Veste S.A. Estilo ($VSTE3)

Good morning, everyone, and welcome to Veste S.A.'s Q1 2026 Earnings Conference. Joining us today are Veste's CEO, Mr. Alexandre Afrange; and CFO and IRO, Ms. Elisa Lima. We would like to inform you that all participants -- We would like to inform all participants that Veste's Q1 2026 earnings release is available on the company's Investor Relations website, veste.com, under Results Center. Before we begin, keep in mind that this conference is being recorded and will include simultaneous interpretation. The recording and slide deck will later also be available for download on Veste's website. [Operator Instructions] Please note that any statement made during this conference regarding the company's business outlook, projections and operating and financial targets are based on its management's assumptions as well as on information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore, depend on circumstances that may or may not materialize. Investors should understand that general economic conditions, the state of the industry and other operating factors may affect the company's future earnings and cause its actual results to differ from those expressed in such forward-looking statements. With that, let's move on to Veste's earnings presentation.

Hello. Good morning. It is a pleasure to be with you this morning. I am Alexandre Afrange, CEO of Veste S.A., and I'm here to share the highlights from the beginning of what has been a truly solid year for the company. Elisa Lima, our CFO, will later walk you through the details of our financial performance. The first quarter of 2026 was our best first quarter in recent years with sales growth, margin expansion and a substantial improvement in profitability. I'm speaking to you from the Morumbi Shopping Mall in Sao Paulo, where Veste has just opened 4 stores, the brand-new Le Lis, where I am right now, as well as Bo.Bo, Dudalina and John John. Taking over this space is more than an achievement. It confirms our strategy, continuous evolution and our commitment to being ever closer to our customers. We ended the first quarter of 2026 with net income of BRL 11.4 million, our best performance in 7 years. This result was planned for, and it reflects a balanced and disciplined operating model designed to generate results consistently. In the quarter, Veste grew sales by 12.8% compared to the same period in 2025, reaching BRL 367 million. Same-store sales came to 11.7%, underscoring the steady momentum in B2C. This was high-quality growth, in that it combined higher full price sales and greater cost efficiency. We expanded our gross margin by 1.9 percentage points from 62.9% to 64.8%. This gain carried through to gross profit, which reached BRL 199 million, up 18% year-over-year, adding BRL 30 million to our results. EBITDA for the quarter was BRL 68 million with a margin of 22.3%. Compared to 1 year earlier, we posted growth of BRL 22 million, a remarkable 46% increase. The first quarter numbers confirm that the strategy we have pursued over the past 3 years is delivering results, growth with discipline, consistency and execution capacity. It attests to the alignment between what we plan, the decisions we make every day and what we ultimately deliver. And this result is based on 3 pillars: Pillar #1, Brands. Le Lis maintained a solid performance in the first quarter of this year. We've remodeled 2 stores, one in Brasilia and one in Sao Paulo and opened this store here at Morumbi Shopping. When you come visit, you will see that this is beautiful and strategically located. Le Lis posted significant sales growth and double-digit same-store sales of 11.2%, cementing its role as a company's leading value generation engine. The 5% expansion in its customer base, combined with its high NPS of 84, highlights the strength of this brand, the consistency of its execution and the high level of satisfaction and engagement among its customers. Bo.Bo grew by an impressive 31%, combining excellence in service, product mix and fashion content. It is the brand where customers know they will find sophistication and exclusivity. Dudalina posted same-store sales of 10.2% and continues to move forward in its transformation with major adjustments in the B2B channel and progress in its operating structure. As part of its rebranding process, Dudalina adopted a tagline Show Your Brand, updated its logo and reinforced attributes such as authenticity and differentiation. John John grew 7.7% in the quarter. The highlight was the jeanswear line, which is central to the brand's recovery and grew 22% over 1 year earlier. Finally, Individual grew its revenue by 7% alongside a 6% point improvement in its B2B gross margin. This result largely reflects a better cost management. Pillar #2, Channels. The B2C channel grew 12.7% compared to 2025, alongside an increase of about 3% in the customer base. Digital once again stood out, growing at a fast pace of 22.5% and increasing its share of total sales, reinforcing the company's digital strategy. The B2B channel remains focused on profitable growth with higher gross margin and EBITDA, channel revenue grew 11.1% compared to 2025. Pillar #3, Discipline. We've continued to operate with the same discipline that guided our work throughout 2025. We remain focused on increasing gross margin, expanding full price sales and controlling expenses. And we've improved the control and efficiency of our inventories even further. Lower inventory levels translated into an additional BRL 24 million in cash. Veste enjoys solid fundamentals and an operation capable of growing, generating value and delivering results for shareholders. We stand confident. Thank you very much. I will now hand it over to Elisa, who will dive deeper into our financials.

Thank you, Alexandre. I am just as confident as you are. I'm presenting our results from the Bo.Bo store at the Morumbi Shopping Mall. It looks incredible. I'm certain that as a company, we have done outstanding work so far and that we have the strategy, the people and the resources to continue on this path with increasingly better results. We began the year with revenue of BRL 366.7 million in the first quarter, up 12.8% compared to the same period in 2025. All channels contributed to this growth. B2C was up 12.7% with same-store sales of 11.7%. Brick-and-mortar stores, which account for 52% of the company's total sales, reflected the positive momentum of our brands, growing by 9.3% Meanwhile, digital B2C continued to grow at a fast pace with revenue of 22.5%. B2B sales grew 11.1% with a 5 percentage point gain in gross margin. This improvement came from greater commercial and cost efficiency. The outlet channel increased 20.6% compared to an especially weak first quarter in the previous year when sales had declined 9.3%. Outlets still represent less than 6% of Veste sales, maintaining their complementary role as a channel to sell products from past collections. The main focus still is and will continue to be full price sales. This quarter, they represented 71% of B2C sales, 2 percentage points above the first quarter of 2025. This was one of the main factors contributing to the 1.9 percentage point gain in gross margin, along with better costs, both in our own manufacturing operations and in externally manufactured products. Adjusted gross profit was BRL 198.7 million, up 17.7% compared to 2025. The adjustment made in the first quarter was merely a reclassification between lines with no impact on EBITDA or net income. We reclassified certain amounts among revenue deductions, costs and expenses to ensure year-over-year comparability following our adoption of CPRB, the social security contribution on gross revenue. With double-digit revenue growth, gross margin expansion and discipline in expense control, our EBITDA reached BRL 68.4 million, up 46.2% from last year. Expenses grew 6.7%. Fixed expenses were well managed, while we gained efficiency in freight and e-commerce marketing. This led to a 4.9 percentage point increase in our EBITDA margin. As a result of profitable growth across all channels, our net income was BRL 11.4 million in the quarter, a significant milestone for us. Also contributing to net income was an 8.5% reduction in financial expenses, reflecting lower leverage and a better debt profile. Our management approach is designed to ensure that Veste continues to grow with an increasingly healthier capital structure. We ended the quarter with net debt of BRL 124.2 million or 0.6x adjusted EBITDA for the last 12 months ex IFRS 16. This ratio has improved compared to the previous year when it stood at 0.8x. In April 2026, we made the scheduled BRL 18 million payment related to the second installment of our 13th debenture issuance. Inventory control is another pillar of Veste's financial strategy. Inventories stood at BRL 247 million at the end of March, down 8.8% compared to the same month in 2025. Inventory coverage also improved significantly, decreasing by 40 days compared to 1 year earlier. The combination of higher sales, improved profitability, well-managed debt and controlled inventory has allowed us to generate cash to invest in Veste's growth. Thank you all for joining us. Let's now move on to the question-and-answer session.

[Operator Instructions]

I'd like to thank everyone for joining us. And I speak on my own behalf and Alexandre's. We are very happy with Veste's results. We are fully confident that our strategy, our staff, our brands and our resources will continue to generate increasingly better results as well as sustainable, profitable growth as we've seen in the last few years, that's what we've worked toward. Now I'll turn it over to Alexandre for the conclusion.

Thank you, Elisa. I would also like to thank everyone very much for joining us. We are very happy with the results we've delivered. These results are not a coincidence. They are the result of a very well-executed successful strategy. And this is the strategy that we have to stick to moving forward. As Elisa said, we will continue to deliver the solid results we've delivered so far. So thank you very much.

This concludes Veste S.A.'s earnings conference. Thank you for joining us, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]