Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vivara Participacoes SA (BSP:VIVA3, Financial) reported a 27% growth in sales for May and June, attributed to improved stock allocation across all stores.
- The company is experiencing acceleration in growth, particularly in its brick-and-mortar channels, due to strategic initiatives in product mix and talent acquisition.
- Vivara has increased its production capacity in Manaus, with metal purchases rising from 80 kilos to over 140 kilos per month, indicating a strong product strategy.
- The company is implementing new store formats that are expected to enhance customer experience and sales, with a focus on modern design and architecture.
- Operational efficiencies have been achieved through a reduction in office staff and optimization of expenses, contributing to improved EBITDA margins.
Negative Points
- Despite the growth, there is still room for improvement in inventory management, which could further enhance sales performance.
- The company has faced challenges with sales personnel commissions, leading to adjustments and layoffs, which may impact employee morale.
- Vivara's expenses have been reduced significantly, but this has involved laying off staff and restructuring, which could affect operational stability.
- The new store formats have not yet been launched, and their impact on sales and customer experience remains to be seen.
- There is a noted slowdown in the Life brand's performance, possibly due to normalization of the base, indicating potential challenges in maintaining growth momentum.
Q & A Highlights
Q: You mentioned a 27% growth in sales for May and June. Is this growth seen across all stores, and do you expect this trend to continue? Also, could you elaborate on the production acceleration projects in Manaus and their expected impact on gross margins?
A: The growth is across all stores, driven by improved stock allocation and a focus on gold and jewelry. We expect continued acceleration in both Vivara and Life stores. In Manaus, production has increased from 80 to over 140 kilos per month, with a workforce expansion from 800 to over 1,000 people. We anticipate seeing the full benefits of these initiatives by the end of next year, impacting our product mix and gross margins positively.
Q: Can you explain the new store formats and their impact on sales? Also, how have sales personnel commissions been adjusted, and what is the expected impact on expenses?
A: The new store formats focus on product, price, advertisement, and people. We are increasing inventory to improve returns and have revamped our store design for better customer engagement. Sales personnel commissions have been adjusted, leading to a reduction in expenses. We have streamlined our workforce, reducing office staff from 500 to 150, and are focusing on operational efficiency to further reduce costs.
Q: Regarding inventory adjustments, is there room for further improvement, and how does this affect growth for Vivara and Life? What is your vision for Life amid a slight slowdown?
A: Inventory adjustments have started, and we expect continued acceleration in both Vivara and Life. This is just the beginning of a growth cycle, with a focus on product strategy and collection mix. For Life, we see opportunities in product mix adjustments, particularly in collections, which will drive growth and inventory relevance.
Q: How are you addressing operational efficiency and cost reduction, and what impact will this have on future quarters?
A: We are focusing on operational efficiency by optimizing expenses in the office and stores, creating a purchase center, and strengthening our procurement team. These efforts are expected to reduce costs significantly, impacting our EBITDA positively in upcoming quarters.
Q: Can you elaborate on the expected sales growth and net profit impact from increased production and inventory adjustments?
A: With increased production from 80 to 180 kilos per month and improved inventory management, we anticipate a 13% sales increase, translating to significant net profit growth. This aligns with our strategy to enhance our market positioning and capture future growth opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
