• Revenue: BRL29.5 billion in Q3 2024, up 4.8% year-over-year.

• Gross Margin: 19.2%, down 89 basis points from Q3 2023.

• Adjusted EBITDA: BRL1.5 billion, up 5% year-over-year, with a 5.7% margin.

• Net Profit: Adjusted net profit of BRL412 million, double the previous year.

• Same-Store Sales Growth (Atacadao): 5.6% increase.

• Same-Store Sales Growth (Retail): 7.1% increase.

• Sam's Club Revenue Growth: 17% year-over-year.

• Carrefour Bank Earnings Growth: 13% increase year-over-year.

• Store Openings: 3 new Atacadao stores and 4 new Sam's Club stores in Q3 2024.

• Cash Flow from Operations: BRL5.7 billion over the last 12 months, up 12% from Q3 2023.

• Net Debt: BRL17 billion, with a leverage ratio of 2.64 times net debt to EBITDA.

• Warning! GuruFocus has detected 8 Warning Signs with ATAAY.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Atacadao SA (ATAAY) reported strong sales growth with a 5.6% increase in same-store sales, outpacing the entire retail market.

• The company opened a record number of new stores, including 14 Atacadao stores and seven Sam's Club stores, enhancing its market presence.

• Digital sales saw significant growth, with GMV reaching BRL3 billion, marking a 21% year-over-year increase.

• Carrefour Bank's earnings grew by 13% compared to the previous year, with a healthy delinquency curve.

• The company achieved a 48% reduction in emissions, surpassing its target by 10 percentage points, and received the Gold Stamp in the GHG protocol for its ESG efforts.

Negative Points

• Gross margin decreased by 89 basis points to 19.2%, impacted by Atacadao's larger relative share and new regulations limiting bank interest charges.

• SG&A expenses increased due to the expansion of the store network and cost inflation, despite efforts to reduce costs.

• The company's net debt increased by BRL4 billion, primarily due to a one-off working capital requirement.

• Sam's Club reported a decline in EBITDA, attributed to increased SG&A expenses from store expansions and promotional activities.

• The retail segment's gross margin decreased by 158 basis points, reflecting the new pricing strategy aimed at increasing competitiveness.

Q & A Highlights

Q: Can you explain the impact of food inflation on your Q3 performance and how it might affect future quarters? A: Stephane Maquaire, CEO, explained that food inflation spiked due to events in Rio Grande do Sul, leading to deflation in July and August, followed by a slight inflation increase in September. This trend is expected to continue, positively impacting sales, especially in B2B with Atacadao. The company anticipates a positive Q4 with food inflation projected between 6% and 7% annually.