Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Veste SA Estilo (BSP:VSTE3, Financial) reported a growth in adjusted EBITDA, with a 2.9% increase and a 0.3 percentage point gain in margin.
- The digital channel experienced significant growth, increasing by 17%, contributing to a steady 17% share of total sales.
- Le Lis brand achieved its second-best quarter for B2C sales in its history, with same-store sales growth of 8.9%.
- Dudalina brand posted growth of 8.3% with successful store renovations and increased brand awareness through effective marketing campaigns.
- The company is committed to sustainability, being the only Latin American signatory to The Fashion Pact, and has set ambitious environmental and social goals for the future.
Negative Points
- Gross profit decreased by 2.3% due to an increase in deductions from gross revenue and a reduction in gross margin.
- The B2B channel saw a 3.9% drop in sales, primarily affected by the performance of the Individual brand.
- Full-price sales for B2C decreased to 79% from 84% last year, attributed to higher levels of liquidation.
- The Individual brand experienced a significant decline, shrinking by 36.9% in the quarter, negatively impacting the company's B2B channel performance.
- Gross margin fell by 2.7 percentage points to 65%, influenced by higher clearance sales and a negative mix effect.
Q & A Highlights
Q: Can you elaborate on the company's strategy for reducing costs and expenses?
A: Alexandre Afrange, CEO, explained that the company plans to maintain its gross margin with minimal changes and focus on reducing expenses through administrative reorganization. This has been an ongoing effort for several years, and the company will continue to emphasize austerity. Elisa Bastos de Lima, Director of Investor Relations, added that as revenue grows, they aim to control expenses more effectively and focus on efficiency improvements.
Q: How did the digital channel perform in the second quarter, and what are the future expectations?
A: Alexandre Afrange highlighted that the digital channel grew by 17%, building on a 42.2% growth in 2023. The digital channel's share of total sales remained steady at 17%, with digital sales, including omnichannel tools and B2B digital sales, growing by 20.9%. The company aims to provide a consistent customer experience across e-commerce and physical stores.
Q: What impact did external factors, such as weather and store closures, have on sales?
A: Alexandre Afrange noted that the closure of stores due to a tragedy in Rio Grande do Sul had a measurable effect of 0.5% on sales, with Dudalina being the hardest hit. Additionally, high temperatures in May affected winter product sales, but the company compensated with a more assertive mix of collections.
Q: What are the company's sustainability goals and achievements?
A: Alexandre Afrange stated that Veste SA published its third sustainability report, reinforcing environmental, social, and governance goals. The company is a signatory to The Fashion Pact and aims to submit emissions reduction targets by 2025. Social goals include increasing diversity in leadership, with a target of 30% people of color and indigenous people by 2025 and 40% by 2030.
Q: How did the individual brands perform in the second quarter?
A: Alexandre Afrange reported that Le Lis grew by 8.8%, Dudalina by 8.3%, and Bo.Bô maintained its growth trajectory with same-store sales of 7.8%. John John is undergoing a rebranding process, and Individual experienced a decline of 36.9%, impacting B2B channel performance. However, there are positive signs for future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
