Grendene (GRND3) Q4 2024 earnings summary

Executive summary

• Fourth quarter and full-year 2024 saw robust growth in revenue, profit, and margins, with gross revenue reaching up to R$3.24 billion (+7.5%) and net income rising as much as 31.8% to R$735.2 million, despite challenging domestic and international environments marked by inflation, high interest rates, and volatile exchange rates.

• Export markets delivered up to 31.9% revenue growth and 12.8% volume growth, outperforming the broader Brazilian footwear export sector, while the Melissa brand led domestic growth with up to 16.7% revenue increase and store network expansion.

• Operational efficiency, cost management, and a favorable product mix drove margin expansion and profit growth, with e-commerce and digital channels showing strong performance.

• Management adjusted for non-operational items, including real estate and legal proceedings, and consolidated 100% ownership of Grendene Global Brands Limited to support international and DTC expansion.

• Dividend distribution for 2024 totals up to R$454.2 million, with a payout ratio of 60.4% and dividend yield of 7.9%.

Financial highlights

• Gross revenue for 4Q24 reached up to R$1,043.5 million (+12.9% YoY), with net sales revenue at R$859.4 million (+13.0% YoY), and gross profit up 20.6%.

• Recurring EBIT for 4Q24 was R$217.6 million (+38.8% YoY), recurring net profit R$347.6 million (+35.5% YoY), and gross margin improved to 50.9% (+3.2 pp YoY).

• Full-year 2024 recurring EBIT reached R$508.4 million (+33.3%), recurring net profit R$796.5 million (+20.5%), and gross margin 47.2% (+2.7 pp).

• Net cash position at year-end was R$1.5 billion (+32.3% YoY), with operating cash flow of R$702.7 million.

• Capex in 2024 totaled R$187.4 million (+52.5% YoY), focused on modernization and efficiency.

Outlook and guidance

• Management expects COGS for 2025 to remain aligned with 2024 levels and will focus on operational efficiency, innovation, and sustainability.

• The company aims to expand its international presence and digital channels, leveraging the full acquisition of Grendene Global Brands.

• Adjustments in GDB structure and supply optimization are expected to drive slower but more profitable growth.

• Ongoing investments in production capacity, digital transformation, and sustainable practices are planned.

• 2025 expected to begin with cautious retail consumption and slower customer repurchases.