Alpargatas (ALPA4) closes with a drop of more than 13% on the Stock Exchange with disappointing performance abroad

The shares of Alpargatas (ALPA4) were the highlight of the Ibovespa’s low in this Friday’s session (5), with a drop of 13.54%, at R$ 19.35, with analysts highlighting the negative performance of the owner of Havaianas abroad .

“The performance of the international business unit – the core of the investment thesis – was clearly below expectations”, stated the Bradesco BBI team. Analysts drew attention to the 36% decline in sales volume in the United States compared to the second quarter of last year, while in China the drop reached 40%.

“It was a disappointing result of the international business in its peak quarter, which means that volume growth for the full year is unlikely to reach the double-digit level,” they added.

Citi analysts also noted that international operations continue to struggle with rebalancing channels and one-off events.

Sales volumes in the international operation fell 5% in the second quarter year-over-year, while net revenue fell 2% on a constant currency basis. In consolidated terms, including Brazil, volume dropped 5%, but revenue grew 9%.

BBI pointed out that the strong revenue performance in Brazil highlighted the pricing power of Havaianas, as well as the good execution of the pricing strategy, with a richer mix of products sold in the quarter.

“This bodes well for the second half – high season for Havaianas in Brazil – which should also see margin expansion, potentially more than in the second quarter.”

Citi analysts followed the view, saying the numbers from Brazil showed the company’s ability to pass through costs and improve gross margin with limited impacts on volumes.

In the second quarter, cash generation measured by earnings before interest, taxes, depreciation and amortization (Ebitda) was R$ 177.8 million, a decrease of 17.2% compared to the same period in 2022. The margin decreased 3, 9 points in the period, to 16.7%.

For analysts at XP Investimentos, Alpargatas presented a mixed result, with a solid increase in price/mix and sequential recovery at the margin, but with pressured volumes and a negative currency effect.

For the next quarters, Alpargatas implemented another price increase that tends to be fully reflected from July onwards, which should contribute to the recovery of margins, assesses the house.

According to the balance sheet, in Brazil, Alpargatas increased the price per pair by 21% in the quarter. XP also believes that the launch of slide models in Europe and the USA in June and July should be a wind in favor of volumes in the international operation.

Bank of America points out that the domestic operation surpassed its projection, but that the advances were more than offset by declines in international markets, as the company overhauls its US operations and Asia continues to be hit by lockdowns.

“The sharp 36% decline in US volume, despite restructuring efforts, was weaker than most expectations. Rothy’s, while accelerating customer acquisition and growth, has also recorded higher-than-expected losses and may continue to do so as it grows its customer base and stores. At the current time, we view ALPA4 as highly valued and maintain our neutral rating on the stock.”

(with Reuters)

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About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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