Release Date: November 08, 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) plans to launch 12 new collections in the fourth quarter, which is expected to boost sales and address previous gaps in product launches.
- The company has seen a strong performance in its watch category, with significant growth in both sales and profitability.
- Vivara Participacoes SA (BSP:VIVA3) is optimizing its inventory management, which is expected to improve sales performance, particularly in the life segment.
- The company is expanding its physical store presence, with plans to open 70 new stores in 2025, indicating confidence in continued growth.
- Vivara Participacoes SA (BSP:VIVA3) has successfully renegotiated terms with suppliers, which is expected to positively impact profitability.
Negative Points
- The company is experiencing margin pressure due to increased investments in its factory and a higher payroll, particularly in the Manaus plant.
- Marketing expenses were significantly higher this quarter compared to the previous year, impacting overall profitability.
- Vivara Participacoes SA (BSP:VIVA3) is still in the process of finding a new CFO, which may create uncertainty in financial management.
- The company faces challenges in balancing inventory levels with demand, particularly in the life segment, which could affect sales performance.
- There is ongoing pressure from the need to train new employees in the factory, which could impact production efficiency and costs.
Q & A Highlights
Q: Can you explain the dynamics behind the recent sales acceleration and how inventory levels are impacting sales?
A: (CEO) We have grown due to better inventory allocations, particularly in the life segment, which had structural issues due to fewer launches. We are addressing this with 12 new collections in the fourth quarter. Inventory levels will increase to support these launches, especially for the upcoming Black Friday and Christmas seasons.
Q: What are the expectations for gross margin improvements in the coming quarters?
A: (CFO) We expect improvements in gross margin due to increased life segment participation and new collection launches. The factory is ramping up production, which will help offset some margin pressures. We anticipate a healthier growth trajectory in 2025, with operational margin expansion driven by efficiency gains and inventory adjustments.
Q: How are marketing and personnel expenses expected to evolve?
A: (CEO) Marketing expenses were higher this quarter but will normalize to 3-3.5% of revenue. Personnel expenses are stabilizing, but we expect some pressure as we continue to open new stores. We are working on improving efficiency as the store portfolio matures.
Q: Can you provide an update on the international expansion, specifically the new store in Panama?
A: (CEO) The Panama store is a pilot project to evaluate future operations. Initial sales are promising, and we are in a learning phase. The store focuses on the Vivara brand, and we are taking gradual steps to ensure success.
Q: What is the strategy for the watches category, and how does it fit into the overall product mix?
A: (CEO) Watches have shown strong performance in sales and profitability. We aim to maintain their share while increasing sales in both watches and accessories. This category is important for both Vivara and Life brands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
