Grendene (GRND3) Q3 2024 earnings summary

Executive summary

• Gross revenue in 3Q24 rose 10.0% year-over-year to R$926.5 million, with recurring EBIT up 31.6% to R$161.2 million and recurring net profit up 45.9% to R$239.4 million, driven by domestic market strength and the Melissa brand, despite export declines and global volatility.

• Net revenue for 3Q24 reached R$749.5 million, up 8.8% year-over-year, with gross margin improving to 47.9%.

• Strong cash generation led to a robust net cash position of R$1.6 billion as of September 30, 2024.

• Strategic focus on higher value-added products, cost efficiency, and innovation supported results amid challenging macroeconomic conditions.

• Volume sold declined 1.5% in 3Q24, reflecting export market weakness.

Financial highlights

• Gross profit in 3Q24 was R$358.7 million (+14.5% YoY), with gross margin up 2.4 pp to 47.9%.

• Net financial revenue in 3Q24 was R$108.7 million (+115.2% YoY).

• Recurring EBIT margin improved to 21.5% in 3Q24; recurring net margin reached 31.9%.

• Operating expenses in 3Q24 fell 3.8% YoY; recurring operating expenses rose 3.5%.

• Net revenue per pair in 3Q24: R$18.52 (+10.4% YoY); COGS per pair: R$9.66 (+5.7% YoY).

Outlook and guidance

• Management is optimistic about continued recovery, citing easing inflation and rising employment, but expects improvements in consumption to materialize gradually.

• The company will maintain focus on cost control, operational efficiency, and market expansion to sustain growth.

• Potential US import tax increases are seen as an opportunity due to limited local competition.

• Strengthening of the dollar is favorable, as dollar revenues outweigh dollar costs.