Assaí Atacadista (B3: ASAI3), Brazil’s second-largest cash-and-carry chain, reported a 95% year-on-year surge in Q1 2025 net profit to R$117 million ($19.5 million) while halving its 2026 store-opening target to prioritize debt reduction.
The company maintained its 2025 guidance of opening 10 new stores but revised next year’s plan from 20 to 10 locations, citing a strategic pivot toward sustainable growth under elevated interest rates.
Revenue climbed 7.7% to R$18.6 billion ($3.1 billion) in Q1, driven by a 5.5% same-store sales increase and contributions from recent expansions.
Gross margins expanded by 30 basis points to 16.5%, while adjusted EBITDA rose 12.7% to R$1.37 billion ($228 million), with margins improving to 7.4%.
Net debt fell to R$13.4 billion ($2.23 billion), lowering the leverage ratio to 3.15x from 3.75x a year earlier. The firm aims to reduce this to 2.6x by end-2025 through disciplined capital allocation.
Assaí’s revised 2026 strategy delays R$1.1-1.2 billion ($183-200 million) in store investments, reallocating resources to mature existing operations and enhance profitability.
This follows a broader sector trend as retailers adjust to Brazil’s 14.25% benchmark interest rate. CEO Belmiro Gomes emphasized “operational efficiency over aggressive growth,” noting that 64 hypermarket conversions since 2021 now contribute 21% of total revenue.
Assaí’s 2024 Results Reveal Disciplined Growth
The company’s 2024 performance laid the groundwork: gross revenue hit R$80.6 billion ($13.4 billion), up 10.7%, with net profit rising 8.3% to R$769 million ($128 million).
Same-store sales grew 3.4% annually, though lagging behind Atacadão’s 5.4%. Assaí closed 2024 with 302 stores and reduced leverage to 3.04x, outperforming its 3.2x target.
Analysts highlight risks in Assaí’s new client-financing initiative, mirroring Atacadão’s credit card program, which could strain margins if defaults rise.
Meanwhile, the firm plans R$250-300 million ($42-50 million) in 2025 maintenance spending and R$100-150 million ($17-25 million) for technology upgrades.
Its stock dipped 2.1% post-announcement, reflecting mixed investor sentiment on growth trade-offs. Assaí’s pivot underscores Brazil’s shifting retail dynamics, where deleveraging and margin discipline now outweigh store-count metrics.
With inflation pressuring consumer spending, the chain’s focus on cash flow and operational rigor positions it to capitalize on demand for bulk purchases while navigating macroeconomic headwinds.