C&A Brazil’s Q1 2025 Profit Plunges 94% Amid Rising Costs and Competition

According to its first-quarter earnings release, C&A Brasil reported net profit of R$4.1 million ($683,000) in Q1 2025. That result marked a 94.3% decline from the same period a year earlier.

The retailer reported adjusted net income of R$2.5 million ($417,000), reversing a R$61.4 million ($10.2 million) loss from Q1 2024. This swing showed improved cost efficiency and a leaner operating structure.

Revenue rose 10.9% year on year to R$1.612 billion ($269 million). Gross profit increased 13.2% to R$872 million ($145 million), raising the gross margin by 1.1 percentage points to 54.1%.

Adjusted EBITDA under IFRS 16 reached R$244.5 million ($40.8 million), delivering a 15.2% margin. This represented a 2.7 percentage-point year-on-year improvement, driven by disciplined expense control.

On a pre-IFRS 16 basis, EBITDA nearly doubled with a 94.8% gain. Same-store apparel sales rose 15% but decelerated 6.9 points compared to Q1 2024 amid heavier markdowns.

Brazil reported 4.1% inflation for the 12 months through March. Freight and raw material costs rose, squeezing margins. Consumers faced real-wage constraints and cautious spending. Supply-chain delays also increased costs.

C&A Brasil Boosts Digital Investments and Streamlines Operations

C&A Brasil operates 260 stores nationwide and a growing e-commerce platform. It competes with Renner, Riachuelo, Zara and H&M in Brazil’s mid-price apparel segment.

Management credits transition collections, dynamic pricing tools and calibrated merchandise volumes for revenue gains. The company invested in store renovations and data-analytics to optimize inventory and pricing.

Under IFRS 16, lease liabilities appear on the balance sheet, boosting EBITDA comparability. The group cut net leverage to about 0.5 times trailing EBITDA through refinancing and debt repayment.

Financial expenses fell over the past year amid lower interest rates and better working-capital management. Investors view this quarter as a test of resilience in a subdued consumer market.

C&A increased online sales penetration to 12% from 9% in Q1 2024. It opened three new suburban stores and closed two underperforming outlets to streamline operations.

C&A Brasil allocated R$50 million ($8.3 million) to capital expenditures, focusing on digital infrastructure and store layouts. It launched a loyalty program in February to boost repeat purchases and gather customer data.

C&A plans to publish detailed Q2 guidance in early July to investors. Analysts will watch same-store sales and online performance as key indicators of recovery.

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