Grendene SA

BOVESPA:GRND3

Earnings Call Analysis

Grendene Q3 Earnings: Challenges and Growth

In Q3 2023, Grendene faced volume and revenue declines due to high inflation and interest rates, impacting consumer spending. Volume dropped by 7.2%, with a decrease of 14.8% in gross revenue on the foreign market, but an improvement in gross margin increased by 5.7 percentage points. This margin expansion was mainly a result of lowered raw material costs. Operating income had a significant lift, with recurring EBIT increasing by 37.6% to BRL 122.5 million, despite a 17.4% fall in recurring net profit largely due to lesser financial results than the previous year. The e-commerce segment, however, marked a positive note with 40% growth in GMV to BRL 20.8 million and an increase in online sales penetration, particularly for Melissa sales which grew from 8.3% to 12.6%.

Navigating Challenging Markets with Resilience and Margin Growth

The third quarter of 2023 presented a challenging landscape for Grendene marked by economic pressures such as high inflation, interest rates, and consumer indebtedness which led to a contraction in available income and, consequently, a detrimental impact on consumption habits globally. Despite these challenges, the company witnessed a volume reduction by 7.2% with gross revenue also declining by 7.4%. However, a noteworthy highlight for investors is the improved margins with gross profit increasing by 10% to BRL 313 million and a gross margin expansion by 5.7 percentage points. This margin expansion is attributed to decreased raw material costs benefiting the company since the last quarter of the previous year and is expected to continue albeit at a marginal rate.

Strategic Brand Performance in Domestic and International Markets

At the heart of the quarter's performance was a decrease in both domestic and international volume—with a slighter decrease internationally at 2.2% versus domestic at 7.2%. On a positive note, the company grew its operational results with EBIT increasing by 37.6% to BRL 122.5 million, indicating strong operational profitability. Net profit, however, experienced a decrease of 17.4% reaching BRL 164 million primarily due to lesser favorable financial results compared to the same quarter last year. The decrease also reflects less profit from financial applications and diminished returns from real estate development projects.

Brand and Product Dynamics: A Story of Mixed Fortunes

Analyzing brand performances reveals varying fortunes. Brands under Division 1 (excluding Melissa) experienced a 5.3% increase in gross revenue and volume growth of 5.4%, showcasing an improved gross revenue per pair. Melissa, well-known for its favorable market sentiment, observed a sellout increase by 11.2% which reflects the positive reception of its spring/summer collection. The brand's e-commerce also surged by almost 40%, further amplifying its online presence. However, on the flip side, Melissa's gross revenue decreased by 7.4%, accompanied by a volume decrease of 3.8%, indicating potential inventory management strategies by its franchises.

Digital Surge and Operational Efficiencies

On the digital frontier, Grendene's e-commerce GMV spiked up by 40%, showcasing an impressive expansion in online sales penetration by 1% overall, and specifically for Melissa, a leap from 8.3% to an explosive 12.6%. Furthermore, inventory levels have been maintained below historic averages due to economic uncertainties. It's also pivotal for investors to acknowledge that COGS decreased by 12.5%, a factor contributing to the growth of the gross margin.

GGB Expansion and International Market Penetration

A focused strategy on brand building and distribution channels has been in play, leveraging partnerships and celebrity endorsements like Shakira for Ipanema, aiming to increase GGB's global footprint. U.S. operations delivered notable editorial coverage and strategic influencer partnerships, all contributing to a remarkable sell-out growth of GGB by almost 70% in the third quarter. Additionally, in the U.S., a 185% growth in digital channels was noted, despite facing wholesale channel challenges.

Financial Health and Investor Relations

The company's recurring net profit has remained stable at 17.4%, with varied contributions from fiscal incentives. Dividends and interest on equity totaling BRL 51.9 million will be distributed in December, signifying the company's commitment to rewarding its shareholders while retaining a stable financial footing.

Conclusion and Future Outlook

With the year nearing its end, Grendene is poised for improvement in the fourth quarter, especially during the holiday season. The company expects to see a more favorable performance from both Division 1 and Melissa brands, and the Investor Relations department remains available to answer any lingering investor queries.

Earnings Call Transcript 2023-Q3

[Operator]

If you need simultaneous translation, we have this available tool on our platform. To access it, you just have to click the button interpretation through the icon of the little globe at the bottom of the screen and choose favorite language. If you are listening to the video conference in English, you mute original audio. We can inform that this video conference is being recorded, and it will be available in the IR website of the company, where you can find available all the complete of our results.

It's possible to download the presentation on the chat icon including the English one. [Operator Instructions] And we also would like to highlight this information of this presentation and declarations that might be done during the video conference about the suppositions, operational methods and economic and financial targets, they are premises of the management of the company and information that are available currently. We don't have any guarantees of future performance. We have just talked about premises about future events. And therefore, it depends on circumstances that cannot happen.

Investors might understand that conditions -- economic conditions, market conditions and other operational factors can affect the future performance of the company and consequently, the results. Today, we count with the presences of the executives of the company, Rudimar Dall'Onder, Gelson Luis Rostirolla, and Alceu de Albuquerque; the Executive Officer of the company and the main managers of the company.

Now I will give the floor to Mr. Alceu de Albuquerque. You can proceed.

[Alceu de Albuquerque, executive]

Good morning, everyone. Thanks for your presence to our video conference for the results of the third quarter of 2023. I hope you are all well and trying good health. To start our video conference, I would like to give a general overview of the quarter. We had another challenged quarter, either in the internal market and the foreign market. We observed the scenario very similar to the one in the first and the quarter of this year, where the high inflation rates, high interest rates and high levels of indebtedness of the population.

All these factors ended up reducing the available income of the population, impacted their consumer habits. In international market, the scenario wasn't really different. It was a high inflation scenario where the central banks are elevating inflation rates to try to contain inflation. And that influences the power of achievement of people. So in a very summarized way, the third quarter of 2023 was a quarter of reduction of volume and gross revenue, as I'm going to mention later, but also a quarter where we grew in margins very strongly in results -- operational results, recurring ones and also operational cash generation, demonstrating the resilience of our business and also the strength of our brands.

So how was the third quarter of Grendene. In volumes, it went down 7.2% to 41.1 million pairs of shipped. In the internal market, we had minus going from 36 million of pairs to 33.8 million pairs. In the external market, we had less decrease, 2.2%, a lot less than the footwear industry as a whole. On the third quarter, it went down [ 2.24% ]. The gross revenue, it goes down 7.4% aligned with the volume of shipped pairs in the internal market, it's 5.7%. In gross revenue, it was BRL 698.5 million. It's a minor decrease when compared to the volume, indicating a growth of 2.7% of the gross revenue per pair.

In the foreign market, the gross revenue went down 14.8%, a little bit higher than the decrease in volume because of the downfall of the gross revenue per pair coming from a concentration of shipment to Paraguay and Bolivia, countries that historically demand products with less added value. The gross profit, even though the revenue went down 7.4%, the gross profit went up 10% for BRL 313 million. We observed a growth of the gross margin of 5.7 pp.

And as I'm going to show you later on, all this growth of the gross margin, it's a result from the movement of the decrease of raw material prices. We have been observing that since last year that started to impact our COGS on the fourth quarter of last year, and it's coming -- it's still helping us to recover our margins in a more intense way throughout this year.

EBIT, the recurring one that measures our results -- operational results -- the results of our operations, it grew 37.6% reaching BRL 122.5 million, and a big recurring margin also grew with 5.3 pp, taking our EBIT -- recurring EBIT to 17.8% going up. The recurring net profit goes down 17.4%, reaching BRL 164 million, and this decrease of 17.4%, it's influenced by the result of BRL 72.3 million less than the financial results of the third quarter of 2022. And here, it's driven by factors such as the portfolio of variable income. It was positive, but not as positive as the third quarter of last year, of a less profit from our financial applications that just resulted a few millions less and also the smaller result of our development projects in real estate. Even though they added a positive value, they were also -- they also decreased when compared to the same period last year.

When we look at in an isolated way to the brands of Division 1 and Melissa in the internal market, we can observe that on the graph on the left-hand side, we can see the dynamics of the selling compared to the sellout. And the sellout, we have the sellout for our traditional stores, the retail, the shoe stores and the sellout of our distributors also. What we observed is that there was a growth in accumulated sell-out throughout the third quarter, either for our retail customers, for our distributors.

On the retail, we observed a sell-out accumulated of 9.4% higher than what we observed last quarter -- third quarter last year and the sellout of our distributors from 0.5% higher than last year. And what we noticed -- what we experienced throughout this quarter, the sell-out happened, our products, in the end, they are selling. They are selling more than on the third quarter of last year, but the selling is not following up that. It's not happening at the same time.

When we observed the accumulated selling of the third quarter, there was a decrease of 8.4%. That indicates that our clients are working with smaller inventories. In the retail, we estimate that they are working with a month less of inventory compared to historic levels. And our distributors are working with 1 month, 1.5 months less of inventory levels, isolating the results of Division 1 in the internal market -- the brands of Division 1.

All the brands except Melissa, they reached 5.3% in gross revenue, 5.4% in volume, and they had a growth of 3.4% growth in gross revenue per pair. That was the result of adjustments we did and also a smaller concentration on shippings of Ipanema that had a performance a little bit weaker this quarter because of the movement we can see from our competitors with sales promotions. We have seen that happening more intensely throughout the quarter. On the other hand, the female lines and the male mail lines, they presented results, very positive ones.

In the female line with Zaxy, Grendha and Azaleia, we observed a strong growth, either of Zaxy and Azaleia, especially regarding the EVA product. That are the products with higher added value. They are more comfortable, they are lighter also. Within the male segment, we observed a growth of the 3 brands: Rider, Cartago Mormaii. And when we look on the channel side of it, our traditional channels and indirect channels, the ones that distributors and retailers, wholesalers that buy it to resell it, these 2 channels, they put our results down on the quarter.

And just observing Melissa, the selling behavior was very similar to the sellout. What we observed in Division 1, but with Melissa, we can see on the third quarter a movement of recovery of sales -- sell-out sales. You can observe that the sellout differently from the previous quarters, it grew 11.2%, a growth that was really impacting. That was the result of our spring/summer collection, '23, '24 that has arrived in our franchisees and Melissa clubs and multi-brand stores, but we're just telling about here the sellout of the Melissa brand where we got the information.

The sellout of the clubs increased 11.2% when compared to the selling that decreased 3.8% in the quarter. Again, just like we observed on Division 1, our products are selling more in the end than our franchisees are ordering, placing orders. That indicates again that our franchisees, our Melissa clubs, they are working with inventory levels that are smaller than the historic levels? And how was the performance of Melissa on the quarter. There was a decrease of gross revenue of 7.4%, volume decreased 3.8% and gross revenue per pair decreased 3.1%.

Melissa e-commerce has been presenting a strong growth since its launch. In this quarter, the gross revenue on the e-commerce grew almost 40%, achieving 39%. And with that, the share of online Melissa sales compared to the total sales in the internal market, they reached 12.6% growth or 3.4 pp when compared to the same quarter last year. We ended the third quarter with 402 Melissa clubs and nowadays, we are 408 Melissa clubs, and our expectation is to end the year with 412 or 413 Melissa clubs.

We are working with inventory levels that are below the average historic inventory levels and also that's happening with our retailers and wholesalers because of uncertainties about the Brazilian economy. Our clients, we can notice that they are waiting for government actions to be able to start making movements and intensify volumes of orders placed of the selling. We launched on April this year, the Melissa app that counts already with 156,000 downloads. And in September, it was already represented 22.6% of the online sales of Melissa. They were coming from this app.

So if we consider -- if we get data -- updated data from November and October, this percentage is up 30%. And why is that important because the indicators of the Melissa app, they are bigger than the indicators of the website. Conversion rates are almost 3x superior than on the website, they are higher. The average ticket also on the app is higher than the average ticket on the website. So we trust a lot. We can see an opportunity with the Melissa app.

When we break down the revenue, the gross revenue, where we observed the higher valuations of our gross revenue from BRL 410 million to BRL 843 million this quarter, the highest variation comes from the volume from the internal and external market. And when we had a decrease of BRL 68 million with BRL 3.7 million of the internal market, we get to a volume of BRL 64.5 million where the volume made our revenue to decrease. We added BRL 8 million revenue to our gross revenue. Internal market, BRL 18.3 million and mix price of the market -- foreign market, it's BRL 10.3 million in our revenue.

Because of the bigger concentration of shipping to Paraguay and Bolivia that historically speaking, demand cheaper products and they feel that BRL was 7% most value on the average exchange in last year, exchange, they had almost BRL 11 million in our gross revenue. On this slide, we have the breakdown of the COGS and showing how each of the components behave in COGS.

So you can see on the right, we can see our gross margin in COGS grew around 5.7 pp if we compare to the net revenue. And this is because of the decrease of representativeness of COGS of 60.2% of the net revenue to 54.5% in this third quarter. And where is the grade gain. In the raw material component, you can see in the blue bar that it went from 30.8% of the net revenue in the third quarter last year to 24.4% of net revenue in this third quarter.

The other components have shown a growth in representativity. Some of the costs that went from 10% to 14%. So there is an enhancement of 0.4 pp, better saying, 10.4%. And this is because of depreciation result of the investments that we ran when we enhanced the plant in Crato more equipment to have more efficiency in textile.

And for Manpower, we grew 3 pp, even though specifically, we spent less money and we reduced costs with manpower. Withdrawal was inferior than the revenue. So that's why we're presenting 0.3 pp more on revenue and net revenue. On the left, we can see the nominal net sales. So net sales dropped 3.5% and they are in a lower level to the shrinking of the gross revenue. And this is the result of the level of discounts for clients and also reduction of volumes for reinvoicing and cancellations.

So net revenue, as I said, it shrunk 3.5%, whereas COGS is going to withdraw 12.5% and the largest withdrawal is in the raw material that it shrunk 23.3%. In this slide, we have the variation of the main components of COGS from March 2020. So you can see the PVC compound that is composed by resin, plasticizer, soy oil and other components, you can see a withdraw of 8.7%. And when we see our average cost for inventory in this PVC compound, we can see over the price for compound, and it's 1.3%, which shows that we have plenty of opportunities for improvement in the raw material component, but this is marginal.

And why is it marginal? Because this whole move to decrease prices of our raw material started in the beginning of last year and even 2020. It was very intense, as you can see in the diagram during last year. And it started hitting our COGS in the fourth quarter last year. So in the fourth quarter this year, we are still going to have gains that are coming from the raw material, but they should be slightly smaller than the previous year in the first, second and third quarter.

And maybe next year, improvement in the raw material components must be like marginal gains because, as I mentioned, a large part of that we have in the first, second and third quarter and part of the fourth quarter last year and this year as well. When we see our operational and recurrent expenses, they fall back 3.2% in the quarter when we compare to the fallback of 3.5% of net revenue. And because of this fallback, which is smaller than the net revenue, this starts to represent 0.1 pp more than the net revenue.

We have the openings between commercial expenses -- recurring commercial expense and general and administrative. And within the commercial expenses, we have variable expenses that change according to the variation in the net revenue within these varied expenses. We have commissions as well, shipping and permits. Then we have investments in marketing, publicity that fell back 9%. And then we have all the other recurring expenses and commercial expenses. I would like to point out, when we talk personnel expense, they show a 30.8% in growth. But in this variation, let me show you -- I apologize -- so within the variation of BRL 4.8 million which is above in this quarter, we have this whole structure that was created in order to have like the management of the franchise network.

So in this BRL 4.8 million, we have BRL 3.4 million that are the results of this implementation of the franchise management structure. Then we go to the general and administrative expenses that they started from 27.7% to 23%. They are stable, [ 27.3% ]. It was a fallback of 0.2%. On this slide, we have the recurrent EBIT that we saw from BRL 89 million to BRL 122 million. And the main component that added to it in the third quarter was COG that added BRL 32.2 million.

And within the COG raw material is the components that add to that EBIT. We also had commission and freight within the variable expenses that helped us to enhance our recurring EBIT. That's the point on the right. On the right, you see nonrecurring items that they are BRL 30.9 million. From this BRL 30.9, BRL 15.7 are regarding to equity earnings, BRL 15 million are regarding the closure of Melissa gallery in New York and the store in L.A. Resources that we invested in the Melissa gallery in New York will be redirected to other initiatives in marketing to strengthen our brand because we believe that there are alternatives today. It can bring more ROI rather than the Melissa gallery.

We have a positive variation, meaning BRL 7.6 million of positive results when we closed Grendene in the U.K., and this is nothing less than the variation in the exchange market from the U.K. gallery until closure. In the meantime of this operation, when it was working, the variations in exchange were registered with the PL. And when we closed the operations, you come from PL to results. So because of that, we are acknowledging this positive result of BRL 7.6 million as a nonrecurrent item.

Then we have legal proceedings, BRL 3.7 million, legal advisory and franchise management. Within franchise management of this BRL 2.7 million, we have BRL 1.9 million, which is commissioning that we pay to the master franchise of those Club Melissas that haven't reached 60 months old. So from the 402 Melissa stores that we have today, we are still paying commissioning of sell-in over 169 stores.

Just for you to have an idea of the size of this reduction. On the third quarter last year, we paid BRL 5.9 million in commissions to the master franchise in this third quarter, BRL 1.9 million. And this is the result of the reduction of the commission and the counterpart of that is enhancement of this commercial structure in order to serve our franchise network. But on the third quarter, we can already see a reduction of around BRL 600,000 in between how much we spent in commission last year to how much we spend this year, adding the structure cost. And this is because we're still paying commission over 169 stores, and they're selling.

And we expect that from today until the end of 2027, the number of Melissa clubs that will -- we are going to stop commissioning the master franchise is around 20% every year. So you see that this benefit tends to grow year by year and then they're going to reduce the number of clubs that are based for the commissioning. And then we are coming to a total optimization move as for 2027. And this result, we have the net financial revenue because, as I mentioned, was BRL 72 million lower than the result we had last year, and the main impact is in the variable portfolio that we had BRL 50.2 million, and this year is BRL 4.5 million. So it's a fallback of BRL 45 million.

Just to remind you that we only have [indiscernible]. This range was not touched since the beginning of the year. We have about BRL 58 million regarding the marketing. We have a gain in capital of around BRL 9 million due to the valuation of this action and BRL 20.6 million of [indiscernible] and dividends that have been paid in this time. If we get -- if we have like -- if we take a slice, I would say, and specifically, we're talking about the variable wallets that we have, now [indiscernible]. Variable revenue is around 50% of CDI. Expectations we have is to sell these stocks of [indiscernible] in the fourth quarter.

Another result that was lower if we compare to the third quarter last year, it was traditional financial transactions, then that is to a lower average balance because it was BRL 1.7 million last year and this year was BRL 1.1 million. And last but not least, the result of our real estate move, that was [ BRL 70 million ] lower than the first quarter last year.

So this is our digital e-commerce, how our online are doing. So we are still moving on in a recurrent growth. GMV reached BRL 20.8 million, like an increase of 40%. Number of pairs sold increased 13.4%. We have more than 12 million pairs. And this growth was with a lower time of session, 13.3%.

General penetration grew 1%. We leapt from 2% to 3%. And when you see Melissa sales alone, they started 8.3% to 12.6%. So it was a 4% in growth. As I mentioned before, Melissa app was released in April this year. In September, we had a penetration of 22.6% over the total sales on online channel. And now in October and November, we can see a higher penetration, higher than 30%. Speaking of GGB, we are still focusing to have brand awareness and strengthening, building distribution channels. So the focus has been and it will be the same to expand brand awareness of our brands. And how are we going to do that? How are we going to do that?

To bring leverage, we hired Shakira for the global -- to be a global investor of Ipanema all over the world, and that will end up in the countries that have GGB, especially in the U.S. So we'll try to optimize our investment in social media. We have renewed the contract with Rosy Zhao in China who has been giving us great results. Sales in China are growing 15x more if we compare to 2022. And we are going to continue with influencers -- digital influencers in the United States. It's a different strategy between China and United States. In China, it's focused -- and in the U.S., smaller influences that are a little bit spread out.

We had a huge editorial coverage in the United States about our brands, especially Melissa. Also, we are going to have restrengthening. We are going to spread out our -- about our products. We're going to -- that have value in the international markets, talk about their attributes. And when the clients get to know our products, they end up having a different perception, a more positive one. We are working to grow the distribution of our products.

An example is the fruit of the partnership with Shakira. Ipanema nowadays grew 60%, the number of stores of Melissa and -- sorry, and Melissa is also print. Adult products will be in the Nordstrom store. We have partnerships with hotels and other places where Ipanema and Cartago are going to be the exclusive sellers. Everything from 2024 onwards, these are all examples of the GGB work, a very robust, solid work to build up our brands and to strengthen our brands.

And what are the results we can observe about it? A growth in sellout. When we compare the total sell-out of GGB in the third quarter of this year with last year, it grew almost 70% and accumulated of the year is 165%. So Melissa in the U.S.A. grew 53%. Ipanema had a growth of more than 1,571%. That's the result of our work, building slowly brick by brick, and we are aware that in an international operation, we don't make things happen from 1 year to another but it's small steps in a very solid construction.

And when we look ahead, we are going to be able to observe a very robust growth in our exports for the countries where GGB is present. Our digital channels are still the main channels for growth, growing in the United States 185% and attention point, specifically in the United States is the wholesale and the physical stores. Wholesale is the channel where we have volume and we are facing challenges.

It's just a specific thing about Grendene and GGB. It's not specific of Grendene, it's the market as a whole. All the retailers still have high inventory levels, the stores that work with higher ticket, they continue having difficulties. I was in the United States, 2, 3 months ago, visiting Melissa's Nordstrom and Bloomingdale's, and I was really impressed with the big department stores with very few people shopping actually where we noticed a lot of people going to discount stores where our products are not found.

This is an attention point because in the wholesale channel is where we sell the biggest volumes. Our physical stores of Melissa and Ipanema kiosks, Melissa stores specifically, we haven't found a feasibility model. We haven't found it yet, but it's an attention point. And as I mentioned before, in China, there was a very strong growth, 50x bigger than the one observed last year.

We have told the market yesterday after it closed about new capitalization of GGB, it's of your knowledge that when we signed the contract with GGB, [indiscernible] and Grendene, they have agreed to together invest [indiscernible] $100 million. Initially, they both [indiscernible] $50 million, and we still have BRL 50 million to do it. Now in November, the 2 [indiscernible] are going to have a new [indiscernible] of $25 million to boost and to give capacity and to continue investing in initiatives of strengthening of our brands.

I'm going to talk a little bit about the results of the accumulated of the year because we mentioned the previous quarters and now I just talked about this one. In the year, it falls back 97.1 million internal market, external market almost 22%. The gross revenue falls back in fewer rate than volume. It goes down 4.4 pp, indicating that we had a gain of 3% of gross revenue per pair. In the domestic market, the revenue grows 1.4% a year and the external market, it decreases 23%, in line with the decrease observed in the footwear industry as a whole, which is a result of the decrease of global economy.

China coming back to the market after the Covid Zero politics and increase of international freight -- decreasing international freight. When gross margin increased 5.4 pp to 41%, our recurring EBIT in the year has a strong growth of 47.8% to BRL 225.8 million, and the EBIT recurring margin is 4.8 pp, reaching 13.5%. The recurring net profit remained stable compared to the accumulated of September last year. It goes to 17.4%. It's the result of a smaller financial result from the variable portfolio and the balance of applications and the recurring margins is 2.2%, a gain of percent of points.

We have a result -- a net result for the quarter, BRL 314.6 million. Within this result, we have results for fiscal incentives, federal in the amount of BRL 177 million. And then we have BRL 137 million for legal reserve calculation basis, BRL 137 million for a social capital limit. It's not necessary to designate amounts for the legal reserve. This is why we have a balance for dividend shares from -- we have already distributed BRL 85.3 million on the first and second quarter and then it's up to us to distribute BRL 51.9 million that will be attributed BRL 31.9 million will be dividend as dividend, BRL 20 million will be gross profit, BRL 17 million of interest on equity.

This amount will be paid as of December 6. For shareholders from the 22nd of November, the shares will be [indiscernible] the amount of dividends distributed on capital that amounts to interest on equity. If we correct this amount by the IPCA, it will go up to BRL 8.2 million. And by the CDI, it goes up to BRL 10.7 billion. What I had to talk about the third quarter, it's I just said. And now I'm open for questions.

[Operator]

[Operator Instructions] We've got our first question, is from [indiscernible].

I'm [indiscernible]. I'd like to exploit a little bit the sales in the domestic market in the end consumer. Just thinking about the end of the year now, can we expect the retail that's probably impacting the selling. And talking about the holidays, do you see Melissa taking advantage of this moment or Division 1. Do we expect Melissa to have more penetration of sales?

[Alceu de Albuquerque, executive]

[indiscernible], thank you for your question. The answer is yes for all your questions. Division 1 and Melissa, we expect an improvement in the selling sales on the fourth quarter regarding the season and the holidays.

[Operator Instructions]

[Operator]

We don't have any more questions. So we are closing the session line. We give the floor to Alceu Albuquerque to final consideration.

[Alceu de Albuquerque, executive]

Once again, thank you so much for all your presence. I hope you have all a very nice day. Good day, everyone.

[Operator]

The video conference of results related to the third quarter of 2023 of Grendene S.A. is now finished. The Investor Relations department is available to ask any questions you might have. Thank you so much and have a nice day.