Brazil-based Alpargatas reported that sales grew 7.5 percent in the third quarter to Brazil Real (BRL)l $1.1 billion ($210 mm), with sales up 6.9 percent in Brazil, 8 percent in Europe and 12 percent in the U.S. Earnings grew significantly, benefiting from lower manufacturing costs and reduced expenses.

Alpargatas stated that the quarter marked the sixth consecutive quarter with revenue exceeding BRL 1.0 billion. Alpargatas said, “These improvements reflect the consistency achieved in commercial execution, supported by a stronger channel and product mix in both Havaianas Brazil and international operations.”

In 3Q25, Alpargatas sold 56.6 million pairs of Havaianas globally, representing a 2.3 percent decline compared to the same quarter last year. The reduction in sell-in volume still reflects the effects of the sales pull forward in Brazil during 1Q25. All international operations recorded volume growth in the period.

At Havaianas, Brazil sales increased 6.9 percent in 3Q25 to BRL$872.1 million, driven by continued improvements in both channel and product mix compared to the prior year. Alpargatas said, “The company recognizes that Havaianas is, and has always been, a democratic product, remaining attentive to pricing needs across its consumer base and maintaining the necessary diligence in potential price adjustments.”

At Havaianas, Brazil’s volume decreased 3.1 percent compared to 3Q24, totaling 51.6 million pairs. This decline continues to reflect inventory level adjustments following the early sell-in in 1Q25. Sell-out grew 1.3 percent in the quarter versus 3Q24. Market share remained at 77 percent, the same level as 2Q25, with an increase of 1.7 percentage points year over year (YoY).

In Havaianas International, sales reached BRL$230.3 million, up 9.0 percent YoY. Higher volumes sold across all markets contributed to this growth, despite a 1.9 percent adjustment in consolidated average ticket. Alpargatas said, “Average ticket dynamics in Europe are linked to the end-of-season process, which creates a higher discount base for the period to clear current inventories and prepare for the 2026 cycle. In distributor markets, the mix of regions and products also results in a lower comparative base.”

Havaianas International sales volume returned to growth, reaching 4.9 million pairs in the quarter, a 7.0 percent increase compared to the same period last year, with varying dynamics across geographies.

Sales in Europe grew 8.1 percent to $BRL110.4 million. Alpargatas said, “Europe maintained sales momentum in line with pre-orders and accelerated slightly compared to the first half, given the weaker 2024 base, when sell-out was impacted by a shorter, rainier summer and operational adjustments in the region.

In 3Q25, with operations normalized and sell-out expanding sequentially, volume reached 1.6 million pairs, up 7.7 percent YoY. The Company views this growth, combined with stronger sell-out, as positive indicators for building a stronger 2026 pre-order cycle.”

In International Distributor Markets (IDM), sales reached $BRL72.5 million, up 8.3 percent. Alpargatas said, “Seasonality is becoming more relevant, and several clients that had been adjusting commercial terms or inventory levels since late 2024 resumed purchasing at a more normalized pace, driving volume to 2.8 million pairs, up 5.3 percent YoY, reversing the downward trend seen in 1H25.”

In the U.S., sales increased 12.4 percent to $BRL47.4 million. Sales volume grew 14.6 percent, reaching 546,000 pairs.

Alpargatas said the U.S. gains are still unrelated to the upcoming business model transition, which will take effect in January 2026. In May, Alpargatas announced 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 this context, the U.S. operation remains focused on preparing for the transition while ensuring a solid 2025 performance, with healthy channel dynamics and balanced expenses.”

EBITDA Performance
Alpargatas delivered the highest nominal adjusted EBITDA in its history this quarter. The amount reached R$255.7 million, with an EBITDA margin of 22.9 percent, an increase of 9.7 percentage points compared to 3Q24.

Alpargatas said the improvement reflects “several fronts of our transformation agenda so far, such as expense efficiency and manufacturing productivity.”

Gross margins improved to 52.5 percent vs. 47.7 percent in 3Q24, reflecting in part strict cost management and the benefit of lower raw material costs. International gross margins benefited from logistics efficiency gains, a better raw material cost mix, and favorable foreign exchange (FX) effects.

Alpargatas’ operating expenses decreased 9.5 percent in the quarter, mainly driven by a 33.1 percent reduction in marketing expenses and a positive impact of R$14.8 million related to insurance compensation for business interruption following the 2021 fire in Santa Rita.

Havaianas’ Brazil operation posted an EBITDA of R$258.6 million in the quarter, up 40.0 percent YoY, with a 7.0 percentage points expansion in EBITDA margin, despite the decline in sales volume during the period. As a result, EBITDA per pair reached R$5.01, 44.5 percent above 3Q24.

Meanwhile, Havaianas International recorded adjusted EBITDA of R$5.8 million, reversing a significant portion of the losses accumulated over the past two years and returning to the same level as 2022, despite selling 1.8 million fewer pairs. Alpargatas said, “This quarter’s EBITDA reflects recent efforts to reduce structural costs and improve service levels, as well as better sizing of marketing expenses in both the United States and Europe, driven by the lower impact of the Olympic Games.”

Alpargatas’ consolidated net income for the quarter totaled R$171.3 million. Excluding the impact of extraordinary items net of income tax and the result of equity income, the adjusted net income would have been R$173.8 million, representing a 131.4 percent increase year-over-year.

Rothy’s Sees 15 Percent Gain
Rothy’s reported sales reached US$45.3 million, up 15.4 percent. EBITDA improved to $1.4 million from $100,000. The net loss shrank to $700,000 from $1.7 million.

Alpargatas said, “Rothy’s continues to deliver consistent quarterly improvements in its results. Four new stores were opened during the quarter, which, combined with the evolution of B2B channel sales, represent a relevant contribution to sales growth in the period.

“Tariff challenges persisted throughout the quarter, impacting gross margin by approximately 2 p.p., partially offset by operational improvements and efficiency gains in both industrial and logistics processes. Structurally, the decision to remain in China has not yet been finalized; however, the search for suppliers in other countries, whether in Asia or beyond, remains ongoing. By the end of the quarter, a small portion of production was already being carried out in other countries on a pilot basis. Internally, the focus on cost and expense discipline remains a priority, supporting sequential improvement in adjusted EBITDA, which, despite negative seasonality, contributed USD 1.4 million in the quarter. On a rolling 12-month basis, adjusted EBITDA has already reached USD 24.6 million.

“Finally, net income was nearly at breakeven this quarter, even with the negative impact of tariffs and unfavorable seasonality, improving the result YoY by USD 1 million.”

Image courtesy Havaianas