Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Track & Field Co SA (BSP:TFCO4, Financial) plans to open over 40 new stores this year, nearly doubling last year's expansion, indicating strong growth and efficient capital allocation.
- The company's sell-out growth exceeded expectations at over 17%, reflecting a consistent customer and product experience.
- Adjusted EBITDA grew by over 25% with a margin above 25%, showcasing a healthy business model.
- Operational cash generation increased by 75%, allowing the company to finance investments with its own capital while maintaining a zero debt position.
- E-commerce operations have grown significantly, now accounting for over 10% of the business, up from 3% pre-pandemic, indicating successful digital transformation.
Negative Points
- Net income declined by 7.7% compared to last year, reflecting strategic investments in TF sports and other areas.
- Operating expenses increased to 35.8% of revenue, partly due to marketing and technology investments, impacting profitability.
- Inventory levels were slightly worse than last year, attributed to replenishing stocks and investment dynamics.
- The average ticket value decreased, potentially due to collection exchange dynamics and product availability issues.
- The competitive landscape is intensifying, with new entrants in the market, which could impact future growth and pricing strategies.
Q & A Highlights
Q: Can you provide insights on the operational leverage expected in 2025, and how it might offset investments in TF Sports? Will there be an expansion in EBITDA margins or a break-even for TF Sports next year?
A: Fernando Queiroz Tracanella, CEO, explained that operational leverage is expected to improve, potentially leading to better EBITDA margins. The company is focusing on productivity and expense allocation to enhance operational leverage. Patricia Abibe, CFO, added that while there's no formal guidance, the aim is for TF Sports to become profitable and add value, though specific break-even timelines are not provided.
Q: Could you elaborate on the inventory dynamics, as there was a slight increase compared to last year?
A: Fernando Queiroz Tracanella noted that the inventory increase was due to stock replenishment during a specific period. The company aims to maintain product availability without relying heavily on promotional sales, focusing instead on cash generation and efficient inventory management.
Q: How is the competitive scenario affecting your core operations and events, especially with new entrants in the market?
A: Frederico Wagner, VP of Strategy & New Business, acknowledged increased competition but emphasized that Track & Field's growth outpaces the market. The focus remains on delivering quality products and experiences, leveraging omni-channel strategies, and maintaining high customer satisfaction.
Q: What are the key lessons learned from TF Sports events, and how do you expect the app to impact future results?
A: Fernando Queiroz Tracanella highlighted the importance of customer acquisition and engagement through TF Sports. The app upgrade will support new initiatives and enhance customer interaction, contributing to strategic growth and monetization opportunities.
Q: Regarding growth in 2025, do you anticipate it will be driven more by volume or pricing? Also, how do you plan to manage franchise inventory levels?
A: Fernando Queiroz Tracanella stated that the focus will be on increasing sales volume rather than relying on price hikes. The company aims to improve franchise inventory management, ensuring efficient supply and profitability without excessive stock levels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
