Grupo Casas Bahia (BHIA3) Q3 2024 earnings summary

Executive summary

• Achieved fourth consecutive quarter of sequential improvement in gross margin and EBITDA, with gross margin at 31.6% in Q3'24, up 8.6 p.p. year-over-year and 0.9 p.p. sequentially, driven by operational efficiency and cost reduction initiatives.

• Net loss narrowed to R$369 million in Q3'24, a 55.9% improvement year-over-year, with net margin improving by 6.9 p.p.

• Physical store GMV grew 4.6% and same-store sales rose 6.5% year-over-year, while 3P GMV increased 18.3% and marketplace revenue grew 24.1%.

• Liquidity balance, including receivables, totaled R$3.1 billion, up R$232 million sequentially, marking the best cash balance variation in several years.

• Transformation Plan delivered structural adjustments, including workforce reduction, store closures, and inventory optimization, with a shift to revenue growth and profitability improvement.

Financial highlights

• Gross margin reached 31.6% in Q3'24, up 8.6 p.p. year-over-year and 0.9 p.p. sequentially; adjusted EBITDA margin at 7.7%, up 8.7 p.p. year-over-year.

• Net revenue declined 16% year-over-year to R$6.4 billion, reflecting strategic focus on profitability.

• SG&A reduced by R$336 million in 9M24, with efficiency gains from personnel and third-party service cost containment.

• Free cash flow was slightly negative at R$179 million, impacted by inventory buildup for Q4 seasonality, but cash variation was positive at R$232 million.

• Liquidity/short-term debt ratio at 4.5x, with R$3.1 billion in liquidity and R$2.4 billion in short-term debt.

Outlook and guidance

• Management expects continued sequential improvement in operational margins and profitability into Q4 and 2025, leveraging structural adjustments.

• Focus on expanding BNPL and credit penetration, with conservative risk management and gradual growth in installment plans and services.

• Targeting positive cash flow and double-digit EBITDA by year-end, with sustainable free cash flow covering interest by 2026.

• Company prepared for Black Friday 2024 with adequate inventory and over R$1 billion in installment plan offers.

• No significant increase in CapEx or marketing spend planned; growth to be driven by efficiency and operational leverage.