Azzas 2154 (AZZA3) Q3 2025 earnings summary

Executive summary

• Consolidated recurring gross revenue from continuing operations reached BRL 3.72 billion in 3Q25, up 4.4% year-over-year, with recurring EBITDA at BRL 476.7 million and a margin of 16.1% (+0.4 p.p.).

• Recurring net income grew 22.9% year-over-year to BRL 201.3 million, reflecting improved expense control and margin expansion.

• Fashion Women and Men units were main growth drivers, with Farm Global up 41% and Fashion Men focusing on profitability.

• Basic BU (Hering) began a transformation cycle with new leadership, focusing on operational restructuring and franchise model review.

• The group advanced integration, unifying Fashion Women and Men under single leadership to capture synergies and operational gains.

Financial highlights

• 3Q25 recurring gross revenue (continuing brands): BRL 3.71 billion (+4.4% vs. 3Q24); recurring EBITDA: BRL 476.7 million (flat vs. 3Q24); recurring net income: BRL 201.3 million (+22.9% vs. 3Q24); net margin 6.8% (+1.4 p.p.).

• 9M25 recurring gross revenue: BRL 10.6 billion (+9.8% vs. 9M24); recurring net income: BRL 602.7 million (+42.9%).

• Gross margin in 3Q25 was 54.7% (+0.3 p.p. vs. 3Q24); recurring EBITDA margin was 16.1% (+0.4 p.p. vs. 3Q24).

• Operating cash generation in 3Q25 was BRL 275.9 million; after CapEx, BRL 166.8 million.

• Net financial expenses increased to BRL 208.7 million from BRL 159.4 million in 3Q24, mainly due to higher interest expenses and lower financial income.

Outlook and guidance

• Strategic focus on integration, efficiency, and margin improvement continues, with ongoing leadership transitions in Shoes & Bags and Basic units.

• Basic BU (Hering) is undergoing a turnaround with new leadership, focusing on franchise model review, product mix repositioning, industrial efficiency, and working capital optimization.

• Women's apparel expected to maintain double-digit growth, though at a slower pace due to base effects.

• Focus remains on gross margin, cash generation, and working capital efficiency.

• Disciplined commercial execution and cost control are priorities to strengthen brand positions.