Atacadao SA (ATAAY) Q2 2024 Earnings Call Highlights: Strong Sales Growth Amid Margin Pressures

In This Article:

  • Gross Sales: BRL30.5 billion in Q2 2024, up 4.9% year-over-year.

  • Gross Margin: 18.7%, a decrease of 100 basis points from Q2 2023.

  • Adjusted EBITDA: BRL1.6 billion with a margin of 5.7%, an increase of 58 basis points year-over-year.

  • Adjusted Net Profit: BRL151 million for the quarter.

  • Same-Store Sales Growth (Atacadao): 7.4% year-over-year.

  • Store Openings: 5 new Atacadao stores and 3 new Sam's Club stores added in the quarter.

  • Sam's Club Revenue Growth: 16% year-over-year.

  • Banco Carrefour Earnings Growth: 13% year-over-year.

  • Cash Flow from Operations: BRL5.5 billion over the last 12 months.

  • CapEx: BRL2.8 billion, BRL1.2 billion less than the same period last year.

  • Net Debt: BRL15.3 billion, an increase of BRL2.2 billion from June 2023.

Release Date: July 23, 2024

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

Positive Points

  • Atacadao SA (ATAAY) reported a strong boost in sales across its business units with a significant recovery in volumes.

  • The company increased its guidance for Atacadao store openings to 20 this year, including 8 additional supermarket stores being converted.

  • Digital sales showed impressive growth, with GMV reaching BRL2.9 billion, up 41% year-over-year.

  • Sam's Club delivered revenue growth of 16% with successful new store openings.

  • The Carrefour bank performed strongly with a 13% increase in earnings compared to last year, and delinquency levels remained under control.

Negative Points

  • The gross margin decreased by 100 basis points compared to Q2 2023 due to the increased participation of Atacadao, which has a narrower margin.

  • Despite sales growth, the adjusted net profit was BRL151 million, not yet reflecting the benefits of lower interest rates renegotiated for intercompany loans.

  • The company faced a decrease in retail sales by 11%, largely due to reduced sales square footage.

  • SG&A expenses for Sam's Club increased by 31.6% year-over-year due to the accelerated pace of store openings.

  • The new revolving credit regulation is expected to impact the bank's EBITDA by BRL150 million to BRL200 million in the second half of the year.

Q & A Highlights

Q: Could you elaborate on the main drivers behind the strong same-store sales growth for Atacadao and the impact of installment payments on working capital? A: Stephane Maquaire, CEO, explained that the strong performance was driven by initiatives to strengthen B2C strategies, including successful campaigns like the Atacadao anniversary and Merchant Week. The introduction of services such as Bakery, Butcher, and Deli in stores also contributed. Eric Alencar, CFO, added that the installment payment option, while impacting receivables, has been beneficial in increasing sales, especially in a market with many customers in arrears.