Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- C & A Modas SA (BSP:CEAB3, Financial) reported a strong net revenue growth of 16.7%, reaching BRL1.8 billion.
- The company achieved a record gross margin for apparel at 55.1%, marking the 13th consecutive quarter of growth.
- EBITDA margin increased by 4.4 percentage points to 17.6%, indicating strong financial discipline.
- The company reversed its previous year's Q3 loss to an adjusted net profit of BRL52 million.
- C & A Modas SA's app saw a 120% increase in monthly active users, becoming the most downloaded fashion app in Brazil in September.
Negative Points
- Despite the growth, the average sales price was slightly below inflation, indicating potential pricing pressures.
- Operating expenses increased year over year, although they remained stable as a percentage of net revenue.
- The company is facing challenges with supplier financing and inventory management, as indicated by a worsening year-over-year comparison.
- C & A Pay's share in retail decreased slightly compared to the previous quarter, despite a 32% increase in net revenue.
- The company is accelerating the demobilization of the fashion TriC category, which may impact short-term sales dynamics.
Q & A Highlights
Q: Can you explain the drivers of growth in your high concept stores and the impact of C&A Pay on sales?
A: The growth in high concept stores is driven by our ability to quickly propose and test new products, leading to significant performance improvements. C&A Pay plays a role in promoting retail sales, but the growth is primarily due to our commercial proposals and customer journeys. The macroeconomic environment also influences store performance.
Q: What are the future levers for value creation, and how does C&A Pay fit into your strategy?
A: The energy strategy focuses on increasing sales per square meter and improving sales productivity. We aim to enhance product assortment, streamline customer journeys, and personalize customer relationships. C&A Pay supports retail sales and customer loyalty, with no significant impact from recent credit strategy adjustments.
Q: How do you plan to manage selling expenses and C&A Pay portfolio coverage?
A: We maintain strong control over expenses and expect to dilute them despite new initiatives. Our C&A Pay coverage levels are robust, and we don't foresee major changes. We aim to maintain a healthy balance between credit portfolio quality and market conditions.
Q: What is the impact of store renovations and category mix changes on gross margin?
A: Store renovations and category mix changes, such as reducing smartphone sales, are improving gross margins. We focus on enhancing store productivity and category performance, particularly in beauty and apparel, to drive margin growth.
Q: How does the new brand positioning impact C&A's strategy and customer engagement?
A: The rebranding aims to enhance C&A's fashion authority and customer connection. The new positioning, "I'll meet you at C&A," emphasizes finding personal style and fashion solutions, driving store traffic and conversion rates, and ultimately improving sales productivity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
