Restoque Comércio e Confecções de Roupas S.A. recorded the sixth consecutive quarter of same-store sales growth at 7.4 percent, with a gain of 9 percent in sales/sqm in the company-owned stores. EBITDA of 76 million Brazilian real (21.3 million dollars) was up 18.4 percent, with a 25.4 percent margin, a gain of 3.8 p.p. Net profit for the quarter was 20.4 million Brazilian real (5.7 million dollars) compared with a loss of 10.3 million Brazilian real (2.8 million dollars) in 2017, which the company said, marks the beginning of a new cycle of results for the company.

Gross profit growth was 14 percent to 191.9 million Brazilian real (53.8 million dollars) and 64.1 percent, a gain of 7.5 p.p. gross margin, with a reduction in the markdown volume, productivity gains in retail stores, costs reduction due to a rationalization of the company’s industrial facilities and distribution centers during 2017, a reduction of 25.6 percent in the number of outlets, compared to December 2017, and a 3.3 percent decrease on outlet sales compared to 1Q17.

Restoque posts retail revenue growth of 3.2 percent

Retail revenues for the quarter increased of 3.2 percent increasing the profitability of its own stores base and reducing 24 stores compared to 1T17. The company also reported higher full-price sales volume, with 46.5 percent reduction of remarked-price sales.

Net Profit adjusted by the goodwill amortization reached 24.7 million Brazilian real (6.9 million dollars) with an 8.3 percent net margin. The company ended 1Q18 with 41 less stores. Restoque added that the company focused on reducing the store base in places where there was a high intersection of customers with its other stores and focused on maintaining the consumption of these customers in the remaining stores and in stores where the cost of occupancy or overall profitability of the stores were not right.

In addition, Restoque is renewing its existing stores: for example, renewal of Le Lis Blanc from Shopping Leblon was completed in March 2018 and repositioning stores to better points of sales: for example, street store closure in Paraíso, São Paulo, and opening at Shopping Paulista; closure of the street store in Santana, in São Paulo, and opening at Shopping Center Norte.

Restoques’s performance across its brands

John John, the company said recorded same store sales growth of 12.2 percent, while sales at Rosa Chá improved 21.1 percent and Dudalina sales increased 50.1 percent. The company said, gross revenue of the Rosa Chá brand is below the previous year due to the reduction in the number of stores, which went from 28 stores in 1Q17 to 20 in this quarter.

Le Lis Blanc, the company’s biggest brand, recorded a 0.2 percent decline in SSS, with a smaller volume of markdown sales, and Bo.Bô registered a 27.5 percent drop in SSS, also affected by a smaller volume of promotional sales, but also due to commercial and designers team restructuring.

The wholesale channel for multi-brand stores had revenues of 102.9 million Brazilian real (28.8 million dollars) in the quarter, 9.5 percent below 1Q17. Consistent with the results from previous quarters, John John recorded a wholesale channel growth of 22.7 percent in comparison with 1Q17.

The company recorded 9 million Brazilian real (2.5 million dollars) of e-commerce sales, down 4 percent, representing approximately 2.3 percent of the Company’s revenues. Comprising the outlets operating under the "Estoque" brand, this channel had a 3.3 percent sales reduction in 1Q18, aligned with the company's strategy of selling less merchandise at a discount. Throughout 1Q18, 25.6 percent of stores in this channel were closed as a result of the company's strategy to reduce this channel.

Picture:Facebook/John John Denim