Release Date: February 27, 2025
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) achieved a 14.4% increase in same-store sales for Q4 2024, marking a 35% growth over two years.
- The company's gross margin in apparel reached a record-breaking 56.6% for the fourth quarter.
- C & A Modas SA's adjusted net income reached 250 million, a record for the fourth quarter.
- The company ended the year with a strong cash position of 1.6 billion and reduced leverage to 0.5 times the net debt to EBITDA ratio.
- The active customer base grew by 7.6% and the Net Promoter Score (NPS) increased by nearly 7%, indicating high customer satisfaction.
Negative Points
- The company faced challenges with macroeconomic conditions, which required preventive adjustments in their credit granting model.
- Operating expenses increased by 1.2% points as a percentage of net revenue due to higher investments in marketing and logistics.
- C & A Modas SA's credit tool, CNA Pay, saw a slight reduction in retail sales share due to more selective credit granting.
- The company anticipates potential challenges in maintaining gross margin levels due to cost inflation and exchange rate impacts.
- There is uncertainty regarding the level of return on new store openings due to high interest rates, leading to cautious capital allocation.
Q & A Highlights
Q: Can you provide details on the sales dynamics in Q4 2024 and the start of 2025, considering the economic slowdown observed in December? How much of the 14.5% same-store sales growth is attributed to price versus volume?
A: Paulo Correa, CEO, explained that sales dynamics can be influenced by various factors such as weather. Despite challenges, C&A maintained consistency in sales both in Q4 and early 2025. The growth in same-store sales is balanced, with approximately 50% attributed to price and 50% to volume. The company continues to focus on foundational improvements through the GSCNA strategy to sustain growth.
Q: How is the GSCNA strategy progressing, and what percentage of benefits have been captured so far?
A: Paulo Correa noted that the GSCNA strategy is a three-year plan, with the first year focused on testing and piloting initiatives. Approximately 25% of the benefits have been captured in the first year, with more significant gains expected in the second and third years as rollouts continue.
Q: What are the dynamics of credit granting for C&A Pay, and could this impact growth?
A: Lawrence Beltran Gomez, CFO, stated that C&A Pay's credit granting model has been adjusted preventively based on economic indicators, leading to a slight reduction in penetration. However, credit remains a key relationship tool rather than a sole growth driver. The company is focused on sustainable growth through product quality and customer relationships.
Q: What is the potential for sales per square meter growth, and how does it compare between adjusted and non-adjusted stores?
A: Paulo Correa highlighted that the company aims to grow sales per square meter by 35-40% over time. In 2024, a 14% growth was achieved, indicating progress towards this goal. The focus remains on enhancing customer experience and product offerings to drive further growth.
Q: How is C&A planning to allocate capital given its strong cash position and low leverage?
A: Paulo Correa mentioned that the company plans to invest in store renovations, technological foundations, and strategic initiatives. While there is potential for new store openings, decisions will be made cautiously, considering the macroeconomic environment and expected returns.
Q: How is the omnichannel and digital strategy contributing to growth, particularly in site and app performance?
A: Paulo Correa explained that improvements in the customer experience on the website and app have led to increased traffic and user engagement. The monthly active user base grew significantly, contributing to a 45% increase in site and app performance compared to the previous year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
