Q2 2026 Azzas 2154 SA Earnings Call (English, Portuguese) Transcript
Key Points
- Strong cash generation of BRL356 million in Q2 2026, three times higher than Q2 2025, with a 105% EBITDA conversion.
- Gross margin expanded by 130 basis points to 56.2%, driven by lower markdowns and a better sales mix.
- Inventory days reduced by 15 days year-over-year, and the financial cycle improved by 31 days, reflecting better working capital management.
- Sellout performance was resilient, with a 0.3% increase excluding the basic business unit, despite World Cup effects.
- Brand strength evident in sellout growth: Arezzo up 12.3%, Schutz up 7.7%, and Chris Barros up 42% in own stores.
- Total revenues decreased 7.1% year-over-year to BRL3.4 billion, with a 13.6% drop in sell-in due to deliberate inventory corrections.
- Recurring EBITDA fell 39% year-over-year, with margin down 430 basis points, reflecting operational deleverage.
- SG&A expenses increased 5.3% year-over-year, driven by fixed costs from store openings and higher bad debt provisions.
- Franchisee sell-in dropped 21.5% in shoes and bags, though sellout improved, indicating ongoing channel adjustment.
- Basic business unit (Hering) saw a 12% revenue decline, with sellout down 14% due to reduced markdown sales.
Good morning, everyone.
And thank you for participating in our earnings call for the results for 2Q26. I have with me our Director of Investor Relations, M&A in Strategy, BM Company, and our CFO, Eric Alexander Allenkar.
So today we'll start off with the message that I've prepared for you, and then we'll talk about the highlights for the quarter.
A deep dive into our four business units. Afterwards, Eric will go into the financial results. And lastly, the most important part, we will be available to take your questions.
Well, in a more comprehensive manner.
About our second quarter, the operating results, meaning our income statement, does not fully reflect the strength of our brands. In fact, it's much different than our capability in selling and sell out. And what we've always mentioned during challenging times, that it's about the branding. So the positive side of our results, we had strong cash generation. That's. Work that we've been doing since 2Q25 with the company strongly
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