By Brazil Stock Guide – Brazilian footwear manufacturer Grendene (B3: GRND3) reported net profit of R$249.4 million in the fourth quarter of 2025, a 24.5% decline compared with the same period a year earlier, as weaker consumer demand and lower shipment volumes offset higher prices per pair and strong financial income.
Net revenue fell 18.0% year over year to R$705.1 million, while shipments dropped 19.8% to 35.3 million pairs, reflecting a more cautious retail environment and slower inventory replenishment across distribution channels.
Volume pressure
The drop in volumes was the central driver of the quarter’s weaker performance. Domestic shipments fell 21% to 28.0 million pairs, reflecting softer demand and more conservative purchasing decisions by retailers. Exports also declined, with volumes dropping 14.7% year over year to 7.3 million pairs, amid geopolitical uncertainties and weaker shipments to North America.
Despite the decline in volumes, Grendene partially offset the impact through higher pricing and product mix improvements. Average gross revenue per pair rose 9.4% to R$25.95, while net revenue per pair increased 2.3% to R$19.98, reflecting the company’s strategy of prioritizing higher-value products and strengthening its brands.
Still, lower production scale increased unit costs. Cost per pair rose 14%, reflecting weaker dilution of fixed costs and higher labor expenses. As a result, gross margin fell to 45.2% from 50.9% a year earlier.
Margins compress
Operating performance weakened significantly during the quarter. EBIT dropped 47.7% to R$156 million, while recurring EBIT fell 43.7% to R$122.5 million, pushing the recurring EBIT margin down to 17.9%.
Operating expenses also increased relative to revenue. Selling expenses represented 25.8% of net revenue, compared with 22.2% in the same quarter of 2024, reflecting lower sales volumes and changes in the consolidation base after the integration of Grendene Global Brands operations.
Financial income cushions results
One factor cushioning the decline in operating earnings was Grendene’s large cash position. The company recorded recurring financial income of about R$161 million in the quarter, benefiting from higher interest rates and currency effects on financial investments.
That helped sustain profitability levels even as operating margins weakened.
Full-year picture
For the full year, net profit totaled R$644.8 million, down 12.3% from 2024, while recurring net income reached R$815.9 million, reflecting strong financial income and continued pricing discipline.
Gross revenue for the year reached R$3.4 billion, up 5.1%, driven largely by export expansion and higher prices per pair, even as total shipments declined 11.1% to 123.9 million pairs.
Management emphasized that its strategy in 2025 focused on preserving margins and revenue quality rather than volumes, prioritizing higher-value products and strengthening brands such as Melissa.
With inventories across retail channels now more balanced, the company signaled early signs of volume recovery entering 2026, although consumer demand remains selective.
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