Brazil-based Alpargatas reported sales grew 8.3 percent in the second quarter to Brazil Real $1.1 billion ($203 mm), boosted by strong double-digit gains in Europe and the U.S. and an improved channel and product mix in Brazil. Earnings improved significantly, with the year-ago quarter impacted by inventory write-offs.

EBITDA in the quarter reached R$174.7 million against R$57.6 million a year ago, a gain of 203.1 percent.

Alpargatas reported consolidated net income of R$87.0 million against R$23.4 million in the year-ago quarter. Excluding the effect of nonrecurring items net of income tax, normalized Net Income would have been R$99.8 million. The earnings improvement reflects an improvement in gross margins to 54.7 percent in the latest quarter from 47.2 percent a year ago, reflecting inventory write-offs that led to discounting in the year-ago period.

Havaianas Brazil’s Sales Expand 6 Percent
In the Havaianas Brazil operation, revenue grew 5.8 percent to R$693.7 million year-over-year (y/y). Volume in Brazil reached 42 million, down 5 percent y/y, reflecting a tactical decision to bring forward sell-in during 1Q25.

Alpargatas said, “As expected, the decision to anticipate a significant portion of sell-in earlier in the year led to a slowdown in volumes in the 2Q25 — a movement we view as healthy to preserve the balance between sell-in and sell-out throughout the semester. This adjustment reflects our commitment to disciplined commercial management, focused on adequately supplying the chain without compromising sell-out dynamics or pressuring inventory levels across channels.”

The decline in volume was more than offset by an 11.4 percent increase in average ticket during the period compared to the same quarter last year. Alpargatas said, “It is important to highlight that the observed increase in average ticket is driven by an improved mix, both in terms of channels and products, with price effects in line with inflation for comparable items. In addition to the mix improvement, the Havaianas Brazil operation underwent a destocking process throughout 2024, which led to a higher level of discounts in the prior year and created a softer comparison base for the current period.”

Havaianas’ Brazil operation’s EBITDA climbed 88.3 percent to R$138 million in the quarter, despite lower sales volume and the recognition of non-recurring tax liabilities. The improvement benefited from tighter expense control and a 7-percentage point increase in gross margin to 46 percent, largely reflecting the impact of inventory write-offs recorded in 2Q24.

Havaianas International Boosted by Europe and U.S. Growth
Havaianas International posted revenue of R$396.6 million in 2Q25, up 12.9 percent, driven by growth of 18.0 percent in Europe (to R$255.8 million) and 42.3 percent in the U.S. (to R$66.8 million). In constant currency, net revenue grew by 3.6 percent compared to 2Q24. The average ticket in both markets benefited from an improved channel mix, strong product portfolio performance, and favorable foreign exchange effects versus 2Q24. Volumes increased 6 percent in Europe and 30 percent in the U.S.

Alpargatas stated that in Europe, the company continued to see improvements in sell-outs and greater stability in commercial operations, due in part to logistics enhancements implemented since the end of last year. The company said, “The recovery in service levels has led to more predictable deliveries and stronger customer engagement, supporting the rebound in volumes across strategic channels and sustaining healthy expectations for the remainder of the peak season. We also believe that the resumption of our marketing investments in the region — through targeted campaigns and brand collaborations — has been instrumental in reigniting the aspirational power of our brand. While it is still too early to assess the full outcome of the season, we are encouraged by this initial traction with consumers.”

In the U.S., Alpargatas announced in mid-May that it was shifting its distribution strategy for the Havaianas brand in the U.S. and Canada to a distributor model through a partnership with Eastman Group.

Alpargatas said in its Q2 report, “The shift aims primarily to address the profitability challenges of the operation by significantly reducing our cost to serve, while unlocking opportunities for broader distribution reach. This evolution aligns with our long-term ambition for the US — a market we continue to view as a meaningful opportunity, provided it is approached with focus, scale, and brand consistency. The new model brings us closer to a proven approach adopted by many other global brands, enabling a more balanced relationship between topline and expenses. We will retain brand management of Havaianas while leveraging the logistics capabilities and commercial reach of our new partner. The transition is already underway and will have a more material impact starting in the 2026 season. This marks a true inflection point in how we plan to drive value and grow the brand in the US market.”

Alpargatas said the new business model in the U.S. will begin to reflect in results starting in 2026.

In International Distributor Markets (IDM), including Africa, Latin America, Asia, the Middle East, and the Pacific, average revenue per pair increased 19 percent year-over-year, partially offsetting the volume decline and resulting in a 15.5 percent decrease in revenue for the region to R$74.1 million.

Havaianas’ International operation reversed the negative EBITDA of R$4 million reported in 2Q24, reaching positive R$57.2 million in this quarter. The improvement was driven by cost reductions stemming from the portfolio refresh process for Northern Hemisphere markets, as well as a decline in commercial expenses. A highlight was the U.S. operation, which recorded a reduction of over 80 percent in commercial and marketing expenses this year.

Rothy’s Q2 Sales Increase 7 Percent
Rothy’s, the eco-conscious footwear brand based in San Francisco, CA, reported that sales increased 7.0 percent in the second quarter to U.S.$63.0 million. The gains were driven by the launch of new products with strong commercial performance, as well as a strategy to expand in the B2B channel.

Rothy’s EBITDA reached $7.9 million, up 14.7 percent year over year. Gross margins eroded 320 basis points to 61.3 percent, partly reflecting a 2-percentage point impact from higher tariffs on products imported from China.

Alpargatas said manufacturing efficiency gains and lower freight and distribution costs continued to support gross margin levels, while ongoing “expense discipline” also supported Rothy’s profit improvement.

Alpargatas said, “It is important to highlight that we continue to closely monitor developments related to the US tariff agenda and its potential implications for Rothy’s business model. In the short term, no material impacts are expected, given the operation’s current margin levels and the inventory already positioned in the US. Nonetheless, we maintain close dialogue with the other shareholders, with a focus on defining action plans that will ensure the business’s resilience and profitability over the medium and long term.”

Images courtesy Havaianas