Vulcabras Azaleia S A : Earnings Release 4Q20

Jundiaí, March 9, 2021

Vulcabras Azaleia S.A. (B3: VULC3) announces today its results for the fourth quarter of 2020 (4Q20). The Company's operating and financial information is presented based on consolidated figures and in millions of reais, prepared in accordance with accounting practices adopted in Brazil and international financial reporting standards (IFRS). The data in this report refers to the performance for the fourth quarter of 2020, compared to the same period of 2019, unless specified otherwise.

HIGHLIGHTS

Gross Volume

Net Revenue

Gross Profit

9.7 million pairs/pieces in 4Q20, an increase of 31.5% over 4Q19, and 25.1 million pairs/pieces in 2020, down 7.6% over 2019

R$ 459.1 million in 4Q20, an increase of 22.8% com-

pared to 4Q19 and R$ 1,179.2

million in 2020, down 13.3%

over 2019.

R$ 150.3 million in 4Q20, an increase of 12.4% compared to 4Q19 and R$ 348.2 million in 2020, a reduction of 26.2% in relation to the amount re-corded in 2019.

Gross Margin

32.7% in 4Q20, down 3.1 p.p. compared to 4Q19, and 29.5% in 2020, down 5.2 p.p. compared to the 2019 margin.

Net Income

R$ 54.6 million in 4Q20, an increase of 21.1% compared to that reported in 4Q19, and R$ 31.5 million in 2020, a decrease of R$ 111.6 million against the R$ 143.1 million in 2019.

EBITDA

R$ 73.9 million in 4Q20, an increase of 22.8% compared to R$ 60.2 million in 4Q19, and R$ 112.2 million in 2020, a decrease of 49.6% in relation to that obtained in 2019.

MESSAGE FROM MANAGEMENT

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Vulcabras discloses hereby its financial results for the fourth quarter of 2020 at a time when retailers are still looking for stability and sales recovery.The company reports a positive performance in the last three months of the year, with growth of more than 20% in most of its financial indicators.

According to the Brazilian Institute of Geography and Sta-tistics (IBGE), retail sales in Brazil fell in November and De-cember 2020, after a few months of recovery. In December, sales decreased 6.1% compared to November 2020, and 0.1% in November compared to October 2020.

Following the same trend, a study carried out by the Brazilian Association of Handicraft and Footwear Retailers (ABLAC) with 3,000 stores, including medium and large footwear chains in the country, points out that the Brazilian footwear retailer closed 2020 in a 33% drop in turnover compared to 2019. Revenue fell from R$ 51 billion to R$ 34 billion in the period. According to the association, the numbers are still a reflection of the pandem-ic that hit business world-wide.

that proved to be effective. The Company understands that having adequate products for each moment is important to guarantee the preference of the consumer and partners. During the quarter, the brands' e-commerce continued to expand in 2020 and increased 141.1% compared to 2019. Moreover, the Company has invested in a new distribution center, in Extrema (MG), which will enter into full operation in the second half of March. This new distribution center will have a logistics operation dedicated to all the brands' e-commerce and also with the operation of distribution of finished products purchased from third parties (imported and domestic). The strategic choice of location, which in-cludes logistical facilitators, labor and specialized services, will give Vulcabras even more efficiency and competitive-ness for its business.

Against this backdrop, Vul-cabras presents a healthy quarter with sales growth above double digits. In the fourth quarter of 2020, the Company posted net rev-enue of R$ 459.1 million, an increase of 22.8% com-pared to 4Q19, an increase in gross profit of 12.4% compared to 4Q19, with R$ 150.3 million in 4Q20, a net income of R$ 54.6 mil-lion, an increase of 21.1% in relation to that reported in 4Q19. EBITDA reached R$

Against the Market backdrop in 4Q20, Vulcabras presented growth of more than 20% in our main indicators

Pedro Bartelle

73.9 million, an increase of 22.8% compared to R$ 60.2 mil- FOCUS ON SPORT lion in 4Q19.

This growth above the sector is mainly due to the compa-ny's decision not to demobilize its operations and to adapt very quickly to the new market conditions. The Company maintained the prices of its products in the new collections sold in the second half of the year and also granted lon-ger payment terms in order to support its customers in the process of resuming retail. Vulcabras' accelerated response reinforced its position as a strategic partner in the resump-tion of retail and provided the market share growth for its brands.

The collections launched for the second half of 2020 had excellent market support and absorbed retail demand at the time of resumption of activities, increasing the share of the Company's brands in national retail. Adapting their product collections to the current moment was a strategyOn January 29, 2021, Vulcabras completed the acquisition of Mizuno's operation in Brazil, starting to develop, produce and import branded products, including footwear, clothing and accessories, exclusively in the national territory for retail distribution and direct marketing to the consumer through its own stores or e-commerce (www.mizuno.com.br) until December 2033. With the integration of the Mizuno brand into its sports brand portfolio, as well as the licensing of the Azaleia brand to Grendene, Vulcabras concludes a strategic transition, which began in 2018 with the acquisition of Under Armour, and consolidates itself as the largest manager of sports brands in the country.

Olympikus, Under Armour and Mizuno will have at their dis-posal all the technology and innovation of the Company's shoe development center, the largest in Latin America, its

modernized industrial park, with production technology worldwide, a large commercial team that serves more 10,000 customers nationwide and marketing strategies ded-icated to each brand. This

composition of brands allows Vulcabras to offer products that meet all the profiles of consumers and athletes and their respec-tive needs, with shoes ranging from R$ 149 to R$ 1,600 and sports clothing and accessories from R$ 49 to R$ 999.

Today Vulcabras is the largest sports brand man-agement company in Brazil, this is due to the investments made and the constant search for growth. Today the com-pany has a relevant port-folio of brands, a modern structure for develop-ment, production and dis-

The agility of Vulcabrás business model and knowledge of the sports market allowed a quick response to the challenges imposed by the pandemic

Pedro Bartelle

tribution and a team of highly qualified employees. There-fore, we are convinced that we are ready to grow even faster and faster. We continue to seek the growth of our brands and see a future with gains in sales and profitability, which will provide increasingly better results.

We are Vulcabras and we live for the sport!