By Brazil Stock Guide – Lojas Renner SA (LREN3) posted a record first-quarter profit as Brazil’s largest fashion retailer benefited from higher margins, fresher inventories and stronger cash generation.
The Porto Alegre-based company reported net income of 257.3 million reais in the first quarter of 2026, up 16.4% from a year earlier, according to Broadcast, the real-time news service of Grupo Estado. Retail net revenue rose 4.3% to 2.875 billion reais, while same-store sales increased 3.2%.
The result marked the company’s highest net income for a first quarter. Chief Executive Officer Fabio Faccio said the performance reflected progress in Renner’s fashion execution model, with more accurate collections, newer inventories and improved operational efficiency.
“This was the quarter in which our strategy delivered record net income, gross margin and cash generation for a first quarter,” Faccio said in an interview with Broadcast.
In apparel, Renner’s core business, revenue advanced 5.1%, while same-store sales rose 3.7%. Faccio said the company faced a tough comparison base after colder temperatures in the first half of 2025 boosted winter sales. Even so, he said the quarter was in line with expectations.
Retail gross margin rose 1.6 percentage points to 56.7%, also a first-quarter record. Apparel gross margin climbed 1.9 percentage points to 58.0%.
Chief Financial Officer Daniel Santos said the margin expansion was not driven by significant price increases.
“Price adjustments were in line with inflation. The margin gain comes from this fashion execution model, which allows us to operate with newer inventories and sell more items at full price,” Santos said.
Renner has been reducing older inventory through closer supplier integration, supply-chain digitalization and a production model that responds more quickly to demand trends, Santos said.
“Our total inventory fell 1%, even with sales growth. But older inventory fell 15%,” he said.
Adjusted Ebitda rose 4.3% in the quarter to 610.5 million reais, with margin stable at 21.2%. Retail Ebitda increased 23.5% to 487.5 million reais, while its margin expanded 2.7 percentage points to 17.0%.
Free cash flow was another highlight. The measure reached 258 million reais in the quarter, up 263.7% from a year earlier. Renner ended March with net cash of 1.5 billion reais.
“It is very difficult for a fashion company to generate cash in the first quarter,” Santos said.
Capital expenditures totaled 106.1 million reais, compared with 61.6 million reais a year earlier. The funds were allocated to technology, store remodeling and business expansion.
The company’s financial result was negative by 22.1 million reais, compared with a negative 18.5 million reais in the first quarter of 2025. The performance reflected lower returns on cash and financial investments after share buybacks and interest on equity payments.
In digital sales, gross merchandise volume rose 7.4%, bringing the channel’s share of total sales to 16.6%. A planned inventory transfer from Renner’s distribution center in Rio de Janeiro to São Paulo temporarily affected online availability of older products, with an estimated impact of 1 percentage point on retail sales in the quarter.