Marisa Ends Losing Streak with First Profit Since 2021 Amid Restructuring

Brazilian fashion retailer Marisa Lojas S.A. (AMAR3) has reported a net profit of R$5.8 million ($1 million) in the fourth quarter of 2024, marking its first profitable quarter since 2021.

This milestone follows a grueling restructuring process that reversed 12 consecutive quarters of losses and reflects the company’s efforts to stabilize its operations amid challenging macroeconomic conditions.

The turnaround stems from a comprehensive strategy launched in early 2024 under CEO Edson Garcia, who took charge in March. Marisa refocused on its core audience—Class C women and their families—after prior missteps targeting higher-income consumers.

The company also normalized its supply chain, renegotiated debts with over 1,000 suppliers, and restructured its product portfolio to better align with customer needs.

Marisa’s fourth-quarter revenue grew by 13% year-over-year to R$468.4 million ($82 million), driven by a 19% increase in same-store sales. Sequentially, revenue surged nearly 34%, signaling strong momentum.

Operating expenses fell sharply, with general and administrative costs dropping by 42%. This contributed to an adjusted EBITDA of R$120.2 million ($21 million), up from a negative R$55.3 million ($10 million) in the same period of 2023.

Marisa’s Financial Performance and Strategic Outlook

Despite these gains, Marisa faced margin pressures due to rising costs in merchandise and financial services, which increased by 21%. The gross margin declined by three percentage points year-over-year to 53%.

However, it improved by seven points compared to the previous quarter. CEO Garcia noted that temporary margin sacrifices were necessary to reposition the business and clear outdated inventory.

A significant factor in the profit was a non-recurring tax credit of R$43.9 million ($8 million), which offset operational losses and boosted results. Without this one-off gain, profitability would have been more modest but still indicative of progress.

Marisa also strengthened its balance sheet through a R$622 million ($109 million) capital injection from shareholders in 2024, reducing net debt to R$29.7 million ($5 million) from R$117.5 million ($21 million) a year earlier. The company’s leverage ratio improved to 0.2x adjusted EBITDA, reflecting greater financial stability.

The retailer reduced investments drastically in 2024, allocating just R$4.4 million ($770,000), down from R$15.7 million ($2.8 million) in 2023, prioritizing debt repayment and operational improvements over expansion. Its store network shrank slightly from 243 to 234 locations.

Looking ahead to 2025, Garcia emphasized caution amid high inflation and interest rates but expressed confidence in further market share gains and stable margins. Expansion plans remain on hold until at least 2027 as the company focuses on consolidating recent gains.

Marisa’s recovery highlights the resilience of its brand and team during a turbulent period for Brazilian retail. While challenges remain, the company’s renewed focus on operational efficiency and customer alignment offers hope for sustained profitability.

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