Magazine Luiza (MGLU3) Q2 2024 earnings summary

Executive summary

• EBITDA grew 62% year-over-year to R$711 million with a 7.9% margin, the highest since 2019, and net income reached R$37 million in 2Q24, marking a return to profitability.

• Total sales reached R$15.4 billion in 2Q24, up 4–4.5% year-over-year, with physical stores delivering 14–16% growth and same-store sales up 15.6–16%.

• E-commerce sales totaled R$10.8 billion, with marketplace (3P) sales growing 4% and representing 40% of online sales.

• Strategic partnership with AliExpress/Alibaba launched to cross-list products, expand assortment, and drive growth in 1P and 3P sales.

• Net cash position improved by R$1.1 billion year-over-year, ending 2Q24 at R$2.0 billion after eliminating short-term debt.

Financial highlights

• Adjusted EBITDA margin reached 7.9% (+2.8 p.p. YoY), with gross margin at 30.9% (+2.1 p.p. YoY), driven by 1P and service revenue growth.

• Adjusted net income was R$37–37.4 million in 2Q24, reversing prior losses.

• Operating cash flow reached R$2.2 billion over the last 12 months, supported by a R$1.0 billion improvement in working capital.

• Financial expenses dropped 24.6–25% year-over-year.

• Luizacred posted net income of R$70.8–71 million, a turnaround from a loss last year.

Outlook and guidance

• Focus on maintaining or improving the 7.9% EBITDA margin, operational margin expansion, and resuming growth in the second half and next year.

• Expect positive impact from AliExpress/Alibaba partnership and digital DCC rollout, especially in Q4 and Black Friday.

• Continued investment in technology, logistics, and customer experience, including AI initiatives and fulfillment expansion.

• Anticipate further reduction in financial expenses and continued improvement in working capital.

• Projections depend on market conditions, regulatory approvals, and macroeconomic performance.