Lojas Quero-Quero (LJQQ3) Q3 2024 earnings summary

Executive summary

• Gross revenue grew 14.4% year-over-year in 3Q24 to R$818.5 million, with same-store sales up 10.6% and total retail sales up 13.6%.

• Adjusted EBITDA increased 20.6% to R$31.2 million in 3Q24, with net accounting loss narrowing to R$3.7 million and adjusted net loss at R$1.3 million.

• Operates 568 stores as of September 2024, with 17 new stores opened year-to-date and a focus on small and medium cities in southern Brazil, São Paulo, and Mato Grosso do Sul.

• Financial services portfolio (VerdeCard) grew 15.2% year-over-year, with delinquency over 90 days at 11.2%, down from last year.

• Emphasizes strong management, robust processes, and solid governance, with a long-tenured executive team.

Financial highlights

• Net operating revenue rose 14.5% year-over-year to R$712.3 million in 3Q24; gross profit increased 11.2% to R$243.3 million, with gross margin at 34.2%.

• Adjusted EBITDA margin on net revenue was 4.4% in 3Q24; EBITDA margin was 8.2%.

• Net financial expense improved to R$31.4 million from R$34.9 million in 3Q23.

• 3.9mn+ credit cards issued and 800k+ active credit cards as of 3Q24.

• R$2.6bn in total payment volume processed in 2023 through VerdeCard.

Outlook and guidance

• Store opening guidance for 2024 reaffirmed at 20–30 new stores, with 17 opened YTD.

• Management remains focused on long-term investment and operating cash flow, with confidence in gradual and sustainable retail recovery.

• Identifies over 900 cities with potential for expansion, with mapped opportunities in current and new regions.

• Ongoing store model improvements and expansion of product mix, including the "Infinite Store" phygital initiative.

• Only a 7% market share in cities of operation (2021), indicating significant room for growth.