Lojas Renner (LREN3) Q1 2025 earnings summary

Executive summary

• Retail net revenue grew 12% year-over-year in Q1 2025 to R$2,756.8 million, with apparel sales up 13.5% and digital GMV up 15% (16% penetration).

• Gross margin increased by 0.6p.p. to 55.1%, marking the lowest markdown levels in a decade; Camicado gross margin rose 5.4p.p.

• Net income reached R$221 million, up 59% year-over-year; EPS increased 65% and ROIC LTM reached 13.3% (+1.9p.p.).

• Adjusted EBITDA grew 54.9% to R$585.2 million (margin 21.2%, +5.8p.p.), driven by retail and financial services.

• 62% of the share buyback program was executed (46.5 million shares repurchased), reducing outstanding shares by 4%.

Financial highlights

• Consolidated net revenue: R$3,257.6 million (+12% YoY); retailing net revenue: R$2,756.8 million (+12% YoY); same-store sales up 10.8%.

• Gross profit: R$1,517.9 million (+13.3% YoY), gross margin 55.1% (+0.6p.p.).

• Adjusted EBITDA: R$585.2 million (+54.9% YoY), margin 21.2% (+5.8p.p.).

• Net income: R$221 million (+58.7% YoY), net margin 8.0% (+2.3p.p.).

• Free cash flow: R$74 million (down from R$186.6 million YoY); net cash position: R$1.2 billion; cash and equivalents: R$1.6 billion.

Outlook and guidance

• Management expects a more challenging evolution due to a high nominal base but reaffirms commitment to long-term growth, profitability, and value generation.

• 2025 investments expected to reach R$850 million, focused on store refurbishments and 25-35 new store openings, with most Renner stores in new, high-profitability locations.

• Expectation of stable or slightly higher gross margin for 2025, with price adjustments aligned to inflation and continued inventory quality improvements.

• RealEasy/Realize results expected to continue improving, with cautious credit granting and focus on private label.

• No major new infrastructure investments anticipated; focus is on leveraging existing assets for profitable growth.