3Q22 RESULTS
Conference Call: 11/november at 1 p.m (EST) / 2 p.m (Brasília)
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Access Code: 822 3328 4064
IR Team:
Rene Santos | Renata Coutinho | Aline Frutuoso | Victor Caruzzo dri@marisa.com.br
São Paulo, November 10th, 2022 - Marisa Lojas S.A. ("Marisa" or "Company") - (B3: AMAR3; Bloomberg: AMAR3:BZ), Brazil's largest women/intimate apparel fashion retailer, announces its results for the 3rd quarter of 2022 (3Q22). The Company's information, unless otherwise indicated, is based on consolidated figures, in millions of Reais, in accordance with the International Financial Reporting Standards (IFRS).
MARISA ANNOUNCES 3Q22 RESULTS
- RETAIL NET REVENUE TOTALED R$ 503.1 MILLION, WITH SAME STORE SALES (SSS) STABLE AT +0.6% VS. 3Q21 AND -4.9% ON A CONSOLIDATED BASIS;
- GROSS PROFIT RETAIL OF R$ 249.3 MILLION AND GROSS MARGIN OF 49.6% AGAINST 42.3% IN 3Q21, A RELEVANT MARGIN INCREASE OF 7.2 PP Y-O-Y;
- RETAIL SG&A OF R$ 260.8 MILLION, UP 0.2% (VERSUS 3Q21) NOMINALLY OR 6.7% LOWER IN REAL TERMS;
- CONSOLIDATED ADJUSTED EBITDA OF NEGATIVE R$34.2 MILLION - REFLECTING THE LOWER EXPENSE DILUTION IN RETAIL AND THE IMPACT OF HIGHER NPL LEVELS ON Mbank;
- OUR NET INCOME WAS ALSO IMPACTED BY HIGHER LEVEL OF FINANCIAL EXPENSES - DUE TO THE INCREASE IN INTEREST RATES.
Financial Highlights (R$ | 3Q21 | 3Q22 | Chg. (%) | 3Q21 | 3Q22 | Chg. (%) | 9M21 | 9M22 | Chg. (%) | |||||
mn) | Pro forma | Pro forma | Pro forma | Pro forma | ||||||||||
RETAIL NET REVENUES | 530.1 | 503.1 | (5.1%) | 530.1 | 503.1 | (5.1%) | 1,312.3 | 1,537.1 | 17.1% | |||||
SSS | (0.8%) | (4.9%) | (4.2 p.p.) | (0.8%) | (4.9%) | (4.2 p.p.) | (11.9%) | 16.6% | 28.5 p.p. | |||||
Retail Gross Profit | 224.5 | 249.3 | 11.1% | 224.5 | 249.3 | 11.1% | 581.2 | 756.7 | 30.2% | |||||
Gross Margin | 42.3% | 49.6% | 7.2 p.p. | 42.3% | 49.6% | 7.2 p.p. | 44.3% | 49.2% | 4.9 p.p. | |||||
Retail SG&A | (199.9) | (193.2) | (3.4%) | (260.2) | (260.8) | 0.2% | (713.8) | (786.2) | 10.1% | |||||
% of Retail Rev. | (37.7%) | (38.4%) | (0.7 p.p.) | (49.1%) | (51.8%) | (2.8 p.p.) | (54.4%) | (51.2%) | 3.2 p.p. | |||||
Retail Adjusted EBITDA | 30.7 | 43.8 | 42.4% | (29.5) | (23.9) | (19.2%) | (138.7) | (46.0) | (66.8%) | |||||
Mbank EBITDA | 42.3 | (10.3) | (124.3%) | 42.3 | (10.3) | n.m. | 140.6 | (4.7) (103.4%) | ||||||
Total Adjusted EBITDA | 73.0 | 33.5 | (54.2%) | 12.8 | (34.2) | n.m. | 1.9 | (50.7) | n.m. | |||||
Net Profit | 44.4 | (97.5) | (319.6%) | 44.4 | (97.5) | n.m. | (68.5) | (202.4) | 195.5% | |||||
n.m. - non-meaningful | ||||||||||||||
Operat ing Highlight s | 3Q21 | 3Q22 | Chg. (%) | 9M21 | 9M22 | Chg. (%) | ||||||||
Number of St ores - end of period | 344 | 344 | 0.0% | 344 | 344 | 0.0% | ||||||||
Sales Area ('000m²) - end of period | 376.7 | 376.7 | 0.0% | 376.7 | 376.7 | 0.0% | ||||||||
Sales Area ('000m²) - average | 377.3 | 376.7 | (0.2%) | 377.3 | 376.7 | (0.2%) | ||||||||
Privat e Label Card (*) | ||||||||||||||
Eligible Account s ('000 account s) | 11,757 | 11,952 | 1.7% | 11,757 | 11,952 | 1.7% | ||||||||
Act ive Account s ('000 account s) | 2,115 | 2,047 | (3.2%) | 2,115 | 2,047 | (3.2%) | ||||||||
Co- Branded Card (*) | ||||||||||||||
Eligible Account s ('000 account s) | 917 | 863 | (5.9%) | 917 | 863 | (5.9%) | ||||||||
Act ive Account s ('000 account s) | 877 | 841 | (4.1%) | 877 | 841 | (4.1%) | ||||||||
Share of Tot al Ret ail w it h Marisa Cards | 40.3% | 36.6% | (3.7 p.p.) | 40.8% | 37.8% | (3.0 p.p.) | ||||||||
Privat e Label Card | 35.7% | 31.9% | (3.8 p.p.) | 36.3% | 33.2% | (3.1 p.p.) | ||||||||
Co- Branded Card | 4.6% | 4.7% | 0.0 p.p. | 4.5% | 4.6% | 0.1 p.p. |
- Eligible Account s: t ot al number of regist ered CPFs, excluding canceled/ blocked ones. Bot h in t he case of Privat e Label and Co- branded (w it hin Marisa). As of 1Q21, Act ive Account s st art ed t o be show n as t he t ot al of account s ext ract ed in t he ref erence mont h (in line w it h t he st andard adopt ed by It aucard)
3Q22 Results | page 2 |
MESSAGE FROM MANAGEMENT
3Q22 presented unexpected weather challenges for our core business, resulting in a slowdown in the pace of top-line growth compared to 2Q22's performance. The anticipated and longer-than-expected lower temperatures in several regions of the country made it more challenging to maintain adequate levels of winter products in such regions and to launch our Spring-Summer collection, leading to SSS growth of only 0.6% in our physical stores. In the digital channel, the much higher comparable base, in addition to our strategy to improve the channel's profitability, led to a -43.8% decrease in sales year-over-year, and consequently impacting our consolidated retail result.
Despite the challenges mentioned above, the Company continued to advance in the strategy initiated in 2021 of improving and preserving product margins. As a result of the projects being implemented in the commercial area, our gross margin expanded by +7.2 pp versus 2021, with increases observed in all months of the quarter - highlighting the increase of +11.9 pp in the month of July, even considering the traditional "Sale" of our winter collection.
We also highlight, once again, important efficiency gains in terms of SG&A expenses in retail, which presented a relevant nominal reduction of 6.7%, due to cost savings initiatives implemented since the beginning of the year, seeking new gains in operational leverage, as well as the preservation of the Company's financial health in anticipation of possible challenges imposed by the atypical calendar during the 2H22.
Mbank also benefited from greater efficiency in operating costs and expenses. In addition, we observed a very positive evolution in the level of PDDs from mid-August, resulting in a NPLs lower than reported in 2Q22, but not enough to reverse the operating loss in the quarter - also impacted by higher costs of funding.
Our cash flow was impacted by the weaker sales volume in retail - while the gross margin recovery was not enough to bring relevant operational leverage - in addition to Mbank's still negative EBITDA. Nevertheless, our treasury initiatives were sufficient to ensure the continuity of adequate levels of liquidity to preserve the safety of operations.
Despite these challenges and restrictions in terms of ability to make relevant investments in the short term, we continue to work on initiatives that will allow us to improve operations, focusing particularly on client experience and generating results in the short term. Our action plan for 2H22, already in progress - in addition to the costs savings and a commercial strategy designed to stimulate flow and sales on World Cup match days in 4Q22 - also include three important pillars: (1) the revitalization of our store network; (2) optimization of the logistics network and (3) continuity of the Commercial Value Proposition.
The first pillar aims to optimize revenue per square meter with the revitalization of our store network through small adjustments, such as VM improvements, changes to store layout, and adapting formats. Such initiatives require low investment, are quick to implement, and can potentially reach a large number of stores in 2022.
The second pillar is aimed at optimizing the integrated logistics network for physical stores and the digital channel, seeking a balance between efficiency, service level and operating cost, in addition to supporting the company's growth in the coming years. This includes the beginning of the transfer process of our distribution center from Navegantes (SC) to Itaquaquecetuba (SP) and redefining the strategy for our Dark Stores across Brazil.
Finally, the continuity of the Commercial Transformation project, whose initial objective - already in roll-out since 2021 - is to update the VALUE PROPOSITION of our product and category offerings, with adjustments in style and quality, sourcing and supply. We intend to adjust the price pyramid and improve the supply chain model by introducing greater controls,
3Q22 Results | page 3 |
improving product availability, and reducing supply disruptions.
Thank you very much,
Adalberto dos Santos
CEO
RESULTS - RETAIL SEGMENT
Retail P&L (R$mn) | 3Q21 | 3Q22 | Chg. (%) | 3Q21 | 3Q22 | Chg. (%) | 9M21 | 9M22 | Chg. (%) | ||
Pro forma | Pro forma | Pro forma | Pro forma | ||||||||
GROSS REVENUE | 712.5 | 677.4 | (4.9%) | 712.5 | 677.4 | (4.9%) | 1,765.7 | 2,069.4 | 17.2% | ||
Taxes on Sales | (182.4) | (174.3) | (4.4%) | (182.4) | (174.3) | (4.4%) | (453.4) | (532.3) | 17.4% | ||
% taxes/gross revenues | (25.6%) | (25.7%) | (0.1 p.p.) | (25.6%) | (25.7%) | (0.1 p.p.) | (25.7%) | (25.7%) | - | ||
NET REVENUE | 530.1 | 503.1 | (5.1%) | 530.1 | 503.1 | (5.1%) | 1,312.3 | 1,537.1 | 17.1% | ||
S.S.S.* | (0.8%) | (4.9%) | (4.2 p.p.) | (0.8%) | (4.9%) | (4.2 p.p.) | (11.9%) | 16.6% | 28.5 p.p. | ||
CoGS | (305.6) | (253.7) | (17.0%) | (305.6) | (253.7) | (17.0%) | (731.1) | (780.4) | 6.8% | ||
GROSS PROFIT | 224.5 | 249.3 | 11.1% | 224.5 | 249.3 | 11.1% | 581.2 | 756.7 | 30.2% | ||
Gross margin | 42.3% | 49.6% | 7.2 p.p. | 42.3% | 49.6% | 7.2 p.p. | 44.3% | 49.2% | 4.9 p.p. | ||
OpEx | (199.9) | (193.2) | (3.4%) | (260.2) | (260.8) | 0.2% | (713.8) | (786.2) | 10.1% | ||
- Selling Expenses | (158.4) | (151.9) | (4.1%) | (218.6) | (219.5) | 0.4% | (606.7) | (668.4) | 10.2% | ||
- G&A Expenses | (41.6) | (41.3) | (0.7%) | (41.6) | (41.3) | (0.7%) | (107.2) | (117.8) | 9.9% | ||
Other Operating Expenses/Revenue | 5.2 | (14.4) | n.m. | 5.2 | (14.4) | n.m. | (12.5) | (18.7) | 49.8% | ||
RETAIL REPORTED EBITDA | 29.7 | 41.8 | 40.8% | (30.6) | (25.8) | (15.5%) | (145.1) | (48.2) | (66.8%) | ||
- Adjustments | 1.0 | 2.0 | 87.8% | 1.0 | 2.0 | 87.8% | 6.3 | 2.2 | (65.6%) | ||
RETAIL ADJUSTED EBITDA | 30.7 | 43.8 | 42.4% | (29.5) | (23.9) | (19.2%) | (138.7) | (46.0) | (66.8%) | ||
n.m. - not meaningful | |||||||||||
NET REVENUE: reached R$503.1 million, -5.1% lower than 3Q21 and -4.9% in terms of SSS, mainly due to the sharper SSS reduction in the Digital channel. The shy SSS performance in physical stores reflected the impact of weather instability with a longer-than-usual cold season that occurred at a time when our winter inventory was already low and our Spring-Summer collection was launched - despite the excellent acceptance of the new collection. The Company also chose to be less aggressive in the July promotions, in order to preserve profitability.
PHYSICAL STORE SALES: In 3Q22, SSS of physical stores
remained practically stable (+0.6%) versus 3Q21. This performance was due to a strong deceleration in the month of July
- due to the anticipation of low temperatures in April and May - also causing an anticipated sale of winter products. In addition, we were more conservative in our promotional efforts due to the excellent condition of inventories in general. SSS performance in August was positive with the launch of our new collection, but slowed down again in September, largely due to the return of cooler temperatures in the month.
DIGITAL SALES: Despite the decrease in revenue from the Digital channel, mainly due to the higher comparison base, our APP continues to gain prominence in terms of share of our digital sales, reaching an average of 67.3% in 3Q22. It is worth noting that our APP continues to be one of the best appraised in the market, despite the more conservative levels of investments. We ended 3Q22 with over 17.5 million downloads.
3Q22 Results | page 4 |
The Company is convinced that the Digital channel is an important tool in improving our clients' experience. Despite this, after the accelerated growth of the pandemic period, the Company turned its focus to channel profitability, even if this implies more modest top-line growth. In 3Q22, channel sales were 43.8% lower than in 3Q21, due to the high comparison base of +96.6% in 3Q21 versus 3Q19. In 3Q22, Digital sales share in total sales followed 2Q22's trend, reaching a more normalized level of 7.4% compared to 12.5% in 3Q21.
NPS: In 3Q22, our NPS level reached 76.6%, close to the 77.6% level seen in the same period of the previous year, consistently maintaining a high efficiency level.
GROSS | PROFIT | AND | GROSS | |
MARGIN: gross profit for the period | ||||
totalized R$249.3 million, up 11.1% | 49.6% | |||
vs. 3Q21. Gross | margin | reached | ||
49.6%, 7.2 p.p. over 2021, expanding | ||||
in all months of the quarter, a trend | ||||
also verified in October, when gross | ||||
margin 52.9% (unaudited). This result | ||||
stems from the Company's efforts in | ||||
terms | of | commercial | strategy, | |
focusing | on | product improvement |
and inventory management, which are reflected in the greater customer acceptance of our collections and, consequently, lower markdowns (-21.4% versus 3Q21). This was verified in all quarters of this year, indicating that the improvements implemented are consistently reflected in the results.
INVENTORIES: The Company continued working in the efficiency of its inventories, reaching an average of 19.9 million units in the quarter and 21.9 million in September.
3Q22 Results | page 5 |
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Marisa Lojas SA published this content on 10 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2022 23:41:05 UTC.