Lojas Renner Announces Third Quarter 2024 Earnings Results

PORTO ALEGRE, Brazil, Nov. 7, 2024 /PRNewswire/ -- Lojas Renner S.A. (B3: LREN3), the largest fashion retailer in Brazil, announces its results for the third quarter 2024 (3Q24).

3Q24 Highlights

• Fourth consecutive quarter of increased sales driven by an increase in pieces sold and in total transactions, reflecting a 13% increase in apparel sales in Brazil; double the market average based on available data through August 31, 2024.
• 1.1p.p. retailing gross margin increase reflecting the precision and agility of Renner's fashion execution model; apparel gross margin in Brazil of 55.9%.
• Increase in inventory turnover with a significant reduction in older items.
• Realize: fourth consecutive quarter of positive results, led by a 32% decrease in net losses and an increased participation of the Renner cards in sales vs 3Q23.
• Quality of the credit portfolio evolved sequentially, with a 5.5p.p. decrease in Over90 vs 3Q23, due to a decrease in nominal NPL90.
• NPS improvement for all business units.
• Total Adjusted EBITDA increased by 59% with a 5.7p.p. margin increase.
• 48% increase in Net Income, ending the quarter at R$ 255,3 MM; a 2.0p.p. margin increase. ROIC LTM of 12.7% (+2.9p.p. vs 3Q23).
• Robust cash position of R$ 2.6 bi, with a net cash position of R$ 1.4 bi and R$ 412 MM in FCF.
• Youcom: 27% net revenue growth, and 1.7p.p., gross margin increase.
• Camicado: 12% increase in sales, 18% increase in sales per sq meter and a 1.2p.p. gross margin improvement to reach record gross margin for a 3Q. Inventories were reduced by 12%.
• Increase in the ecosystem's active customer base, reaching 19.3 MM by quarter's end.

Message from the CEO

"Lojas Renner's third quarter results demonstrate that our business model evolution, and the relevant initiatives we have put in place to date, are unlocking our Company's potential. 13% improvement in third quarter apparel sales, almost double the market average, combined with a 1.1 percentage point gross margin increase is clear evidence. SG&A leverage improved by two percentage points and we delivered R$255 million in net income with R$412 million in free cash flow generation for the third quarter 2024.

With the use of artificial intelligence, we quickly and accurately capture trends, through a shortened product development cycle and improved supply chain productivity and efficiency. Our omni fulfillment model and the end-to- end, 100% SKU-based operational system is already supporting a more granular, responsive and precise operation resulting in store fulfillment lead times at record low levels. This strong fashion execution, driven by our evolved fulfillment model, accelerated apparel sales during the quarter - our collection saw excellent sell-through, which resulted in yet another quarter of increases in transactions and pieces sold.

Renner's increasingly attractive value proposition, together with an improving omnichannel experience, resulted in higher NPS scores and a still expanding base of active customers. An enhanced customer journey was reflected in an 11.6% increase in sales per square meter. We also continue making substantial progress with digital penetration, which increased by 1.4 percentage points, with digital GMV increasing 24% during the third quarter 2024.

And we're pleased to note continued positive signs of evolution at our Realize financial services business, which delivered its fourth consecutive quarter of positive operational results, with EBITDA increasing R$24 million sequentially to R$58 million, or 10% of our total Adjusted EBITDA. The health of our credit portfolio also continued improving during the quarter, reflected in improved origination with benefit of the sophisticated credit and collection models that we have implemented. These will continue to enhance Realize's risk profile and its relevance as a driving force behind retailing.

We're pleased that we have delivered on our commitment to accelerate growth and profitability while improving returns (LTM ROIC of 12.7%, +2.9pp). We finished the most significant investment period in our Company's history to evolve our business model and have entered its next phase, a renewed cycle of growth and profitability without the need for substantial infrastructure investments. The flexibility, precision and agility of the model will continue to drive further gradual traction in the final quarter of 2024 and for the future ahead, with sustained growth, profitability and cash generation aligned with our focus on remaining a benchmark in fashion and lifestyle, providing enchanting experiences, and always led by engaged teams and our strong underlying "responsible fashion" principles and values."

Fabio Faccio – CEO

For a full version of Lojas Renner's Third Quarter 2024 Earnings Release, please visit: https://lojasrenner.mzweb.com.br/

3Q24 Earnings Conference Call*
Date: November 8, 2024
Time: 10:00 a.m. (BRT) | 8:00 a.m. (US-EDT) | 1:00 p.m. (GMT)
*Portuguese with a simultaneous English translation.
Access the webcast here.

About Lojas Renner S.A.
The Company was incorporated in 1965 and listed in 1967, becoming a pure widely held company in 2005 with a 100% free float, being considered the first true Brazilian corporation. Renner's equities are traded on B3 under the LREN3 symbol in the Novo Mercado segment, the highest level of corporate governance.

Lojas Renner S.A. is a fashion and lifestyle ecosystem connected to its customers through digital channels and its physical stores in Brazil, Argentina and Uruguay. It is the ecosystem leader in omnichannel fashion retailing in Brazil through the Renner, Camicado, Youcom, Realize CFI and Repassa businesses.

Legal Notice
The statements contained within this document relate to the prospects for the business, estimates for operating and financial results. and those related to growth prospects of Lojas Renner S.A. are merely projections and, as such, are based exclusively on the expectations of the Company's management with respect to the future of the business. Such forward-looking statements depend substantially on changes in market conditions, the performance of the Brazilian economy, the sector and the international markets and are therefore subject to change without prior notice.

SOURCE Lojas Renner S.A.