Lojas Renner (LREN3) Q2 2025 earnings summary

Executive summary

• Achieved strong growth in Q2 2025, with apparel sales up 20% year-over-year, SSS up 18.6%, and digital GMV up 20.7%, driven by strategic initiatives and operational efficiency.

• Gross margin improved by 0.9 percentage points to 58.4% in apparel, supported by better inventory management, reduced markdowns, and a higher share of winter goods.

• Net income increased by 28.4% to R$404.5 million, and earnings per share rose 34.4%, reflecting improved profitability and the impact of a share buyback program (70% executed).

• Free cash flow reached R$333.1 million, and ROIC increased by 2 percentage points to 14.1% over the last 12 months.

• Recognized as the first global retailer to adopt IFRS Sustainability Disclosure Standards (S1 and S2), and ranked highly in sustainability indices.

Financial highlights

• Retailing net revenue grew 18.5% year-over-year to R$3,649.7 million; apparel net revenue up 20%.

• Retail gross margin reached 57.1% (up 0.9 p.p.); apparel gross margin at 58.4% (up 0.9 p.p.).

• Adjusted EBITDA reached R$891 million, up 33%, with a margin of 24.4% (up 2.6 p.p.).

• Net income for the period was R$404.5 million (up 28.4%), net margin at 11.1% (up 0.9 p.p.).

• Free cash flow of R$333.1 million; net cash position at R$1.2 billion after share buybacks.

Outlook and guidance

• Plans to open 30–37 stores in 2025, with most openings in Q4; investments of R$850 million focused on store refurbishments, new stores, and technology.

• Price adjustments for the second half of the year are expected to be close to inflation.

• Anticipate healthy sales growth in H2, though not at the same pace as H1, due to a stronger comparison base and macroeconomic challenges.

• Gross margin expected to remain positive, supported by hedged import orders and efficiency gains, but not at H1 levels.

• Cautious credit origination to continue until macroeconomic conditions improve, with potential for more aggressive growth in 2025.