Lojas Renner (LREN3) Q3 2024 earnings summary

Executive summary

• Achieved fourth consecutive quarter of sales growth, with apparel sales in Brazil up 13%, nearly double the market average, and significant margin expansion driven by operational leverage and digitalization.

• Net income rose 48% to R$255.3 million, with a 2.0 percentage point margin improvement and LTM ROIC at 12.7%.

• Adjusted EBITDA increased 59.1% year-over-year to R$576.8 million, with a 5.7 percentage point margin improvement to 19.5%.

• Enhanced customer experience and brand strength, reflected in record NPS and an active customer base of 19.3 million.

• Realize financial services delivered its fourth consecutive quarter of positive results, with EBITDA of R$58 million and improved credit portfolio quality.

Financial highlights

• Retailing net revenue grew 12.1% year-over-year to R$2,956.0 million in 3Q24; same store sales up 11.5%.

• Retailing gross margin improved by 1.1 percentage points to 54.7% in 3Q24; apparel gross margin in Brazil reached 55.9%.

• Free cash flow reached R$412.5 million in 3Q24, with a net cash position of R$1.4 billion.

• Digital GMV grew 23.8% in the quarter, with digital sales penetration at 16.7%.

• SG&A expenses decreased to 37.3% of retailing net revenue, down from 39.3% in 3Q23.

Outlook and guidance

• Management expects continued growth and profitability in the final quarter of 2024, with no need for substantial infrastructure investments.

• Anticipate continued leverage of revenue growth over expenses through 2025–2027, supporting operating margin expansion.

• Positive outlook for year-end sales events, with strong preparation for Black Friday, Christmas, and summer campaigns.

• Conservative but gradual approach to credit expansion, balancing internal portfolio health with external market risks.

• Forward-looking statements are subject to changes in market conditions and economic performance.