[Foreign language]
Good morning, everyone. Thank you for joining our fourth quarter and full year 2025 earnings call. We delivered another very consistent quarter, and to discuss the evolution of our strategy and key highlights in further detail, we have André Farber, our CEO, Miguel Cafruni, our CFO, and Francisco Santos, the head of our financial operations. We'll start with a company presentation, and then we'll open the floor for the Q&A session. Just a reminder, to participate, click on the Raise Your Hand icon and join the queue, or if you prefer, you can submit your question in writing through the chat icon. Before handing over the floor, I'd like to make a few announcements. In December, we announced the sale of our shopping mall, Midway Mall. Therefore, the mall's performance is reflected in our annual and quarterly results only through December 17th.
However, to enhance comparability, we have excluded the effects of this transaction, so the figures we're presenting today do not include these impacts. This call is being recorded, and any forward-looking statements represent the company's expectations that are not guarantees of future performance. Those are the key points. I'll now turn the call over to André.
[Foreign language]
Thank you, Isa. Good morning, everyone. Thank you again for joining us for our fourth quarter 2025 results. In today's presentation, we'll also be covering our full year 2025 performance. 2025 was an exceptionally strong year for us, one that generated a great deal of pride, evolution, and results. Let's move on to the presentation. We've often discussed our transformation journey. Since I joined the company back in May 2023, a great deal has happened.
We frequently revisit this slide, which shows our timeline, highlighting key milestones that are worth recalling as they are closely tied to our strategy. We implemented a major structural change back in August 2023, significantly strengthening our fashion business and other segments with very distinct strategies, as I cited with the fashion example. As early as October 2023, we started accelerating the utilization of our factory, already recognizing its strategic importance and the potential results it could bring to our business. At the end of 2023, we saw a significant reduction in our leverage, which had been a concern at the time. Our very strong cash generation was instrumental in bringing leverage down, and we have been executing this work very consistently. 2025 was a very intense year. In the first half, we relaunched and evolved our core values, which we call our threads.
In September, we relaunched the Pool brand, which targets a younger demographic with a strong emphasis on denim. In November, during our last earnings call, we communicated our liability management exercise and the reduction of our debt cost, refinancing our entire debt to DI + 0.95%. Since then, from November to the close of the year, two very important events occurred at the company. First, we relaunched the new Riachuelo brand with a more contemporary positioning. The brand is now signed as Incredibly Brazil, believing in the strength of Brazil and its people. Furthermore, on December ninth, we launched the prototype of our store of the future, the Incredibly Brazil store, located on Rua dos Pinheiros in São Paulo. So this was another key milestone, which we'll cover in greater detail later.
Additionally, before the year ended, we concluded the sale of Midway Mall for BRL 1.6 billion, alongside a special dividend distribution. This concluded the organization's effort to reaffirm its focus, ensuring we concentrate on our two core businesses, fashion and financial services, and executing a divestment of the mall with a very strong return for shareholders. Moving on to our Q4 2025 results. We once again had a very robust same-store sales growth in fashion. Fashion grew by 7.2%, marking our 10th consecutive quarter of growth. At the same time, we achieved this with margin expansion. Our fashion gross margin reached 57.8%, up 2.9 percentage points year-over-year, representing the 9th consecutive quarter of margin expansion.
This underscores our ability to deliver growth alongside margin expansion, making our bottom line results significantly more powerful, and that's what you see on the bottom line. Our EBITDA from retail reached the 20% range, up 1.7 percentage points year-over-year, the highest level in the past five years. I have spoken extensively about the strength of our fashion business, combined with our financial services arm. Midway was also a highlight of the quarter. We grew EBITDA by 28.4%, reaching BRL 126 million. As a consequence, we achieved a consolidated EBITDA margin of 20.6%, an increase of 1.9 percentage points. Also, the best EBITDA level for the company in a fourth quarter in recent years.
Finally, we reached a net income of BRL 322 million, up almost 30% year-over-year. This also demonstrates that we have a business that grows its core fashion operations with margin expansion, coupled with Midway's growth and the resulting synergies that drive such a strong bottom line performance. We're very proud. Now, I'd like to share the full year results with you. It was also a very strong year, and it's where we see the results delivered consistently across all four quarters. We closed the year with double-digit apparel same-store sales growth of 10.3%. Now, our margin, it also expanded by 2.4 percentage points over the year, reaching a very strong 56.7%. This is the best margin figure in seven years. We last saw this level in the previous decade only.
At the same time, Midway had another very strong year. As a result of this robust fashion performance with margin expansion and Midway's contribution, we achieved a consolidated EBITDA for the company as a whole of BRL 1.8 billion, an increase of almost 20% year-over-year, a very strong figure. When we look at net income, we reached BRL 512 million. We more than doubled our net income compared to the previous year. I must reiterate what I mentioned in the opening. This was also the year we sold the shopping mall for BRL 1.6 billion, accompanied by a record dividend payout to our shareholders. When we look at the 2025 results, we see it's a very robust performance and an evolution we've seen over the past few years. Now, let's look at the key indicators from this period.
The first one is our work on margins. We started this margin improvement initiative back in 2023. It's a multifaceted effort that involves better factory utilization, improved fashion planning, pricing, and how we approach markdowns. And we have been demonstrating very strong results here. Gross margins went from 52.5% in 2023 to 56.7%, a 4.2 percentage point improvement over these two years. When we look at retail EBITDA margin for the fashion business, we moved from 11.5% in 2023 to almost 15%. Also, a very significant improvement. So we are making the business increasingly profitable and with room to expand, which ties directly to our future growth lever, which is channel expansion. When we look at consolidated EBITDA, we also see a very strong figure representing the sum of our fashion and Midway operations.
We went from, we went from an EBITDA of BRL 1 billion to nearly BRL 1.8 billion here, more than 70% growth over these two years. And finally, the evolution of our bottom line. We moved from a loss in 2023 to a turnaround in 2024, with BRL 235 million, and now delivering this net income of BRL 512 million, which makes us extremely proud. This evolution shows we're on the right path. It also shows we are being very careful with every step we take, enhancing the company's value proposition, while also generating substantial financial returns. This slide shows, our margin evolution over the past nine years. Margin is a core focus for us. We have dedicated significant attention to it, with many initiatives aimed at expanding margins.
If I go back to 2017, which was the last time we had a similar margin level to the one we achieved in 2025, we saw that after 2018, margins contracted. The pandemic exacerbated the situation. The supply chain was disrupted. We didn't leverage our factory in the best possible way during that period of time, leading to several years of lower margins. From 2023 onwards, we started implementing strategies focused on factory utilization and other portfolio initiatives, ranging from collection design to pricing and markdown, and we are returning to a margin level we have seen historically. So I wanted to show you that we don't see this as a temporary spike, but as a sustainable margin baseline, which we now intend to build upon to reach an even higher level. That's what we're working on.
I believe I have consistently communicated to you that our business is comprised of two distinct operations: a fashion business, which has received immense effort and focus, and a financial services business. This slide illustrates the evolution of the powerful combination of these two businesses. Value creation per square meter, the light green bar representing the fashion business, and the dark green bar representing the financial services business. We have increased the value generated per square meter from these two combined businesses by 33% over the past two years. Both businesses have grown substantially, as we've been showing, and this is where our focus will remain. We have a robust store footprint with national coverage. We also have considerable exposure in the northeast region.
The financial business is extremely relevant to us, so we'll continue to monitor our operations, ensuring the fashion business keeps improving, while also ensuring the financial services business continues to evolve over time, with a constant focus on this value generation per square meter. So we have made significant progress and achieved strong results. How do we continue executing our strategy to further enhance our performance? We continue to focus on our five pillars. The first one is experience. There's no news here. We've talked about that in our last call, the previous one, and the one before that. We discussed it in 2024 and 2023, and we remain firmly committed to enhancing consumer experience. We believe that in the long run, this will continue to foster customer loyalty, add value to the brand and the company, and drive our growth. So this is the first pillar.
The second pillar we introduced in our last earnings call, the footprint pillar. We have an optionality here. As we enhance the experience, we can, and indeed we should, expand our channels. This will generate incremental growth for the company, and then I will elaborate on this in a minute, but it's a critical pillar. The third pillar, which we've been working on over the past two years, is fashion efficiency. This is about how to deliver better, more efficient, and more responsive fashion. The fourth pillar is Midway. Midway is paramount, and I might sound repetitive here, but we discussed value generation per square meter, and Midway accounted for 25%-30% of our results, and we have a dedicated pillar for our financial services business because we see significant opportunities for continued growth.
And finally, we have the capital structure pillar, an area where we've been very proactive in recent months and years, and we continue to identify opportunities to further optimize our capital structure. I'll discuss this in further detail later. So let's move on to the experience pillar now, our first pillar. This pillar has three dimensions: brand evolution, product evolution, and channels evolution, the in-store and digital experience itself. We started a brand revitalization process some time ago, and it, it's still going on. And I believe that good companies, and especially strong fashion companies, are built on a powerful brand. So we'll keep on investing in the Riachuelo brand, renewing it, and also investing in some of our strategic sub-brands. Product is also paramount to our strategy. Everything we do results in a product that customers take home.
So we've been working over the past years to focus on our core categories: women, men, and kids. We aim to increase our share of modal fabrics and improve our supply chain responsibility. This enables us to deliver an increasingly higher quality product tailored to our customer with more added value. This is a core pillar of our experience following brand and product. Finally, last but not least, the evolution of our channels. We have two very strong channels, which are interconnected through our omni-channel experience. We have been making significant headway in the store experience, which we have shared with you, as well as in the e-commerce experience. Let me show you a video about the evolution of our experience, focusing on brand and store.
These dimensions are highly interconnected, the concept behind the brand's evolution and how it translated into the prototype store we launched in Pinheiros at the end of last year. 2025 was a turning point for Riachuelo and marked the beginning of a new chapter in our journey, a movement that reconnects with our roots, pays tribute to our history, and carries forward the legacy of Nevaldo Rocha. From Brazil, we take our shape, color, and attitude, translating this into a new brand era, an identity that is more aligned with our authentic self, a new way of engaging with the world. The logo evolves, lines acquire movement, colors gain presence, a celebration of Brazil and our essence. And this transformation spills over into the experience in the store. The new concept comes to life in the Pinheiros pop-up.
For 12 months, the store will operate as a living lab with a customer journey at its core, where brand, product, and experience share the same space. Every detail was crafted to narrate our story, from the Brazilian art piece at the entrance to the nods to our heritage in the architectural details. 240 square meters of innovative design, curated fashion, and technologies that facilitate decision-making and expedite the purchase process. More than just a store, it's an experimentation lab, a concept that foreshadows the future of Riachuelo's more than 300 stores in the years ahead. In just 6 weeks, the pop-up surpassed the initial forecast and drew new demographics to the brand. "Hi, everyone. Welcome to the new Riachuelo pop-up!" Great identification, connection, and positive conversations. A brand on the move, heading in the right direction to remain relevant. Riachuelo, incredibly Brazil.
As you can see, there is been significant evolution here. This is a deep work, a seed we planted back in 2025, which will bear fruit and generate substantial results for Riachuelo in 2026 and 2027. We started with changes in the staff and internal alignment so that by the end of 2024, we could present all of these launches to you. So, as I said, this is a seed we planted back in 2025 and which will bear fruit and generate substantial results for Riachuelo in 2026 and 2027. As I said, the experience pillar has three dimensions. We've covered brand and store, but I also wanna provide more examples and context for an essential dimension: product. We have just launched a new line under our BodyWork brand called D-Sync.
I wanna give you a glimpse of this product evolution, showing how we've been investing in technology and concepts to constantly enhance our customer experience. So with you, D-Sync. As you can see, this is D-Sync. D-Sync is a line under our Bodywork brand umbrella, where we incorporate proprietary technologies to enhance consumer experience and bring more attributes to our products. It's a continuation of our previous efforts. In 2025, we launched the Ultra, which was a major success, and now we have D-Sync. We are creating significant momentum, bringing substantial content to our products, reinforcing our brand. So we closed 2025 on a high note, and we also kicked off 2026 very strongly. We'll discuss a couple of collaborations, one from December and one from January to February. First, in December, we had the Helô Rocha collabs, and then in February, the Triya collection.
These are collabs where we feature Brazilian designers harnessing significant Brazilian creative energy, bringing Riachuelo an accessible format with outstanding commercial performance. They are very much aligned with our brand identity. I wanna share some details with you about these collabs. Riachuelo's new era stems from the evolution of our DNA as a fashion brand, focusing on what really counts: the product. Over the past few years, we have made conscious decision to elevate our fashion, create desirability, and win over Brazilian consumers. The result is evident in our collections. We have over 70 partnerships with local brands and talents, democratizing fashion and amplifying Brazil creative potential. Our celebrity collabs were widely talked about. With Ella Rocha, we made handmade crochet, the embroidery from Timbaúba dos Batistas, and the Brazilian culture at the heart of the collection, featuring 140 items in different categories.
We kicked off 26 with a collab that captures the essence of Brazilian summer. In partnership with Triya, we celebrated the sun-soaked lifestyle with a simultaneous launch across 8 cities. With exclusive prints and author design, the collection combines swimwear, apparel, accessories, and homeware, and it exceeded all expectations in two weeks. These are my choices. This is an amazing collab. More than just products, these collections reaffirm our positioning: fashion with identity, authorship, and Brazilian creativity, because nothing speaks louder than the product itself. Riachuelo, incredibly Brazil. So what, what you're witnessing here, be it the brand's evolution, the store's evolution, D-Sync, Ella Rocha or Triya, are very broad, yet highly consistent initiatives driving the evolution of the Riachuelo experience. We believe that by enhancing the experience, we deliver greater, greater value to consumer and maintain steady growth. So we're very pleased and proud, and we'll keep going.
There is still plenty of good work ahead. The year is just starting. Now, let's move on to our second pillar, which is also key to our strategy: footprint. Here we see room for new store openings. We have been discussing this since last year. After the pandemic, we spent several years in deep analysis, focusing on our finances and our debt. Beginning last year, we started opening stores. With a new store concept we just presented, we also see an opportunity for store renovations. We know that, properly executed store remodels have the potential and ability to generate positive same-store sales. So this is a second lever, and e-commerce continues to gain momentum. This is another growth driver for us. Now, let's show you some data on our store expansion. These are Riachuelo's store opening numbers from the past few years, from 22 to 25.
This capability was somehow on hold, let's say. Last year, we opened one store. The year before, in 2025, we also opened one. But in 2025, we opened eight stores. This was already an acceleration. We've been targeting regions where our penetration is lower and our relative share is smaller. We see regions with high productivity that could support additional stores, and we always require IRRs above 25%. So our analysis are strict and conservative, and these eight stores have been delivering very strong results. So we're very confident in our capacity.... We have mentioned these figures to you previously. We have the potential to open from 100 to 150 stores, and our plan is to open 15-20 stores per year over the next few years. Last year was a warm-up with 8 stores, and we're pleased with the results.
This year, we are firmly on track with our plan to open 15-20 stores. This will provide incremental growth on top of the same-store sales we have been showing you. The third pillar of our strategy is fashion efficiency, and here we must absolutely discuss our factory. We have been very consistent here. We are increasing factory utilization run rates, improving efficiency, bringing more fashion-oriented production, and adding new technological and textile capabilities, ensuring the factory becomes a stronger pillar of strategic differentiation for us. Logistics is crucial in our business. Supply chain accountability, ensuring the right product at the right time. We already operate a push-and-pull system. Our Guarulhos DC process is highly automated. We've been enhancing our algorithms and have scheduled increased investments there to support our growth.
There are additional levers here, such as clustering strategies to ensure the appropriate products are sent to the right stores. As I said, we are assessing how to invest in Guarulhos to make it more scalable and productive over time. With fashion efficiency, there is substantial planning involved. This is the analytics front. I talked about the effect of pricing and markdowns on our margin, but we've been developing our teams and refining our planning methods, incorporating machine learning and AI capabilities so that our planning evolves in line with the available technology. This is our third pillar, fashion efficiency, encompassing factory, logistics, and planning, and analytics. The fourth pillar is Midway. A great deal of consistency here. Midway's core business has evolved and is delivering stronger results year-on-year. Again, we have reinforced our credit, origination, and risk underwriting models, leveraging AI and machine learning.
We have enhanced the value proposition of our cards and the loan business, which the company has been running for about 10 years. We've been able to grow in a highly profitable manner. Looking ahead, we have seeded initiatives for other products that are a strong fit with our customer base. They can help us build our, our services for our consumers, increasing loyalty and delivering substantial value to our business, like the value per square meter generation we discussed a few slides back. At the end of last year, we launched the payroll deductible loan product, which is a natural adjacency to our existing loan business - loan business, so this is starting to gain scale. Finally, Midway is a business that, when combined with fashion and retail, is truly leveraged.
Through our financial products, combined with the benefits they offer within our fashion operations, we ultimately drive higher customer loyalty, allowing us to retain clients and keep them engaged with us for longer periods, buying more products. So this is the full potential of our financial services business, the fourth element of value here and the fourth dimension of our strategy. And last but not least, capital structure. We've discussed our debt here and the reprofiling of debt. At the end of last year, we launched a FIT for personal loans, providing us with capital structure tools to support growth while optimizing returns. And at the end of the year, we executed the divestment of the mall, enhancing our capital structure and increasing focus on our core fashion and financial services operations. It was a year of substantial progress, as you saw, across the five pillars.
These pillars we have been developing since last year. We are confident they still hold substantial potential for the future with value creation, and we persist on them to ensure the company continues to growth profitably with expanding margins through the synergy of these two businesses, fashion and financial services, while improving customer experience. So I'll conclude here, and, thank you again for joining us. And now I'd like to invite Miguel to give you more details about our financial performance. Thank you.
[Foreign language]
Thank you, André. Good morning, everyone. It's a pleasure to be here with you again. Thank you all for joining us. I'd like to start by discussing apparel net revenue. In the quarter, a growth of nearly 8%, building on a very strong base of 15.6% from the previous year.
A significant quarter with apparel net revenue surpassing BRL 2 billion, consolidating a very important, solid growth for the full year. Apparel net revenue grew nearly 11%. This marks two consecutive years of growth, underscoring important and highly consistent expansion of our top line. Now, Same-Store Sales. We have 10 consecutive quarters of positive apparel Same-Store Sales growth. We see 7.2% growth here, again, very much in line with the third quarter, reinforcing a very strong and consistent historical trend in apparel Same-Store Sales, which adds substantial value to our overall proposition. Combined with gross margin and gross profit, our gross profit for the quarter hit BRL 1.2 billion, an increase of nearly 14% compared to the same period last year, which was approximately BRL 1.1 billion.
For the full year, we reached nearly BRL 3.7 billion, up 16% growth in apparel gross profit. Now, next slide, margins. We have top-line growth, combined with growth in nominal gross profit margin, fueled by significant and consecutive gross margin expansion. André talked about this, 9 consecutive quarters of apparel gross margin expansion. In the quarter, we achieved a margin of nearly 58%. Actually, 57.8% apparel gross margin, an increase of almost 3 percentage points year-over-year, reinforcing the consistency of our business. And just as important as this 58% margin is, you know, the phasing over last year. Fashion retail has a characteristic pattern in the second quarter. It's a strong period for margin expansion, driven by winter and winter apparel, which naturally carries higher gross margin, and we saw this move, this year again.
We increased nominal gross margin by almost 58%, achieving almost 58%. Now, let's see how we've been driving this growth margin improvement. We can see the three main dimensions and variables that explain how we built this nearly 300 basis point margin expansion in the quarter. We have a significant product effort, consistently increasing penetration in our core categories: women's, men's, working extensively with modal fabrics and carefully balancing the mix between fashion items and more basic core products. We have been delivering a consistent and sustained effort in expanding internal efficiencies, capturing greater productivity at our factory, and improving our integrated business supply chain, optimizing our operational model. This contributed nearly 200 basis points of the total, 290 basis points expansion, stemming also from internal improvements and efficiencies. This adds a lot of value.
We also advanced in pricing, contributing to the gross margin expansion quarter-over-quarter. Now, for retail, in Q4, we exceeded BRL 500 million in nominal EBITDA, with an EBITDA margin of 20%, an expansion of 1.7 percentage points, representing significant growth compared to about BRL 440 million, over 15% nominal growth year-over-year. For the full year, we achieved a 15% EBITDA margin in retail, an expansion of 1.2 percentage points year-over-year, also demonstrating a significant upward trajectory. At the beginning of this transformation, we were around 11.5% EBITDA margin. We ramped up to nearly 14% last year, and we're now continuing to ramp up to approximately 15% retail EBITDA margin. Now, we'll move on to our second business segment, the financial services, discussing the credit portfolio.
This quarter, we have also detailed the loan portfolio separately. I'll show you the important evolution of products beyond just consumer finance. Here, we present the portfolio. All deltas mentioned here exclude the impact of CPC 49 to ensure comparability, okay? So in Q4, we closed the quarter with BRL 5.33 billion in the credit card portfolio. This is a growth of 10% compared to the beginning of 2023, and around 6% year-over-year. In loans, we have been accelerating significantly with great consistency and diligence, and we reached nearly BRL 850 million in the loan portfolio, compared to BRL 690 million in the same period last year. A 21% increase compared to, again, the start of the transformation, which was just under BRL 700 million.
This expansion has been achieved with high quality and diligence and great consistency. This is clear in our delinquency curves, both short-term and long-term, which remain disciplined in our credit underwriting approach. We did not become overexcited and did not loosen our underwriting standards when market conditions were potentially more favorable, and we remained diligent in our credit concession, credit granting process. The short-term delinquency rates are around 8%-9%, quite stable and improved compared to historical levels. And at the end of 2024, beginning of 2025, we readjusted our risk appetite, slightly growing our portfolio, and we have now returned to a healthy level, and long-term delinquency rates have resumed their decline. The card portfolio remains very consistent. We see both short- and long-term ranges within our established guardrails and within our risk appetite. Very stable.
We continue with a very strong performance and very consistent with the FPD indicator, which is a key metric for us regarding credit quality and performance of our origination process. We also added this gray line representing the FPD for personal loans, showing credit cards and personal loans, which remain within our risk appetite, with the guardrails we have established. Maintaining a credit card FPD around 4, 4.1, and loan FPD also very consistent. Following the spike earlier in the year related to the additional risk appetite we assumed in late 2024, now returning to the range of 6.5, between 6 and 6.5, which is a very consistent level for the personal loan, 90 T+ days FPD as well. This translates into a consistent evolution of our financial services results as well.
We had 28.4% growth, reaching almost BRL 130 million, against a bit less than BRL 100 million last year. This shows how important it is to be consistent over the years. The last four years, you can see here a CAGR that is close to 60%. We went from BRL 100 million to BRL 200 million, and we went through an upward curve, doubling this number to BRL 200 million EBITDA a year, to BRL 404 million in 2024, and nearly BRL 500 million in EBITDA from financial services in 2025. This demonstrates that the pillar is growing significantly. Now, let's look at the consolidated results. Here you can see our operating leverage, our SG&A. We told you that we had executed significant work in recent years to gain operating leverage and improve our efficiency and expense leverage.
We'll maintain this level and pass through the benefit of sales growth through the company's future results. We remain very consistent and confident that this is also a controlled level within our guardrails. For the full year, we closed basically flat, with 0.2 percentage points of operating leverage compared to the previous year. Very similar to what we had in the quarter, Q4, where naturally we have higher revenue. Adjusted consolidated EBITDA for the quarter, it was BRL 660 million, consolidating our two core businesses, against BRL 566 million the prior year, with an EBITDA margin above 20%, actually 20.6% versus 18.7%, an expansion of nearly 200 basis points in the final consolidated margin.
In a breakdown of our last four years, we have moved from consolidated EBITDA levels below BRL 1 billion to BRL 1.5 billion last year, and this year approaching BRL 1.8 billion in consolidated EBITDA. 16.7% EBITDA margin, an expansion of almost 1.5 percentage points compared to fifteen point four percent EBITDA margin last year. And consolidated net income, again, reinforcing that this excludes the effect of the shopping mall transaction. In the quarter, we reached BRL 322 million in consolidated net income. In Q4, growth of nearly 30%, as André highlighted earlier, compared to BRL 250 million in Q4 2024. And when we look at the last four years, we see a powerful, consistent evolution.
We reached BRL 512 million for the full year, crossing the BRL 500 million threshold, BRL 512 million in 2025, more than doubling the net income of BRL 235 million from 2024, moving from levels around breakeven and even a loss in 2023. This shows we're focused and consistent, working through the P&L lines and making consistent progress quarter after quarter. Cash generation. It was a very strong quarter for cash flow at the same levels as Q4 2024. We start with EBITDA, 160 million in consolidated EBITDA. We generated 35 million from working capital. We are growing while generating cash from working capital. We continue to invest significantly in technology and store expansion.
In the quarter, we invested around BRL 170 million in CapEx, paid financing costs, and generating virtually the same cash as Q4 2024. So we are strong and consistent in cash generation from EBITDA, top line, gross margin, EBITDA, net income, and positive cash generation in the quarter and the full year. Now, our investments. We told you a few quarters ago that we would resume investment levels this year, coming out as a leaner, less leveraged company. We resumed investment spending at a level of approximately BRL 570 million in 2025, representing 5.4% of the company's consolidated net revenue. These are higher levels compared to previous years. Again, with a strong long, long-term view, we are resuming store openings, expansion, and investments in technology and new initiatives that secure our long-term future.
We remain comfortable at a manageable and controllable level, generating EBITDA, generating cash, and demonstrating health and consistency of our business. We're very proud to show you this whole process, which began, as André mentioned, back in 2023. In 2023, we had a net debt that was slightly above BRL 1 billion, depending on the leverage metric that you use. It was between 1x and 1.5x . We have undergone a strong deleveraging process. We closed 2024 with BRL 500 million in net debt, leverage between 0.3x and 0.4x , and we closed 2025 at BRL 60 million. This is not an increase in net debt if we consider that we accelerated for tax efficiency purposes, BRL 121 million in dividends that were originally scheduled for April 2026, and we paid in December 2025.
This consumed cash, so our cash flow result was impacted, and it resulted in net debt being BRL 121 million higher at year-end. But this, if this action had not been taken, we would have seen a reduction in net debt, continuing a very consistent trend we have been communicating to the market. Now I'd like to conclude by reinforcing that starting last week, we began operating under a new ticker on B3. We transitioned from GUAR3 to REAL3. This is another important step and milestone in the company's transformation journey, including how we communicate with our investors. So for those who haven't yet picked up on this change, we're very proud of it. It connects the company to... and the brand across all touchpoints, including our ticker on the stock exchange.
So we are now REAL3, and GUAR3 is now more focused on our factory. Now, I would like to turn the floor back to Isa to start our Q&A session. Thank you, everyone.
[Foreign language]
Thank you, Miguel. Now, let's get started with our Q&A session. The first question is from Gustine with Itaú. Go ahead, Gustine, you have the floor.
[Foreign language]
Good morning, everyone. I have two questions on my side. Starting with a more macro question. A topic that we've been discussing with investors is the retail path for 2026, considering government incentives and so on. So Q3 and Q4 especially, we saw that you probably gained market share, though we still have to see the results of other companies, but based on our analysis, it seems like you gained market share.
Now, in 2026, do you feel any improvements, you as a company, and looking at the January EDAT, we saw generation in all industries, especially apparel. So do you feel this movement? Do you feel the market is improving, either due to incentives or to any other reasons? Now, the more micro question: the gross margin is clearly working and drawing attention, and this will lead you to surpass your peers very soon. Maybe you have already surpassed them with the accounting adjustments. And André, you said there are more gains to come. So with these additional gross margin gains that you have, you will continue to be more profitable, or do you think that you can become even more competitive to gain even more market share? These are my two questions. Thank you very much.
[Foreign language]
Thank you, Gustine, for your question.
About the market, sales, and our results, in the report that you published last year, you talked extensively about how we have internal levers that do not depend on the market to perform well, and we continue to believe in that. What happened in Q4 is, boosted by all the levers that we've created in the past two years. And so regardless of the market conditions, these levers lead to a good performance. So that's what we saw. Yes, the market has a slightly weaker demand in Q4, but our results remained very robust. Now, we can't share the first quarter results with you yet, but they're in line with our results. Our levers continue, bearing fruits, and we continue optimistic. EBITDA, yes, it's stronger, so we've been feeling that, the market is heating up. So we believe that EBITDA is correct. Now, about margins.
Like I said in previous calls, we've been improving margins quarter after quarter, and we've been telling you that we will continue improving this because we are working on many levers. And of course, there's no silver bullet. It's not that we're using a specific technology or a specific initiative, but there are actually many initiatives that, when added up and when mature, will improve our margins. So this is because of a better utilization of our factory, more intelligent pricing, and improving our collection, among others. And these levers are not over yet. We'll continue improving factory utilization. We have projects ongoing and other strategy elements to improve our factory operations. So the factory we'll have more and more fashion content. I visited the factory at the end of January, and this is visible.
With more fashion items, you can have higher average prices, and with a good pricing, this can lead to higher margins. So this is just one example I'm giving you. So these margin levers have been built throughout time, and there's nothing different we're going to do from now on, but I don't think all the levers have matured yet. So I think we are midway through this process. I believe we still have many quarters of margin evolution ahead of us.
[Foreign language]
Excellent. That was very clear, André. Thank you.
[Foreign language]
Thank you, Gustavo.
[Foreign language]
Our next question is by Daniela with XP. Daniela, please go ahead.
[Foreign language]
Good morning, everyone. Thank you for taking my questions. Congratulations on your results. I have two questions here on my side. The first is a follow-up question to the margin dynamics, but from the perspective of category mix.
André mentioned you're focusing more on apparel. This is quite clear in everything you've been doing, but you are leaving electronics a bit aside because they have lower margins and require more working capital. So, you may also have some challenges in growth for consolidated same-store sales. How can we think about other categories that can also grow in addition to apparel, so that we can see what can come ahead of us in terms of growth challenges that need to be offset with higher profitability? Just wanted to further understand what you said. Now, my second question is about Midway. Francisco, you've achieved excellent results. I think that this is the most mature financial company in retail, but what can you do to achieve more comfort and grant more credit?
I think that you're being very careful with this process, but what are the main points that we should track, so that you can achieve more comfort and provide more credit, of course, in a diligent way, but to support your growth? Thank you.
[Foreign language]
Hi, Danny. Good morning once again. Thank you for your questions. I will talk about margin, and then I'll turn the floor over to Fran to talk about Midway. We look at our business as having four major categories: apparel, electronics, beauty products, and houseware, homeware, and they have different margin dynamics. We made the strategic decision of leaving electronics a bit aside because they have much lower margins, and this will lead to a positive impact on the overall margin of the company.
So we're doing this now, and in order to clean up our inventory, we can, we can have an even lower margin than normal. But that's easy to explain. That's quite straightforward. In apparel, over 80% of our volume and our revenue have a very specific strategy. In the quarter, we see the apparel margin growing 2.9%, and what I showed you in today's presentation reinforces that we believe that apparel is the category with the best margins, and we'll keep on improving apparel margins. So this will lead to combined effects on the company's margins, improving the apparel margin and improving the company's mix as a whole, with more apparel and less tech. The third category is beauty. Beauty is seen as complementary to fashion.
It has lower margins, and we've been implementing initiatives in-house to improve our mix and beauty margins, but this is lagging a bit behind fashion. But, we've been working on the evolution of these numbers as well. And part of our margin evolutions that you saw in the consolidated numbers also comes from homeware. Our homeware has evolved quite a lot. We have home products at Riachuelo and the homeware standalone store. We have 25 of those stores, and we've been working to improve mix, margin, and pricing in those stores, as well as working on markdowns, and this will also lead to a positive impact on the homeware margin and on the margins of the business as a whole. But our business today is 85% fashion and, like, 5% other businesses.
So the apparel margins impact us more, and this is where we're focusing on, and these are the numbers we share with you. But of course, we think there are improvements to be made in the other lines as well. Now, Fran will talk about our credit policy at Midway.
[Foreign language]
Thank you for your question, Danny.... Well, there is actually a large set of indicators that we consider to define our appetite. Interest rates, family debt levels, they're still under pressure, but we also have internal indicators, like, customers from the new waves that are paying well and new portfolios. So we see a complex scenario for the year, but we've been able to navigate well in spite of all that. We're still small in those products, and we believe we can improve the models, and the loans business grew by two digits.
So we've been able to find room for growth. There's nothing happening here that is too different from what we imagined, and we expect the same pace of growth for the coming quarters. Can I add something here, Fran? Our strategic posture at the company is Midway came to boost our fashion business, but now we see Midway business independently as a standalone value generator. We actually have a slide about value generated per square meter, and we believe Midway will grow on its own now. We have great ambitions, but we are also very careful. We are very conservative, and we do not intend to bite more than we can chew. But we think that we can distribute financial services through our base, and Midway is a great value-generating lever for our future.
But Fran, once again, is showing how conservative we are when it comes to credit granting.
[Foreign language]
Okay, excellent. Thank you for your answers, and congratulations on your results.
[Foreign language]
Thank you. Our next question is from Pedro, from Bradesco. Hi, Pedro, you have the floor.
[Foreign language]
Hi, everyone. Good morning. Thank you for taking my question, and congratulations on your results. I have two questions. My first question is: We see that the company closed the year with a good cash conversion and a clean balance sheet, which allows you to accelerate investments without a great burden on cash flow, profit, and balance sheet. So taking that into account, I think there is a key lever that you focused on in 2025, and that will be even stronger in 2026 and beyond, as you said in your Investor's Day, which is to re-accelerate the opening of new stores.
So can you tell us about the experience of the eight stores you opened in 2025? Economics, tiers, maturation against expected, just so we understand how well this expansion machine is running. Now, André talked about a tier of 25%. Does that include Midway's contribution or not? That's my first question. My second question is more related to Midway, so maybe this is a question to Fran. You've been talking about the strategic importance and about Midway being able to grow on its own, and what are the products with the best returns? Considering the new products, in what point of the journey are we? What are the milestones that we can expect for 2026, and what are the metrics that we should track from up close to follow up on this evolution? Thank you.
[Foreign language]
Thank you, Pedro, for your question.
Well, when we look at Midway's portfolio, we should understand the contribution of each product. What we call consumer private finance or the private label card, although it accounts for a small percentage of our results, it's like a gateway for customers to become more loyal and frequent in retail. We started doing this last quarter. For the consigned business, we talk about audience profile and sales channel that can work well. We started doing this in Q4, and the results have been good. We can talk more about that later. So this year, we're still analyzing our portfolio. So this year, we're going to try and ramp up this portfolio, which should lead results later on. The rest of the businesses, if they continue on the same pace, we can see results in the short term. Thank you.
[Foreign language]
I think, the audio, chopped up, so, if you could repeat your answer, that would be helpful.
[Foreign language]
Okay, Pedro, thank you for your question. When we look at Midway's portfolio, we can look at consumer finance, and if we look at the private label card, although it accounts for a small part of Midway's results, it's really important because of two factors: It brings more customers to retail, they become more loyal, and it's also a gateway for other Midway products because we start a good relationship with customers. Now, you asked about the maturity. We have two more mature businesses here: the insurance business and the loan business. We've been working with them for a longer period of time, and we are growing double digits. We believe that our gear is oiled and running well here.
When we look at ROI and results, we're happy, and we see room to keep on operating these businesses at the same pace of growth. Now, consigned credit, we started doing that recently, and we believe that we have a good customer profile, customers that come to our store to find this type of product. This is a new product, so we should be tracking the portfolio now, and we expect to see results from this product in the medium to long term. But we'll see how this portfolio behaves this year to see if everything is running as expected. Thank you.
[Foreign language]
Okay, now going back to your first question about the opening of new stores. We said in the Investor Day that we looking at an ATIR of 25%. This does not include Midway.
We had eight openings last year, and these openings are doing well, exceeding our business plans, and we think that this is going to be a growth lever in the coming years. This will help us with profitability, scale, diluting fixed costs, and so on. So additionally to everything we've been doing with growth in same-store sales and margins, starting in 2026, there will be a new lever in our business case, which is opening omnichannel and new stores.
[Foreign language]
Great. Thank you, everyone. Thank you for your answers, and congratulations on your results.
[Foreign language]
Okay, our next question is by Vinicius with UBS. Hi, Vini. Go ahead, ask your question.
[Foreign language]
Hi, Isa, André, Miguel from... Okay, now let's talk about the factory contribution to boost margins. Do you have more efficiencies to capture at the factory?
Can you tell us about the margin gap for the products made at the factory today and third-party products? And do you see more room to bring many of the processes in-house to your factory? And now, about price positioning, can you tell us what you see in terms of price positioning at Riachuelo compared to the competition as you gain more space for fashion items? Thank you.
[Foreign language]
Hi, Vinicius. Thank you for your question. I'll take the first part here about factory. Okay, we've been advancing well, and it's increasingly clear to us what we can do well at our factory. As we said in the beginning of the transformation, we went through a process with volume increase at the factory, going from 30 million items a year to over 40 million items a year. This led to an increase in volume and productivity.
This lever is now quite mature. The factory is already working at a very productive pace, and we've been working on a process called make or buy. We want to clearly understand at the SKU level what the factory does well with higher margins and what we can outsource or even import. We do not aim to internalize 100% of our production. Having other sources is key, so that we can have all types of product in terms of quality and also market demands. So we are now in the second stage of this process, and we are developing new capabilities as well, you know, manufacturing some types of fabric or sewing that will bring more exclusivity and, of course, maintaining a focus on what we do well, you know, basic products, denim, and so on.
So we're very confident, and we talked about that during our Investors Day. We believe that we have many levers that will keep on bearing fruit throughout time, so that we can keep healthy and consistent margin levels in the coming quarters. Now, about price. Well, we believe we are a very democratic company. We have 342 Riachuelo stores. We are present in the 27 states of Brazil. We have distinct locations, like AA class malls and also C class streets. So we have a broad pricing strategy. We want to be very competitive with entry-level items. We want consumers to see us as a good value for money, so we are always aiming at a competitive product basket, and we use our factory capacity to produce many of those products, which is a competitive edge to offer these prices.
But at the same time, we've been working on the other end as well, creating more fashion items and better products, which enable us to increase prices of part of the products we sell. So I see this as an hourglass strategy. It's very robust at the base, but it's also improving the average ticket here at the top in fashion items. And combining these two businesses will create a democratic store that can serve well all different audiences with a huge addressable market that can serve almost the whole Brazilian population. So I think there are many growth alternatives here with this strategy. Now, as I said earlier, this is our pricing strategy, and the factory helps us to be very competitive at the base of that hourglass. So we integrate part of the chain, and so we can integrate that part of the margin.
And so in certain items, we can be more competitive as a result of that. And the factory, yes, gives better margins than the other sources we have, which is natural. Of course, it adds some complexity, but if we use this well, this can be positive, and this is what we've been doing when it comes to sourcing and pricing.
[Foreign language]
Great! Thank you so much, guys.
[Foreign language]
Thank you. Our next question is by Eric with Santander. Hi, Eric, go ahead. You can ask your question.
[Foreign language]
Hi. Good morning, everyone. Thank you for taking my question, and congratulations on your results that were really strong.
Now, looking at the numbers you shared throughout 2025 for apparel, same-store sales or apparel gross margin, if we go back to the ambitions you shared in your Investor's Day, both for same-store sales for the coming years and gross margins for the coming years as well, where can we have some upside? Where do we have some upside on those ambitions? Considering how strong your results were. And now, my second question: when we look at the same-store pillar, thinking about the renovations and the lessons learned from the pop-up store, what are things that can lead to gains in your existing store park as you start renovating the stores from now on?
[Foreign language]
Hi, Eric. Thank you for your question. I'll take the first one, and then I'll turn the floor over to André to answer the second.
As you said, well, we shared with you during the Investor Day a few ambitions. It was no guidance or it was nothing written in stone, but this is something we want to continue delivering consistently, being very diligent in the execution. We know what the levers are and the way we should lead our business to keep on working on those ambitions. Of course, in one quarter or another, things may change. We can exceed those numbers. So we have top line and margin levers to help us achieve what we want. In terms of top line, as André said, we are going back to an accelerated store opening strategy. Especially in the second half of the year, we will see a better same-store sales of the stores that were opened and that are performing well.
We intend to open from 15-20 new stores this year, so the product pricing and store clustering have been impacted. Margins as well, we've been working hard to reduce markdowns and to use the factory intelligently and efficiently, and use our database and algorithms to price in a smarter way, you know, on an SKU basis, on a store basis. So we look at these numbers with ambition. We want to be very consistent quarter after quarter, but there are many levers that we can work on to sustain all that, and we'll be very disciplined to keep on delivering those robust number, numbers. André?
[Foreign language]
Now, about our pop-up store and lessons learned. We opened the store on December ninth, and then we had the end-of-year holidays and vacations and recess.
So the store opened only two months ago, but it was impacted by the dates on the calendar. We'll have Carnival now, but we got very positive feedback from consumers. They now see Riachuelo differently. They now see Riachuelo's products differently, and it's been a strategy to show our brand and our products differently, and the feedback has been very positive from the different stakeholders we talked to. And I agree with you, Eric, we have a powerful lever in terms of store renovation, same-store sales, and if well executed, this can unlock long-term value for the company. So we're working on this to see how this store with 250 square meters can be expanded to a 2,000 square meter store. So 2026 will be a year of hard work.
We are already designing this, and we are going to test this to see how much this lever can add. I'm quite experienced in this. I've been working in retail for about 20 years. The previous company I worked at, we did many store renovations, and when you do that well, you can unlock double-digit growth in same-store sales. But of course, you have to think about category exposure, cross-selling, improving, the experience, and that's what we want. That's our ambition, a double-digit growth in addition to all other initiatives, but we are not ready yet, but we'll get there.
[Foreign language]
Great! Thank you so much.
[Foreign language]
Thank you for your question.
[Foreign language]
Okay, our next question is by Nicholas with JP Morgan. Hi, Nicholas, go ahead. You can ask your question.
[Foreign language]
Hi, everyone. Good morning. Thank you for taking my questions, and congratulations on your results.
I have two questions. The first is about category and assortment. André talked about the improvements in stores, and I want to understand. When we look at the current store park, some of them have houseware products that are at a grade level. Maybe they, maybe they're oversized, and this could be allocated to other categories that can lead to better sales. So can you tell us about what you are planning to do to reach an optimum assortment at stores? And now, my second question is about working capital. The company has improved working capital quite a lot in recent years, so can you tell us how much improvement can be unlocked from 2026 onwards? Thank you.
[Foreign language]
Thank you, Nicholas, for your question. I will answer both of them. So the first question is about square meters for categories in the stores.
In the end of 2024, we started an internal process for space management. We invested to train and to hire experts in this, and this has been paramount. We now clearly know what the ROI is per square meter. Actually, ROIC per square meter, and we got relevant findings, and they are in different maturation phases. The first one is technology. This detracts top line, but adds ROI and also square meter sales and houseware or homeware, the same. These products at Riachuelo, they have a ROIC that is not as strong as other categories of our business. So we're now working at these products, you know, home products as standalone-...
We're working to deliver a robust business for home products as a standalone initiative, and the 15-20 new stores that will open this year will have this new format already that will be more profitable. That's why we're so confident that the return and IRR will be above those 25% we mentioned. Now, about working capital. In the beginning of the transformation journey, we worked hard to make the company leaner and stronger to move forward. We have our two businesses at different compositions when it comes to working capital. When we look at retail, we've been leaner and leaner in recent years. We demand the same working capital, like BRL 1.2 million, that we demanded three years ago, and the revenue has exceeded 10% growth every year.
And the financial company, Capitânia Capital, so we also mentioned this during our presentation and also during the Investors Day, we are working on new ways to accelerate Midway. At the end of last year, we launched our first FIDC. It's still internal, and just like that, we see other efficient sources to keep unlocking our full potential. We're very confident. So the working capital should be a line that will adjust to keep stable, considering these other sources and the financial company and also in retail.
[Foreign language]
Great! Thank you so much, and congratulations. Thank you.
[Foreign language]
Okay, this concludes our Q&A session. Now, I turn the floor back to André for his final remarks.
[Foreign language]
Thank you, Isa, thank you, Miguel, thank you, Fran, and thank you everyone for joining us. As you saw, the results that we achieved in 25 make us really proud.
This is the result of a strong transformation effort that started in 2026, and you are all asking about what lies ahead. And I'm being very honest when I tell you that we're so midway through this transformation journey, and there's still a lot to be captured, and we're very confident in what lies ahead of us. So I would say we're only just starting. Many levers can be worked on, and they're generating results, and they can generate even more, and many seeds have been planted in the last quarter, like the renovation of the brand, a new pop-up store model, product launches. So as these projects mature, I'm sure they will help us grow our top line margins and improve our results as a whole. So my take home message to you is, once again, thank you for coming along on this journey with us.
We're working hard to make sure these levers keep on adding value to the company, and this is only the beginning. There's still a lot to come, and we'll deliver great results and generate possibilities for all the employees and everyone who has joined us on this journey. Thank you so much.