Azzas 2154 (AZZA3) Q4 2025 earnings summary

Executive summary

• Achieved gross revenue of BRL 14.7 billion in 2025, up 7.1% year-over-year, driven by strong DTC channels, premium women's apparel, and international expansion.

• Completed the merger with Grupo de Moda Soma, expanding the brand portfolio, rebranding as Azzas 2154 S.A., and issuing 95.5 million new shares.

• Focused on integration, operational simplification, and disciplined capital allocation, including a 30%+ CapEx reduction and significant one-off expense cuts.

• Cash generation reached BRL 1.2 billion, with a 71% pre-IFRS EBITDA conversion and leverage reduced to 1.28x.

• Strategic decisions included shutting down underperforming brands, restructuring business units, and portfolio simplification.

Financial highlights

• 2025 recurring EBITDA was BRL 1,941.1 million (+5.8%), margin at 16.4% (+60 bps); ex-Hering margin was 18.4% (+180 bps).

• Net income for 2025 was BRL 911.2 million, a significant increase from R$ 338.5 million in 2024.

• Q4 2025 net revenue was BRL 3.3 billion, down 4.1% year-over-year; consolidated brand gross revenue was BRL 4.1 billion, up 0.7%.

• Operating cash generation in Q4 reached BRL 838 million, the highest since the merger, and BRL 1.17 billion for the year.

• Shareholder returns totaled BRL 667 million via dividends and buybacks in 2025.

Outlook and guidance

• 2026 will focus on stabilization, simplification, and execution, with Hering turnaround and profitable growth as key priorities.

• Management expects continued integration benefits from the merger, leveraging synergies in product development, channel management, and industrial optimization.

• Targeting sustainable CapEx levels, continued cash generation, and ROIC as a central KPI for management incentives.

• Capital budget for 2026 is set at R$ 411.2 million, fully sourced from retained earnings.

• Expecting healthy winter collection sales and strong performance in premium women's apparel and Arezzo brand.