Magazine Luiza (MGLU3) Q3 2024 earnings summary

Executive summary

• Q3 2024 marked the fourth consecutive quarter of net profit, with adjusted net income of R$70.2 million and published net income of R$102.4 million, reflecting the success of strategic cycles focused on digitalization and ecosystem expansion.

• Total sales reached R$15.5 billion, up 4.5% year-over-year, with strong growth in both physical stores and online channels.

• Adjusted EBITDA grew 47.2% to R$718 million, with margin rising to 8.0%, the highest since 2019.

• Gross margin improved to 31.5%, a multi-year high, up 1.1 percentage points year-over-year.

• The company is less cyclical and more robust, with reduced volatility in results despite high Selic rates.

Financial highlights

• Same-store sales in physical stores grew 15.2%, the highest among peers.

• Marketplace (3P) sales reached R$4.5 billion, with 1P sales at R$6.5 billion; marketplace accounted for 41% of online sales.

• Operating cash flow reached R$570.6 million in Q3 2024 and R$2.4 billion over the last 12 months; total cash position at R$6.6 billion.

• Net cash position was R$1.8 billion as of September 2024, up R$1.1 billion year-over-year.

• Financial expenses decreased 21% year-over-year, now 4.0% of net revenue.

Outlook and guidance

• Focus on improving EBITDA margin from 5% to 8% and reducing financial expenses by 20%.

• High expectations for Q4, especially from the new AliExpress partnership and continued ecosystem integration.

• Management highlights the completion of a strategic cycle focused on ecosystem consolidation, aiming for resilience against macroeconomic cycles.

• Anticipates further growth in financial products, especially online, and continued reduction in financial expenses.

• Continued investment in omnichannel fulfillment, logistics, and digital financial services.