Vivara Participacoes SA (BSP:VIVA3) (Q3 2026) Earnings Call Highlights: Record Gross Margin, ...

Q: What pressured gross margin this quarter, particularly the markup, and what can be done to improve it over the next few quarters? A: CFO Elias Lima said roughly half of the margin decline came from the comparison base, with about 1 percentage point from subsidies and 1 point from GGF, plus 2 points from markup and production. Higher factory production in silver and gold required loss provisions. Gold costs remain below spot prices, so short-term spot moves do not affect costs. The full-year gross margin is 69.9%, close to last year and slightly above on a comparable basis. Categories such as silver, gold, and Vivara silver/gold are gaining relevance and carry higher markups, a positive for margins going forward.

Q: How is working capital and inventory progressing, and what EBITDA-to-cash conversion should we expect? A: CFO Elias Lima noted inventory days fell by about 140 days from more than 700 last year to nearly 600, driving strong cash generation with more than 70% EBITDA-to-cash conversion. Inventory typically declines from the third to fourth quarter on seasonality, similar to last year, and there is still room for incremental efficiency gains in 2027. COO Cassiano Lemos added that inventory reduction rests on four pillars: better management of finished goods and top sellers, more product reallocation between stores, melting down unsold pieces (70% higher than in 2025), and better coverage of best sellers.

Q: Which categories received the recent price increases, and how much has been recovered with this first round? A: CEO Thiago Borges said the company protected more price-sensitive, competitive categories such as wedding rings, where volume is recovering. Larger increases were applied to design and classic collections, Vivara Silver, and gold/silver pieces with stones, where elasticity permits and consumer desire for gold and silver remains strong. In October, the company applied mid-single-digit increases in categories meeting its elasticity criteria, and the fourth-quarter commercial calendar, including Black Friday, is expected to be less promotional.

Q: What is the outlook for Life's markup, and is the recent reduction structural or temporary? A: CEO Thiago Borges said silver is now priced into inventory at spot, so no further margin pressure is expected from new silver price increases. The Life margin has been a bit below 60% this year versus as high as 75% in recent years, leaving room for structural improvement. Initiatives include 3D and mold technology, investment in machines for lighter bracelets arriving in the first half of next year, and a new Life gold alloy. The benefit could go either to margin or to lower price increases and higher volume, depending on cost, market, and elasticity considerations.

Q: How are Life stores performing on ROIC and EBITDA, and does it still make sense to keep expanding at a similar pace? A: CFO Elias Lima said stores opened in the last 18 months are maturing and delivering sales in line with projections, with EBITDA above expectations. ROIC ramps up through the third year and is in line with projections. The company remains diligent in negotiating rents and allowances with shopping malls and in controlling CapEx and inventory, targeting a minimum ROIC above 25% before opening a store. Capital will continue to be allocated to stores while returns remain high, with excess cash potentially returned to shareholders.

Q: How significant is cannibalization between Vivara and Life stores in the same shopping center, and has it changed your expansion criteria? A: CEO Thiago Borges said the same-store sales loss in a Vivara store when a Life store opens in the same mall is basically unchanged versus last year. What changed is the number of such stores: 34 opened last year and 31 this year, so the larger base of overlapping stores weighs more on consolidated same-store sales. The effect is within expectations and does not change expansion criteria.

Q: How should we think about the product mix and profitability of digital sales versus physical stores? A: CEO Thiago Borges said stores act as an extension of e-commerce, using store inventory to fulfill digital orders, which is a positive for the omnichannel model. Digital is a very profitable channel, similar to stores. In digital, Life and watches together represent about 70% of the channel, with jewelry making up the rest, a somewhat different mix than the company overall.

Q: What is driving the higher freight costs this quarter, and is there more room to rearrange assortment among stores? A: CEO Thiago Borges said the company had to use alternatives that are somewhat more expensive than standard mail delivery, explaining the freight increase. On cost of goods, gold exchanged by customers at the beginning of the year at prices above spot is now flowing into products sold, and new collections amplify this effect. Melting down pieces in the second half, as last year, lowers finished-product costs and reduces pressure to buy raw materials.

Q: How is the pace of new product launches evolving for the fourth quarter, and how far is inventory gold cost from spot? A: CEO Thiago Borges said the company reinforced product creation and 3D development teams and has a robust launch pipeline for both brands, with five new collections arriving in November and December across silver, silver/gold, lab-grown diamonds, and traditional gold, plus a Life campaign with Sasha Meneghel. COO Cassiano Lemos said inventory gold cost is currently about 20% below spot. Inventory reduction in the next cycle will be smaller in magnitude than in 2026, with focus on assortment, availability, and omnichannel.

Q: How is the competitive landscape evolving, and what is the impact of the change in shopping

For the complete transcript of the earnings call, please refer to the full earnings call transcript .