This article first appeared on GuruFocus .
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Total Sales Growth:Total base sales increased 2.4%.
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Same-Store Sales:Customer flow increased 3.4% in the same store base.
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Market Share:Gained 0.3% market share in the cash and carry segment.
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Gross Margin:Gross profit margin saw a 0.4% impact, partly due to tax substitution effects from the removal of some products from the state of Sao Paulo's tax substitution regime.
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Expenses:Expenses increased by 0.20%, but expenses per customer served decreased 1.6% below inflation.
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Recurring Net Income:Recurring net income reached 340 million, an increase of 94% compared to the same quarter last year.
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Accounting Net Income:Accounting net income was 507 million, including non-recurring tax credit effects.
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EBITDA:EBITDA remained stable at approximately 5.6% in the second quarter.
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Financial Expenses:Reduced expected financial expenses by 5% compared to the same period last year.
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Cash Generation:Operational cash generation was approximately 3.3 billion, with free cash flow of 2.7 billion and final cash generation of 1.4 billion.
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Leverage:Financial leverage dropped to 2.37, a reduction of 0.8 in the last 12 months.
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Cash Position:Gross cash position closed the quarter at 7 million, a growth of 20.9% compared to the same period last year, covering two years of debt maturities.
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Gained market share in the cash and carry segment, with a 0.3% increase, despite a challenging consumption environment.
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Achieved an all-time high in customer flow, with a 3.4% increase in total base and positive same-store sales in July.
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Preserved profitability with a stable EBITDA margin of 5.6%, supported by operational efficiency and store maturity.
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Significantly reduced leverage to 2.37x, with a strong cash position covering two years of debt maturities.
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Expanded growth avenues, including private label products, drugstores in-store, and digital partnerships, with low CapEx requirements.
Negative Points
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Continued pressure on consumption, especially among lower-income classes, leading to persistent trade-down behavior.
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Gross margin faced a 0.4% pressure due to tax substitution effects, impacting net sales comparisons.
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Expenses increased by 0.20%, though lower than customer traffic growth, reflecting cost pressures.
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Delayed approval for the PAI financial services product, limiting potential monetization of customer base.
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New store expansion is paused due to deleveraging focus, with no precise timeline for future growth.
Q & A Highlights
Q: How do you see the evolution of the core food business, category mix, and trade-down trends given the challenging consumption environment and food inflation dynamics? A: CEO Belmiro Gomes stated that consumption remains pressured, particularly among lower-income classes (C, D, E), with a persistent trade-down trend of approximately 2-3%. Customer flows are increasing, but average tickets are not keeping up with inflation. He noted that July has already closed with positive same-store sales of 0.50% without calendar effects, indicating a continuity scenario. The company is betting on new growth initiatives, such as private labels, to help mitigate the pressure and improve margins.
Q: Can you share the economics of the new in-store pharmacy (drugstore) initiative, including sales potential, margins, and CapEx requirements? A: CEO Belmiro Gomes explained that the CapEx for implementing a drugstore inside an existing store is below R$400,000, significantly lower than a street-level drugstore. With a potential of 250 units, total investment would be around R$100 million. The sales potential is described as equivalent to "one and a half stores" of revenue. The initiative leverages existing operational expenses (rent, safety, personnel) and available store space, with the first unit in the iconic Anhangabau store already performing above expectations.
Q: What is the strategy behind the cashback initiative and how does it integrate the drugstore and cash-and-carry operations to lock in customer volume? A: CEO Belmiro Gomes highlighted that the drugstore is fully integrated into the customer's shopping journey, allowing them to pick up prescriptions while shopping. The cashback mechanism is designed to incentivize customers to use the drugstore, which in turn drives traffic to the main store. With 200,000 customers visiting the Anhangabau store monthly, the company sees this as a service that adds value, sales, and margin without significant additional costs.
Q: How are you assessing customer sensitivity to price movements and the competitive scenario, especially after a management shift at a main competitor? A: CEO Belmiro Gomes noted that regional performance is more correlated with income classes than geography, with lower-income areas like the Northeast being more pressured. He observed that consumers are at their spending limit, leading to significant brand trade-downs. Regarding competition, he stated that the market lacks elasticity for major movements, and while there have been changes in commercial policies, the primary pressure comes from the macroeconomic environment, not competitive actions.
Q: What are the lessons learned so far with the private label program, and what is the strategy for brand segmentation and category expansion? A: CEO Belmiro Gomes explained that the company is leveraging the strong "Assai" brand, which is the most valuable in Brazilian food retail. The team is focused on quality, not just first-price products, and is launching new SKUs weekly. The biggest challenge is supplier capacity given the company's large volumes in Sao Paulo. The objective is not just to increase sales but to improve margins and use private labels as leverage in negotiations with existing suppliers. The company expects to have around 250 SKUs by the end of 2026 and double that in 2027.
Q: How much of the gross margin improvement is due to store maturity versus structural initiatives like deli, bakery, and private labels, and is there room for further expansion? A: CEO Belmiro Gomes attributed margin gains to a combination of factors, including the maturity of converted Extra stores, the addition of higher-margin services like deli and sliced cold cuts, and the growing private label program. He emphasized that the company is working to achieve growing margins even in a challenging consumer environment, with private labels expected to be a significant value driver.
Q: What is the potential for the financial vertical, particularly the "Assai Pay" pilot, and how does it fit into the broader monetization strategy? A: CEO Belmiro Gomes described the financial vertical as one of the company's biggest value levers. The "Assai Pay" product is currently restricted to a few customers, but the company sees great potential in granting credit through a private label to boost sales and generate new revenue streams. The company is awaiting regulatory approvals to expand the product, which is expected to be a high-potential offering.
Q: Can you provide an update on the tax credits, specifically the PIS/COFINS credits and the ICMS credits from Sao Paulo, and how they will be consumed? A: CFO Rafael Sachete explained that the company has two types of credits. The PIS/COFINS credits from the third-phase regime will be consumed monthly, with a cycle of less than 18 months. Regarding ICMS credits from Sao Paulo, the state is gradually moving products to the normal tax regime, which increases the balance of recoverable credits. However, given the company's quick stock turnover (33-35 days), these credits are expected to be offset and utilized very quickly, practically on a monthly basis.
Q: How are you thinking about the right pace of new store growth over the next few years given the focus on deleveraging? A: CEO Belmiro Gomes stated that the company is highly focused on deleveraging and has significantly reduced investment levels. While there is a land bank for future projects, the pace of expansion will depend on the deleveraging curve, the success of new store models (including drugstores and electric charging stations), and the overall capital structure. He indicated that it's difficult to provide a precise assessment at this moment.
Q: What are the productivity gains from self-checkout, and how do you balance this with concerns about shrinkage, as seen in other markets? A: CEO Belmiro Gomes noted that self-checkout has reached a level of maturity and has helped keep expenses per customer served below inflation. He acknowledged that other retailers have reduced self-checkout due to shrinkage concerns, but Assai has managed this trade-off effectively, particularly given the high volume of customers and the need for efficient service during peak times.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
