By Brazil Stock Guide – Lojas Renner (B3: LREN3) adopted a conservative stance on inventory during the third quarter, which limited sales growth but preserved profitability. CEO Fábio Faccio said the company intentionally reduced winter orders to maintain stock discipline after a normalized autumn, but colder temperatures extended longer than expected.
As a result, Renner estimates it missed between 2 and 3 percentage points in sales, mainly in apparel. The company has since shortened decision-making windows and refined its supply processes to adjust more quickly to seasonal shifts, while reaffirming its confidence in the flexibility of its operational model.
Margins advance, expenses adjust
Despite slower growth, Renner maintained strong profitability. The gross margin reached 55.1% in retail and 56.2% in apparel, both higher than a year earlier, supported by lower markdowns and better execution in fashion collections. Expenses rose 7%, affected by temporary items such as overlapping employee benefits and the transition to the CTO (Total Occupancy Cost) lease model.
Management said these effects are non-recurring and that expense dilution will resume in 4Q25. CFO Daniel dos Santos highlighted that Renner is advancing a cost-optimization and productivity plan across stores, logistics, and back-office areas, with broader results expected by 2026.
Realize delivers another strong quarter
The company’s financial arm, Realize CFI, continued to strengthen its role as a driver of margin and customer loyalty. The unit’s profit rose 37% to R$79.8 million, supported by a healthier loan portfolio and a decline in delinquency to 14.7% in the Over-90 bucket. Executives reaffirmed that Realize’s conservative credit approach remains a key element of the retailer’s value proposition.
Digital integration supports margins
Online sales increased 4% and represented 17% of total revenue, as Renner prioritized profitability over paid-traffic expansion. The company said e-commerce margins are now comparable—or slightly higher—than in physical stores, thanks to the full integration of its São Paulo distribution center. The setup allows faster deliveries, a wider assortment, and more efficient stock management, improving both conversion and service levels.
Expansion and financial position remain solid
Renner posted net income of R$279 million, up 9% year on year, and generated R$473 million in free cash flow. ROIC advanced to 14.4%, while the company ended the quarter with a net cash position of R$1.3 billion. The retailer reaffirmed its goal to open between 30 and 37 stores in 2025, having inaugurated 18 units so far.
New store formats across Renner, Youcom, and Kamikado are performing above the chain’s historical averages, with renovation costs 30% lower per square meter. Management expects margin expansion and efficiency gains in 4Q25, supported by the seasonal calendar led by Black Friday and the holiday period.