Azzas 2154 (AZZA3) Q2 2025 earnings summary

Executive summary

• Q2 2025 marked a pivotal period with 10.3% consolidated revenue growth, major leadership transitions, and the first year post-merger, focusing on Vision 2030 and governance improvements.

• The group celebrated one year since a major merger, consolidating the largest fashion group in Latin America and advancing strategic projects for efficiency and competitive edge.

• Leadership changes, including new Chair, CEO, and CFO appointments, aim to expedite integration, enhance operational focus, and define a five-year vision.

• Despite macroeconomic challenges and underperformance in some units, structural progress and efficiency gains were achieved, preparing for a new growth cycle.

• Strategic priorities include accelerating integration, focusing on core business, and targeting Gen Z through portfolio expansion.

Financial highlights

• 2Q25 gross revenue reached R$3.6bn, up 10.3% year-over-year; recurring EBITDA was R$535.6mn (+9.0%), with a margin of 18.5%.

• Recurring net income for 2Q25 was R$283.7mn (+81.7% vs. 2Q24); accounting net income was R$537.7mn (+408.2%), mainly due to reversal of tax provisions.

• 1H25 gross revenue totaled R$6.9bn (+13.0% vs. 1H24); recurring EBITDA R$963.3mn (+14.9%), recurring net income R$401.4mn (+55.6%).

• Gross cash at quarter-end was R$823mn; net debt at 2Q25 was R$2.2bn, with leverage stable at 1.3x Net Debt/LTM Recurring EBITDA (pre-IFRS 16).

• CAPEX in 2Q25 was R$94.2mn, down 24.3% year-over-year, with focus on high-return projects.

Outlook and guidance

• High single-digit growth is expected for the second half of 2025, with continued focus on integration, operational efficiency, and portfolio expansion, especially targeting Gen Z.

• Women's apparel is projected to maintain high-teen growth, while men's and basic apparel are expected to sustain mid-teen and stable growth, respectively.

• Shoes and bags are anticipated to remain stable, with gains expected during the holiday season and into 2026.

• Continued investment in strategic projects to drive future growth and competitive advantage.

• The group is positioned for a new cycle of sustainable growth, with a focus on integration, operational discipline, and value creation.