Azzas 2154 (AZZA3) Q2 2024 earnings summary

Executive summary

• Completed merger with Grupo Soma, creating the largest fashion brand manager in Latin America, with LTM gross revenue over R$12.7B and EBITDA of R$1.7B.

• Achieved 8.5% year-over-year growth in 2Q24 gross revenues, reaching R$1.54 billion, with strong omnichannel and digital performance; DTC sell-out reached R$1.3B, up 10.1% YoY.

• E-commerce revenue grew 22.4% YoY, with digital tools accounting for 58.4% of physical store sell-out.

• Board of Directors restructured post-merger, with new governance and advisory committees.

• Major brands like Arezzo, Anacapri, and Vans delivered robust results, with Anacapri up 8.9% and Vans up 26% YoY.

Financial highlights

• 2Q24 gross revenues: R$1.54B (+8.5% YoY); 1H24: R$2.90B (+7.1% YoY).

• Gross margin stable at 54.9% in 2Q24; gross profit R$677M (+9% YoY).

• Recurring EBITDA: R$203M (+2.6% YoY); EBITDA margin: 16.5%.

• Recurring net income: R$135M (+19% YoY); net margin: 10.0%.

• Net debt at R$649M, with net leverage at 0.8x EBITDA; cash position at R$563M.

Outlook and guidance

• Focus on omnichannel and digital transformation, with digital sales representing 58.4% of physical store sell-out.

• Continued investment in brand expansion, new store openings, and integration of Grupo Soma.

• Efficiency improvements and expense reductions targeted for 2025 and beyond, following integration investments in 2024.

• Farm brand projected to grow 12%-15% annually over the next two years, with global expansion focus.

• Further strategic direction to be shared at AZZAS 2154 Day.