Riachuelo 4Q25: Best Year Ever as the Turnaround Delivers on Every Line
Key Facts
— 3 Key Points This is part of The Rio Times’ daily coverage of Latin American markets and financial news.
— Net income of R$ 321.9 million ($62M) in 4Q25 beat the Bloomberg consensus of R$ 271 million by 19%, rising 28.8% year-on-year — the strongest fourth quarter in five years.
— Full-year 2025 delivered record net income of R$ 512.1 million ($98M), more than doubling 2024’s result, alongside record EBITDA of R$ 1.8 billion ($346M) and net revenue of R$ 10 billion ($1.9B) — up 117%, 18%, and 9% respectively.
— Apparel same-store sales grew 7.2% in Q4, marking the tenth consecutive quarter of positive SSS, while apparel gross margin expanded 290 basis points to 57.8% — validating the product-centric strategy under CEO André Farber.
Headline Numbers
Riachuelo — formerly trading as Guararapes under the GUAR3 ticker until a rebranding on February 5, 2026 — closed the fourth quarter of 2025 with consolidated net income of R$ 321.9 million ($62M), a 28.8% jump from R$ 249.9 million in 4Q24. The result handily cleared the Bloomberg consensus estimate of R$ 271 million ($52M).
Consolidated EBITDA reached R$ 659.8 million ($127M), with the EBITDA margin expanding 190 basis points year-on-year to 20.6% — the highest level in five years. Net revenue totaled R$ 3.2 billion ($615M), up 5.9% on the year-ago quarter.
For full-year 2025, the company posted its best annual result in history: net income of R$ 512.1 million ($98M), more than doubling the prior year’s figure. Annual EBITDA hit a record R$ 1.8 billion ($346M), up 18%, while full-year net revenue crossed R$ 10 billion ($1.9B) for the first time, advancing 9%.
Key Figures
| Metric | 4Q25 | Y/Y Chg |
| Net Income | R$ 321.9M ($62M) | +28.8% |
| Net Revenue | R$ 3.2B ($615M) | +5.9% |
| Consolidated EBITDA | R$ 659.8M ($127M) | +16.0% |
| EBITDA Margin | 20.6% | +1.9 pp |
| Apparel SSS Growth | +7.2% | — |
| Apparel Gross Margin | 57.8% | +2.9 pp |
| Merchandise EBITDA Margin | 20.0% | +1.7 pp |
| Financial Segment EBITDA | R$ 126M ($24M) | +28.4% |
| Operating Expenses | R$ 1.06B ($204M) | +6.6% |
| FY2025 Net Income | R$ 512.1M ($98M) | +117% |
Key Drivers
Merchandise Segment
The apparel operation was the headline driver. Same-store sales grew 7.2% in Q4 — the tenth consecutive quarter of positive SSS — while the gross margin on apparel expanded 290 basis points year-on-year to 57.8%. For full-year 2025, the apparel gross margin was 56.7%, up 240 bps from the prior year.
The Merchandise segment posted an EBITDA margin of 20.0%, a 170 bps improvement and the best in five years. The company attributes this to structural efficiency gains and a deliberate strategy of placing product at the center of the brand — with sharper design, better identity, and stronger consumer connection.
Financial Services — Midway
The Midway Financeira arm — the group’s captive financial services vertical — delivered Q4 EBITDA of R$ 126 million ($24M), up 28.4% year-on-year. For full-year 2025, Midway’s EBITDA reached R$ 482 million ($93M), growing 19.3% as the unit matured into an increasingly independent operation.
CFO Miguel Cafruni described the financial arm as being run “diligently and responsibly,” with a focus on credit origination quality and growing autonomy from the retail business. The emphasis on underwriting discipline is significant given the broader Brazilian consumer credit environment, where delinquency remains elevated across the sector.
Store Expansion & Asset Recycling
Riachuelo opened eight new stores over the course of 2025, extending its physical footprint. Meanwhile, the sale of the Midway Mall in Natal for R$ 1.6 billion ($308M) reshaped the capital structure. The proceeds funded a record R$ 1.48 billion ($285M) in dividend distributions — equivalent to approximately R$ 2.97 per share and a roughly 28% dividend yield — while providing financial flexibility heading into 2026.
The Rebranding
As of February 5, 2026, Guararapes Confecções officially trades as Riachuelo under the new RIAA3 ticker on B3 — aligning the listed entity’s identity with its strongest consumer-facing brand. The Guararapes group encompasses Riachuelo, Casa Riachuelo, Carter’s, FANLAB, and Midway Financeira under one umbrella.
The name change was part of a broader transformation push that included a new concept store, the company’s first-ever Investor Day, and a strategic repositioning designed to close the gap between operational reality and market perception. For investors, the ticker change eliminates the historical disconnect between the holding company’s industrial identity and the retail brand most consumers actually recognize.
Management Signals
Key Facts
— CEO André Farber framed the results as a maturation milestone: “We evolved not only in execution — capturing efficiencies and greater management discipline — but also in how we build brand, product, and experience. Putting product at the center of the strategy, with more identity and consumer connection, has been fundamental.”
— In a separate interview, Farber added: “The combination of sales growth with healthy margins is what catapults our results.” The messaging signals that the growth-at-any-cost era is definitively over, replaced by a margin-and-discipline playbook.
The company framed its FY2025 achievement as structural rather than cyclical: “The trajectory reflects structural efficiency gains and higher-quality results, sustained by an integrated business model with relevant contribution from both the Merchandise and Financial segments.” The integrated model — combining in-house manufacturing, retail distribution, and captive finance — is the moat the management team is building the next cycle around.
What to Watch Next
The SSS streak is the first thing to monitor. Ten consecutive quarters of positive same-store sales growth is impressive, but sustaining 7%+ comps with a Selic at 15% and consumer credit conditions tightening will be challenging in the first half of 2026. Any deceleration will test whether the margin expansion story can hold without top-line momentum.
Midway credit quality is the second. With Brazilian household indebtedness at elevated levels, the financial arm’s 28% EBITDA growth needs to be assessed against its loan book quality. CFO Cafruni’s emphasis on “diligent and responsible” origination suggests awareness, but the proof will come in NPL trends over the next two quarters.
Post-mall capital allocation will define the next chapter. With the R$ 1.6 billion ($308M) Midway Mall sale behind it and the extraordinary dividend paid out, the question becomes whether Riachuelo channels its now-lighter balance sheet toward accelerated store openings, digital investment, or ongoing deleveraging — and whether it can sustain the 20%+ EBITDA margins without the rental income from the mall asset.
Risk Factors
Consumer spending is the macro risk. Riachuelo‘s customer base skews toward lower-to-middle-income households, who are most sensitive to the high Selic environment and elevated food inflation. A demand pullback in 2026 could stall the SSS streak and compress volumes even if margins hold.
FX and input costs remain relevant. As a vertically integrated manufacturer, Riachuelo has some insulation from imported fabric price swings, but cotton and synthetic yarn prices are sensitive to global commodity cycles and the BRL exchange rate. The real has strengthened to approximately 5.19 per dollar, which helps on the input side but could reverse quickly.
The Midway Financeira credit book requires monitoring. The 19.3% annual EBITDA growth in the financial arm is impressive, but captive retail finance arms have historically been the first to suffer when consumer delinquency spikes. The company has not yet disclosed detailed NPL figures alongside this result, which will be a focus for analysts in the upcoming conference call.
Sector Context
Riachuelo’s 2025 performance stands out in a Brazilian fashion retail sector that has struggled with anemic same-store sales, margin pressure from imported goods, and elevated credit costs. The 117% jump in annual net income and the ten-quarter SSS streak contrast with a sector where many peers have yet to fully recover pre-pandemic profitability levels.
RIAA3 shares have rallied approximately 57% over the past 12 months, trading at around R$ 9.63. The trailing P/E stands at roughly 10.9x based on trailing twelve-month earnings, with a P/BV of 0.87x. The stock’s recent re-rating has been turbocharged by the extraordinary R$ 1.48 billion ($285M) dividend from the mall sale, which produced a trailing 12-month dividend yield of approximately 32%.
Going forward, investors will need to distinguish between the extraordinary capital return — a one-off event tied to asset recycling — and the recurring earnings power of the core retail and financial services business. At a normalized earnings run-rate closer to the R$ 512 million ($98M) achieved in 2025, the stock trades at a reasonable multiple for a vertically integrated fashion retailer with improving margins and a captive finance engine. The key catalyst for further re-rating will be whether the company can sustain 20%+ EBITDA margins and high-single-digit SSS growth without the tailwind of one-time asset sales.
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