C&A profits R$70.9 million in 1Q24 with tax credits and improved indicators

C&A (CEAB3) beat market expectations and recorded a net profit of R$70.9 million in the first quarter of 2024, reversing a loss of R$126.3 million in the same period last year.

The result was driven by the recovery of tax credits, it is true, but the fashion retailer continued to improve its operational indicators — which also contributed to the good result. Without the tax credits, the company had an adjusted loss of R$61.4 million.

Even the adjusted result “beat the market”, as the LSEG consensus estimated a loss of R$81.7 million for the company, and this loss was less than half of that recorded in the first quarter of 2023 (for retailers, seasonality weighs on results , and the beginning of the year is always the most challenging, while the end of the year is the bonanza).

Among operational indicators, C&A’s consolidated net revenue grew 17.1% year-on-year, to R$1.453 billion, and 21.9% in apparel same-store sales (SSS). This led to an adjusted EBITDA of R$180.5 million (up 125%) and an adjusted EBITDA margin of 12.4% (up 6 percentage points).

“We had really standout numbers this quarter”, says Paulo Correa, CEO of the retailer. He highlights the company’s “growth accompanied by a higher margin”, with the 9th quarter followed by an increase in margin (in the annual comparison).

“This combination shows the level of acceptance of our commercial proposal and the quality of execution of our strategy,” Correa told InfoMoney, shortly after the results were announced. “And the growth in sales and margin allowed the dilution of expenses.”

The CEO refers to operating expenses, which grew 12.1% in the annual comparison, but had a reduction of 1.8 pp as a percentage of net revenue, because revenue grew much more.

Another highlight of the result was the financial result. Despite being negative at R$3.9 million, it fell by a significant 96% compared to 2023. The company’s net debt fell by 30.4%, to R$1.046 billion, which made the leverage (net debt over Ebitda adjusted pre-IFRS 16 of the last 12 months) plummet from 4.0x to 1.5x in just one year. “It was our best performance since the IPO”, summarizes Correa.

(With Estadão Content)