integration process involved deep internal diagnosis, benchmarking with global fashion groups, phased structural changes, and the creation of a new governance and operational model with four main business units plus an industrial BU.

• Governance emphasizes autonomy for each business unit, standardized KPIs, a strong and independent board with international best practices, and specialized committees for strategic oversight and risk management.

• The merger aims to combine complementary strengths: industrial and retail expertise, entrepreneurial autonomy, talent retention, and a culture of learning from mistakes to accelerate growth.

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

Value generation and operational synergies

• Three main value levers are mapped: expanding footwear and handbags, optimizing the multi-brand channel, and increasing in-season responsiveness, with significant investments planned and 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.

• SG&A optimization is a priority, targeting logistics, marketing, technology, and corporate expenses, with a focus on scale, contract renegotiation, and best practice sharing.

• Tax and financial synergies are being pursued through interest on equity, leveraging tax credits, goodwill, and optimizing legal structures, with expected benefits from 2025 onward.

• Technology integration is underway, focusing on ERP, data unification, information security, and leveraging digital innovation to support business growth.

Brand and channel management

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

• 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 footwear, with Hering aiming for 121 stores by 2027.

• 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.