Azzas 2154 (AZZA3) Investor Update summary

Strategic vision and integration process

• Azzas 2154, Latin America's largest fashion group, unites 34 brands and 24,000 employees, focusing on creative autonomy, talent retention, and a platform-BU model for long-term value and global expansion.

• Integration prioritized deep internal diagnosis, benchmarking global peers, phased structural changes, and mapping brand DNA, structure, and governance to preserve autonomy and foster synergies.

• 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.

• Board governance includes nine members, independent directors, specialized committees, and clear management rights, focusing on strategic resolutions, risk management, and capital allocation.

• 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: expanding footwear and handbags, optimizing multi-brand channels, and improving in-season responsiveness, with initial targets for 2025 and 2026 and 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 targets BRL 1.8 billion, focusing on logistics, marketing, technology, and corporate efficiencies, with most synergies expected in the 2025 budget.

• Integration and deal expenses total BRL 85 million in 2024, including legal, consulting, communication, and talent retention, with significant investments in governance, systems, and people.

• Tax and financial synergies include leveraging interest on equity, tax loss carryforwards, goodwill, and cross-lawsuit settlements, with significant gains expected from 2025.

Brand and channel management

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

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

• 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.