“We are confident in the solid steps we have taken so far and recognize these developments’ importance as a foundation for sustainable growth. Our focus on discipline, profitability, and prudent capital use is already yielding initial results and will remain a permanent part of our approach. On the other hand, we understand that the journey is long, and the path may not be linear. Our prioritization has been appropriate thus far, and we see a promising path ahead regarding value generation for our shareholders”, said the company in a statement.

First Quarter Results

In the first quarter of 2024, Alpargatas reported net revenue of 931.8 million Brazilian (167.9 million euros), an increase of 3.2% on a comparable basis to the same period of last year, mainly due to 8.6% growth year-over-year in volumes sold (52 million pairs versus 48 million pairs in the first quarter of 2023).

Havaianas’ net revenue grew by 3.0% to 921.1 million Brazilian reais (166.0 million euros), as compared to the first quarter of the previous year. This growth was driven by the domestic market, which surged by 14.0% year-over-year to 655.8 million Brazilian reais (118.2 million euros). However, international net revenue experienced a decline of 16.8% year-over-year, totalling 265.3 million reais (47.8 million euros).

Meanwhile, in the first quarter of the current year, Rothy’s recorded net revenue of 34.3 million Brazilian reais (6.18 million euros), an increase of 9.8% on a comparable basis to the same period of 2023. This result “was primarily driven by the higher volume resulting from newly launched products during the quarter and strategic discount and promotion events”.

In the three months to the end of March, Alpargatas’ gross profit reached 425.4 million Brazilian reais (76.7 million euros), reflecting a growth of 9.4% over the same period last year, and the gross margin improved from 43.1% to 45.7%. The company attributed this improvement to an increase in the volume of pairs sold, despite a higher level of write-offs, and a reduction in raw material costs.

The Brazilian company’s EBITDA for the period was 99.8 million Brazilian reais (18.0 million euros) and the EBITDA margin was 10.7%, a significant improvement from an EBITDA loss of 211.6 million Brazilian reais (38.1 million euros) and a negative margin of 23.4% in the same period last year. This strong performance was driven by a combination of factors: increased operational leverage from higher sales volume and improved cost efficiency per unit sold.

This turnaround resulted in Alpargatas swinging back to profitability in the first quarter of 2024. Its consolidated net income from continuing operations reached 24.7 million Brazilian reais (4.5 million euros), a significant improvement, as compared to the 199.7 million Brazilian reais (36.0 million euros) net loss in the same period last year.