Grupo Casas Bahia (BHIA3) Q2 2024 earnings summary

Executive summary

• Achieved positive free cash flow of R$92 million in Q2 2024, the best half-yearly result in five years, driven by disciplined inventory management and Transformation Plan execution.

• Net income turned positive at R$37 million in Q2'24, reversing a R$492 million loss in Q2'23, aided by a non-recurring R$637 million gain from debt reprofiling.

• Transformation Plan in its first year focused on profitability, cash flow, and operational efficiency, with significant progress in cost reduction, stock health, and channel optimization.

• Strategic shift to core, profitable categories and specialist positioning, exiting 23 non-core categories and prioritizing profitable channels.

• Closed 60 loss-making stores and reduced workforce as part of cost rationalization and footprint optimization.

Financial highlights

• Net revenue was R$6.48 billion in Q2'24, down 13.5% year-over-year, mainly due to operational decisions and category reductions.

• Gross margin improved to 30.7%, up 1.5 p.p. year-over-year; EBITDA margin reached 7.0%, up 0.7 p.p. year-over-year.

• SG&A expenses reduced by 9.1% year-over-year; sales expenses down 12.7%.

• Free cash flow was R$92 million in Q2'24; liquidity stable at R$2.9 billion.

• Inventory reduced by R$1.4 billion year-over-year, with 92% of inventory under 90 days.

Outlook and guidance

• Entering the second phase of the Transformation Plan, focusing on revenue growth, margin improvement, and sustainable profitability.

• Physical stores prioritized for growth in 2H 2024, with digital channel profitability and growth targeted for 2025.

• Transformation Plan aims for R$2.5 billion in benefits, with ongoing leverages and selective investments.

• Focus on sustainable growth post-2025, prioritizing margin over GMV and operational stabilization.