Q2 2026 Track & Field SA Co Earnings Call

August 13, 2026

Speaker #1: Instructions will be provided. Before we proceed, I would like to remind you that forward-looking statements are based on the beliefs and assumptions of Track & Field's management and on information currently available to the company.

Speaker #1: These statements may involve risks and uncertainties, as they relate to future events and therefore depend on circumstances that may or may not occur. Investors, s, analysts, and journalists should bear in mind that factors related to the macroeconomic environment, the industry, and other factors may cause actual results to differ materially from those expressed in the respective forward-looking statements.

Speaker #1: Joining us today's video conference call are Mr. Fernando Tracanella, CEO of Track & Field; Ms. Patricia Abibe, CFO and IR officer; and Mr. Fred Wagner, CEO of TF Sports and Vice President of Strategy and New Business at Track & Field.

Speaker #1: I would like to turn it over to Mr. Fernando Tracanella, who will begin the presentation. Fernando, please. You have the floor. First and foremost, good morning to everyone.

Speaker #1: I would like to thank you for your interest for the time you're dedicating here today. We started a little bit early, but yes, but I'm very happy to talk about the good results this was a positive quarter and when we see the situation of the retail, this is a quarter where we grew more than 20% in total sales and same-store sales, which is very important for us, which is very important for the soundness of our business, and this is a period especially during the month of June we affected the effect of the football World Cup, the results could have been better, and I will elaborate a little bit more on this afterwards, and I will talk about the World Cup.

Speaker #1: But I believe that our results are strong in terms of growth, with a number of variables that remain. Number one, a segment that continues growing, and we believe that will continue growing, that will be the retail the retail market in terms of wellness.

Speaker #1: The company is strongly inserted in this segment. There is an external external things that are helping us. People are more aware about their health, and I believe that this positively impacts our business, but we were internally assertive in terms of product, so our winter collection was new with technology, and our customers in the franchisees in the franchisees accepted our products and in terms of replenishment, our operation was much more positive in terms of the chain efficiency, distribution, logistics, better supply than the same period last year, and I believe that this also contributed for our current result.

Speaker #1: Our ecosystem is a great competitive advantage that we present. Fred will talk about these initiatives. But our ecosystem strategy of providing experience in sports contribute to our same-store sale performance.

Speaker #1: Which is extremely robust. Now, the refurbishment of stores. Once again, we've, of course, our growth has been more than twice in terms of same-store sales.

Speaker #1: We initiated a program in 2021, and we can see significant results. The levels you know, the levels of performance of the refurbished stores have changed so this is the main highlight was growth in terms of net revenue.

Speaker #1: It was 15.5%. We with more participation of our franchisees, the mix has also changed. And therefore, this is why our growth was higher in terms of net revenue.

Speaker #1: Our sell-out was also very good because our own stores and franchise stores and there was a mismatch in terms of sports sponsorship, but we've seen a very significant growth, and our adjusted EBITDA the margin is 23.5% and a highlight would be the just the SG&A, this is because of a number of cuts from the beginning of the year.

Speaker #1: We have a lean company now with a possibility to improve our operational cash. Well, although we've had logistic is expenses because of the fixed cost in logistics, we have been able we've had a great result, net revenue, with good results.

Speaker #1: A margin that I would like to highlight of almost 16% that I would like to highlight, there were impacts in terms of income tax the rate the income tax rate was higher, but this was anticipated.

Speaker #1: But omnichannel has also been extremely successful. We have a great amount of stores that that that work with ship from store, and we also have pickup in store which is growing quarter after quarter.

Speaker #1: So we strongly believe that we we are always focused on our customer. We're also focused on our franchise. And most of our sales today in e-commerce are billed by brick-and-mortar stores and more most of the brick-and-mortar stores are franchises.

Speaker #1: Our expansion is very similar we had 7 new stores 8 refurbishments, and we are highly aligned we're aligned with maintaining the pace of la of the last years in terms of openings and remodeled stores.

Speaker #1: Although the interest rates today are a bit higher, well, we believe that the situation is challenging, but there is great appetite for new stores and remodeling.

Speaker #1: What are the highlights of our quarter? This is a portray of the semester the growth has been 18.6%. The second quarter was stronger than Q1.

Speaker #1: The accrual of the semester you can see here now, same-store sales growth was 14%, and our profit indicators are excellent. The adjusted EBITDA 14% and the margin 24%, and we are focused on cash generation.

Speaker #1: And this has grown. And we have combined the growth with good profitability. And which improves our working capital. No risks in terms of product, but gradually we have been able to improve this dynamic.

Speaker #1: And this has enabled us to have good cash generation. During this quarter, the increase of cash generation was significant and during the semester in cash generation operating cash flow practically $100 million with zero debt that is very important when you're facing a scenario of height interest rates.

Speaker #1: We have cash equivalent as well. But including receivable, we have cash with no debt. Thank you very much. Now I will hand it over to Patricia.

Speaker #1: Good morning to everyone. Well, let's start talking about sell-out in detail. So we can analyze everything that took place in the quarter. We've grown almost 21% in terms of sell-out vis-à-vis last year, and 16% in same-stores the growth is higher than what we pointed out on Q1.

Speaker #1: There are a number of considerations that justify this growth. Let's talk about expansion. There were 8 new stores in the group one. Wasn't own store.

Speaker #1: And this increasing the coffee operation of a store in São Paulo. In Cidade Jardim Boa Vista in the village in Porto Celine that is within the gated community of Boa Vista.

Speaker #1: It it I would like to invite people to go there this is an open operation the coffee is extremely well positioned in front of the store I believe that the operation is extremely core cool.

Speaker #1: In terms of remodelings, there were 8 remodelings, 7 were franchises, and 1 is owned. As Tracanella, we have to mention about the growth when we remodeled the stores in the network.

Speaker #1: This in this has seen a growth of 37%, but when we zoom these operation, the franchises presented 38% of growth, which is significant. And directly proportionally for the franchises extremely important to remodel the store.

Speaker #1: The payback is it the payback is quick with this growth. Now, regarding all our drivers, the the winter collection was extremely strong in the stores.

Speaker #1: There were periods of cold dates that contribute for the sales. And during the Brazilian Valentine's Day, this was extremely good. And of course, replenishment that is something that we have been improving throughout the years.

Speaker #1: But it is gaining more momentum in our operation because the chain as a whole with when you redo so rupture in a store with the right product at the right time and when you reduce rupture this has been gaining relevance.

Speaker #1: It's important to talk about e-commerce with a 16% growth during this quarter. With a share of 9.4% of our sell-out omnichannel is extremely important.

Speaker #1: These are all the stores that are connected to a platform where I can deliver to our customers throughout all Brazil, throughout these small DCs in quotes and they're scattered throughout Brazil streamlining the delivery process and satisfying more and more of our customer.

Speaker #1: We have practically 94% of our network connected. And I and and an additional point. Now, 39 acting as national sellers. Now, something important if you are not connected you have to update the app that was updated at the end of the second quarter, but regarding the process of omnichannel of ecosystem, it is connected to our entire strategy.

Speaker #1: Of openings and remodeled stores. Although the interest rates today are a bit higher, well, we believe that the situation is challenging, but there's great appetite for new stores and remodeling.

Fernando Tracanella: Of openings and remodeled stores. Well, we believe that the situation is challenging, but there is great appetite for new stores and remodeling. What are the highlights of our quarter? This is a portray of the semester. The growth has been 18.6%. The Q2 was stronger than Q1. The accrual of the semester, you can see here now same-store sales growth was 14%, and our profit indicators are excellent. The adjusted EBITDA 14% and the margin 24%, and we are focused on cash generation. This has grown. We have combined the growth with good profitability, which improves our working capital, no risks in terms of product, but gradually we have been able to improve this dynamic. This has enabled us to have good cash generation during this quarter.

Speaker #1: What are the highlights of our quarter? This is a portrayal of the semester: the growth has been 18.6%. The second quarter was stronger than Q1.

Speaker #1: So what was relevant throughout the app update that we integrated all our channels. So this means that you are going to deliver something during the weekend.

Speaker #1: The accrual of the semester, you can see here, now same-store sales growth was 14%, and our profit indicators are excellent: the adjusted EBITDA 14% and the margin 24%.

Speaker #1: Let's say a t-shirt from Trac and Field. You want to buy a technical product that is offered by our marketplace. The TF mall. And you can also include our supplement like it's coffee.

Speaker #1: And we are focused on cash generation, and this has grown. We have combined the growth with good profitability, which improves our working capital. There are no risks in terms of product, but gradually we have been able to improve this dynamic, and this has enabled us to have good cash generation.

Speaker #1: So your cart will be able to share all the needs and provide comfort to our customer. Now, this is an opportunity that will create more sales.

Speaker #1: I would also like to talk about the event calendar. During this calendar, we had 1300 events in our operations. This was a growth of practically 34% vis-à-vis last year.

Speaker #1: During this quarter, the increase in cash generation was significant, and during the semester, operating cash flow was practically $100 million, with zero debt. That is very important when you're facing a scenario of high interest rates.

Speaker #1: That also contribute to strong sales. This increases the traffic of the store. Now, all the initiatives regarding the influence influencers in our platform media and branding as we've we focus strongly in this.

Patricia Abibe: The increase of cash generation was significant during the semester. In cash generation, operating cash flow, practically BRL 100 million with zero debt. That is very important when you are facing a scenario of high interest rates. We have cash equivalent as well. But including receivable, we have cash with no debt. Thank you very much. Now I will hand it over to Patricia. Good morning to everyone. Well, let's start talking about sellout in detail, so we can analyze everything that took place in the quarter. We have grown almost 21% in terms of sellout vis-à-vis last year, and 16% in same stores. The growth is higher than what we pointed out on Q1. There are a number of considerations that justify this growth. Let's talk about expansion. There were 8 new stores in the group. One was an owned store.

Fernando Tracanella: The increase of cash generation was significant during the semester. In cash generation, operating cash flow, practically BRL 100 million with zero debt. That is very important when you are facing a scenario of high interest rates. We have cash equivalent as well. But including receivable, we have cash with no debt. Thank you very much. Now I will hand it over to Patricia.

Speaker #1: We have cash equivalents as well. But including receivables, we have cash with no debt. Thank you very much. Now, I will hand it over to Patricia.

Speaker #1: And we've made progress. With a ticket growth of 14% vis-à-vis last year and 13.4% in terms of apparel. Now, when we talk about net revenue, we had a growth of 15.5%.

Speaker #1: Good morning to everyone. Well, let's start talking about sellout in detail. So we can analyze everything that took place in the quarter. We've grown almost 21% in terms of sellout vis-à-vis last year, and 16% in same stores the growth is higher than what we pointed out on Q1.

Patrícia Abibe: Good morning to everyone. Well, let's start talking about sellout in detail, so we can analyze everything that took place in the quarter. We have grown almost 21% in terms of sellout vis-à-vis last year, and 16% in same stores. The growth is higher than what we pointed out on Q1. There are a number of considerations that justify this growth. Let's talk about expansion. There were 8 new stores in the group. One was an owned store.

Speaker #1: And this is explained by second element. This what is different from the seller. We have a royalty share that we were expecting from a stronger growth because we saw during Q1 in our net revenue a significant selling participation.

Speaker #1: And when we have a greater sell in participation in our revenue, what do we expect? We want the franchise to sell out and to receive the royalty.

Speaker #1: There are a number of considerations that justify this growth. Let's talk about expansion. There were 8 new stores in the group one. Wasn't own store and this increasing the coffee operation of a store.

Speaker #1: This is why this explains the first line of 24% because of a more significant performance on Q1. There was a greater sell in participation share during Q1.

Operator: This increasing the coffee operation of a store in São Paulo, in CJ Boa Vista Village, in the village in Porto Feliz that is within the gated community of Boa Vista. I would like to invite people to go there. This is an open operation. The coffee is extremely well-positioned in front of the store. I believe that the operation is extremely cool. In terms of remodelings, there were 8 remodelings, 7 were franchises, and one is owned. Extra Canal, we have to mention about the growth when we remodeled the stores in the network. This has seen a growth of 37%, but when we zoom these operations or franchises presented 38% of growth, which is significant and directly proportionally for the franchise is extremely important to remodel the store. The payback is quick with this growth.

Patrícia Abibe: This increasing the coffee operation of a store in São Paulo, in CJ Boa Vista Village, in the village in Porto Feliz that is within the gated community of Boa Vista. I would like to invite people to go there. This is an open operation. The coffee is extremely well-positioned in front of the store. I believe that the operation is extremely cool. In terms of remodelings, there were 8 remodelings, 7 were franchises, and one is owned. Extra Canal, we have to mention about the growth when we remodeled the stores in the network. This has seen a growth of 37%, but when we zoom these operations or franchises presented 38% of growth, which is significant and directly proportionally for the franchise is extremely important to remodel the store. The payback is quick with this growth.

Speaker #1: In São Paulo, in Cidade Jardim Boa Vista, in the village in Porto Selim, which is within the gated community of Boa Vista. I would like to invite people to go there.

Speaker #1: The share was 2.5% and selling which is relevant. And this is a figure that you see here nonetheless. During this quarter, the protagonism is shared with sell in.

Speaker #1: This is an open operation. The coffee is extremely well positioned in front of the store. I believe that the operation is extremely cool. In terms of remodelings, there were 8 remodelings, 7 were franchises, and 1 is owned.

Speaker #1: Sell in is also performing well. The franchise the franchisee has strong share you know with sales for Father's Day and sales. And we also accelerated our selling almost 22%.

Speaker #1: Extra Canel, we have to mention about the growth when we remodeled the stores in the network. This has seen a growth of 37%. But when we zoom these operations, the franchises presented 38% of growth, which is significant.

Speaker #1: And when and when you see this is 13.8%. And this is lower than the franchise operations. And this neutralized the growth of the royalty.

Speaker #1: And we will see this growing in this magnitude. The events and TF mall. Well, let's slow down 18%. It's important to explain that during this year that has been very positive.

Speaker #1: And directly proportionally for the franchises, extremely important to remodel the store. The payback is the payback is quick with this growth. Now, regarding all our drivers, the winter collection was extremely strong in the stores.

Speaker #1: A a participation of our sponsors in event that are more connected to the circuit. Here we have the running circuit. We have the experiences.

Operator: Now, regarding all our drivers, the winter collection was extremely strong in the stores. There were periods of cold days that contribute for the sales. During the Brazilian Valentine's Day, this was extremely good. Of course, replenishment, that is something that we have been improving throughout the years, but it is gaining more momentum in our operation because the chain as a whole win when you reduce a rupture in a store with the right product at the right time. When you reduce rupture, this has been gaining relevance. It is important to talk about e-commerce with a 16% growth during this quarter with a share of 9.4% of our sellout. Our omnichannel is extremely important.

Patrícia Abibe: Now, regarding all our drivers, the winter collection was extremely strong in the stores. There were periods of cold days that contribute for the sales. During the Brazilian Valentine's Day, this was extremely good. Of course, replenishment, that is something that we have been improving throughout the years, but it is gaining more momentum in our operation because the chain as a whole win when you reduce a rupture in a store with the right product at the right time. When you reduce rupture, this has been gaining relevance. It is important to talk about e-commerce with a 16% growth during this quarter with a share of 9.4% of our sellout. Our omnichannel is extremely important.

Speaker #1: There were periods of cold days that contributed to the sales. And during the Brazilian Valentine's Day, this was extremely good. And of course, replenishment—that is something that we have been improving throughout the years.

Speaker #1: So therefore, we had new sponsors within our initiatives. But they will remain with us until the end of the year. And what and sometimes you have a mismatch of revenue appropriation we compared the base to have an idea.

Speaker #1: And if I were if we would have been the same conditions last year, our revenue would have grown 14%. This is something important to bear in mind.

Speaker #1: But it is gaining more momentum in our operation because the chain as a whole wins when you redo a rupture in a store with the right product at the right time, and when you redo rupture.

Speaker #1: Now, gross profit. As I said, during this quarter, we have the mix of channel and the net revenue. But there we made progress. When we see our gross margin that was almost 56.7.

Speaker #1: This has been gaining relevance. It's important to talk about e-commerce, with 16% growth during this quarter and a share of 9.4% of our sellout. Omnichannel is extremely important.

Speaker #1: But you said there's a drop of 0.6%. Because of the mix of channels that I was mentioning. Now, when I have greater representative in our channel.

Speaker #1: These are all the stores that are connected to a platform where I can deliver to our customers about all Brazil, throughout these small DCs in quotes and they are scattered throughout Brazil streamlining the delivery process and satisfying more and more of our customer.

Operator: These are all the stores that are connected to a platform where I can deliver to our customers throughout all Brazil, throughout these small season quotes, and they are scattered throughout Brazil, streamlining the delivery process and satisfying more and more of our customer. We have practically 94% of our network connected. An additional point, now 39 acting as national sellers. Something important, if you are not connected, you have to update the app that was updated at the end of Q2. But regarding the process of omnichannel of ecosystem, it is connected to our entire strategy. What was relevant throughout the app update, we integrated all our channels. This means that you are going to deliver something during the weekend, let's say a T-shirt from Track & Field.

Patrícia Abibe: These are all the stores that are connected to a platform where I can deliver to our customers throughout all Brazil, throughout these small season quotes, and they are scattered throughout Brazil, streamlining the delivery process and satisfying more and more of our customer. We have practically 94% of our network connected. An additional point, now 39 acting as national sellers. Something important, if you are not connected, you have to update the app that was updated at the end of Q2. But regarding the process of omnichannel of ecosystem, it is connected to our entire strategy. What was relevant throughout the app update, we integrated all our channels. This means that you are going to deliver something during the weekend, let's say a T-shirt from Track & Field.

Speaker #1: And here we have a greater share of royalty. Here we neutralized this. And this impacts our margin. But this was an important share of almost 15%.

Speaker #1: We have practically 94% of our network connected. And an additional point, now 39 acting as national sellers, now something important if you are not connected you have to update the app that was updated at the end of the second quarter.

Speaker #1: Now, grow and operational expenses. Well, we end with 33.3% of our net revenue. Again, of 0.6% in efficiency. If we see these two entries, we will see sales expenses that that increase 1.3.

Speaker #1: And it's important to remember that when we analyze Q2 of last year, the base was more atypic. A typical the investment in marketing was slower and this normalized during Q3 of 2025.

Speaker #1: But regarding the process of omnichannel in our ecosystem, it is connected to our entire strategy. So, what was relevant throughout the app update is that we integrated all our channels.

Speaker #1: So during Q3 this year will be more comparable for explanation. And Q1 and Q2 last year was growing 30, 34% vis-à-vis 2024. So here you can balance.

Speaker #1: So this means that you are going to deliver something during the weekend. Let's say a t-shirt from Track & Field—you want to buy a technical product that is offered by our marketplace, the TF Mall, and you can also include our supplement, like its coffee.

Speaker #1: And you can offset things. When we see the investments in media as a matter of fact we will see a normal situation on 2025.

Operator: You want to buy a technical product that is offered by our marketplace, the TF Mall, and you can also include our supplement like Scappie. So your cart will be able to share all the needs and provide comfort to our customer. This is an opportunity that will create more sales. I would also like to talk about the event calendar. During this calendar, we had 1,300 events in our operations. This was a growth of practically 34% vis-à-vis last year that also contribute to strong sales. This increases the traffic of the store. All the initiatives regarding the influencers in our platform, media, and branding, as in we've focused strongly in this, and we've made progress with the ticket growth of 14% vis-à-vis last year and 13.4% in terms of apparel.

Patrícia Abibe: You want to buy a technical product that is offered by our marketplace, the TF Mall, and you can also include our supplement like Scappie. So your cart will be able to share all the needs and provide comfort to our customer. This is an opportunity that will create more sales. I would also like to talk about the event calendar. During this calendar, we had 1,300 events in our operations. This was a growth of practically 34% vis-à-vis last year that also contribute to strong sales. This increases the traffic of the store. All the initiatives regarding the influencers in our platform, media, and branding, as in we've focused strongly in this, and we've made progress with the ticket growth of 14% vis-à-vis last year and 13.4% in terms of apparel.

Speaker #1: So your cart will be able to share all the needs and provide comfort to our customers. Now, this is an opportunity that will create more sales.

Speaker #1: And the impact during Q1 and Q2 this year on the other side we would like to highlight that all the SG&A that are diluted in 1.6 percentage points.

Speaker #1: I would also like to talk about the event calendar. During this calendar, we had 1,300 events in our operations. This was a growth of practically 34% vis-à-vis last year, which also contributed to strong sales.

Speaker #1: This result reflects all the adjustments that were implemented at the end of Q1. And even more important, we can dilute this significantly placing all the initiatives during in our DC to face the growth of last year.

Speaker #1: This increases the traffic of the store. Now all the initiatives regarding the influence influencers in our platform media and branding as in we focus strongly in this and we've made progress.

Speaker #1: Although when I see the impact of one of Q1 and I transfer it throughout the year, I can offset and deliver an expressive dilution.

Speaker #1: So regarding expenses, this is an important message. And this is regarding all the dynamics here in order to result in the results that we see here and when we talk our EBITDA.

Speaker #1: With a ticket growth of 14% vis-à-vis last year, and 13.4% in terms of apparel. Now, when we talk about net revenue, we had a growth of 15.5%, and this is explained by the second element.

Operator: When we talk about net revenue, we had a growth of 15.5%, and this is explained by, Tracanella mentioned this. What is different from the sale? We have a royalty share that we were expecting from a stronger growth because we saw during Q1 in our net revenue, a significant sell-in participation. When we have a greater sell-in participation in our revenue, what do we expect? We want the franchise to sell out and to receive the royalty. This is why this explains the first line of 24% because of a more significant performance than Q1. There was a greater sell-in participation share. During Q1, the share was 2.5% in sell-in, which is relevant. This is a figure that you see here. Nonetheless, during this quarter, the protagonism is shared with sell-in. Sell-in is also performing well.

Patrícia Abibe: When we talk about net revenue, we had a growth of 15.5%, and this is explained by, Tracanella mentioned this. What is different from the sale? We have a royalty share that we were expecting from a stronger growth because we saw during Q1 in our net revenue, a significant sell-in participation. When we have a greater sell-in participation in our revenue, what do we expect? We want the franchise to sell out and to receive the royalty. This is why this explains the first line of 24% because of a more significant performance than Q1. There was a greater sell-in participation share. During Q1, the share was 2.5% in sell-in, which is relevant. This is a figure that you see here. Nonetheless, during this quarter, the protagonism is shared with sell-in. Sell-in is also performing well.

Speaker #1: Our EBITDA is almost 66% and growing practically 16% vis-à-vis last year. And a margin slightly above 0.1 from 23.5%. Which is something extremely robust.

Speaker #1: This what is different from the seller. We have a royalty share that we were expecting from a stronger growth because we saw during Q1 in our net revenue a significant selling participation.

Speaker #1: What explains this? The dilution of 0.6% points of gross margins because of the slowdown. Regarding the net revenue. And we offset in the expenses so we gain margin.

Speaker #1: And when we have a greater sell-in participation in our revenue, what do we expect? We want the franchise to sell out and to receive the royalty.

Speaker #1: This is why this explains the first line of 24%, because of a more significant performance in Q1. There was a greater sell-in participation share during Q1.

Speaker #1: Now, when we see the semester, we can see basically 127 million BRLs. This is a growth of 14% vis-à-vis last year. This is a margin of 24%.

Speaker #1: The share was 2.5% and selling, which is relevant. And this is a figure that you see here, nonetheless. During this quarter, the protagonism is shared with sell-in.

Speaker #1: This is a very significant figure. And when we talk about net revenue, here almost 45 million BRLs. Net margin of almost 16%. Now, when we compare it to last year, it's important to explain a slowdown of 1.1 percentage points regarding last year.

Speaker #1: Sell-in is also performing well. The franchise, the franchisee, has strong share with sales for Father's Day and sales. And we also accelerated our sell-in almost 22%.

Operator: The franchisee has strong share with sales for Father's Day and sales, and we also accelerated our sell-in almost 22%. When you see this is 13.8%, and this is lower than the franchise operations, and this neutralized the growth of the ROI, then we will see this growing in this magnitude. The events in TF Mall will slow down 18%. It's important to explain that during this year, that has been very positive. A participation of our sponsors in event that are more connected to the circuit. Here we have the running circuit, we have the experiences. Therefore, we had new sponsors within our initiatives, but they will remain with us until the end of the year. Sometimes you have a mismatch of revenue appropriation.

Patrícia Abibe: The franchisee has strong share with sales for Father's Day and sales, and we also accelerated our sell-in almost 22%. When you see this is 13.8%, and this is lower than the franchise operations, and this neutralized the growth of the ROI, then we will see this growing in this magnitude. The events in TF Mall will slow down 18%. It's important to explain that during this year, that has been very positive. A participation of our sponsors in event that are more connected to the circuit. Here we have the running circuit, we have the experiences. Therefore, we had new sponsors within our initiatives, but they will remain with us until the end of the year. Sometimes you have a mismatch of revenue appropriation.

Speaker #1: Because there was an insi it was a significant impact by the income tax rate. And this impacted 0.8% of our net revenue. Why? Throughout the last years, there were a number of operations that were calculated profit and as this was eliminated, we've lost some benefits.

Speaker #1: And when you see this is 13.8%, and this is lower than the franchise operations, and this neutralized the growth of the royalty, and we will see this growing in this magnitude.

Speaker #1: And we're impacted it's important to see that the actual rate of income tax it's around 22% last year. If we see the same period, it was 19%.

Speaker #1: The events at TF Mall, well, saw a slowdown of 18%. It's important to explain that this year has been very positive, with the participation of our sponsors in events that are more connected to the circuit.

Speaker #1: So this impact is reflected on our last entry. And in terms of cash position. Well, the we had an extraordinary cash position 96% of growth in our operating cash flow.

Speaker #1: Here we have the running circuit. We have the experiences. So therefore, we had new sponsors within our initiatives. But they will remain with us until the end of the year and what and sometimes you have a mismatch of revenue appropriation we compared the base to have an idea and if I were if we would have been the same conditions last year, our revenue would have grown 14%.

Speaker #1: This is of course because of great sales. But here we have to see how we've improved the average day of inventory. We've dropped our average period almost 16 days.

Operator: We compared the base to have an idea. If we would have been the same conditions last year, our revenue would have grown 14%. This is something important to bear in mind. Gross profit, as I said, during this quarter, we have the mix of channel and the net revenue, but we made progress. When we see our gross margin, that was almost 56.7, but you said there's a drop of 0.6% because of the mix of channels that I was mentioning. When I have greater representativeness in our channel, and here we have a greater share of ROI, here we neutralize this, and this impacts our margin, but this was an important share of almost 15%. Operational expenses, we end with 33.3% of our net revenue, a gain of 0.6% in efficiency.

Patrícia Abibe: We compared the base to have an idea. If we would have been the same conditions last year, our revenue would have grown 14%. This is something important to bear in mind. Gross profit, as I said, during this quarter, we have the mix of channel and the net revenue, but we made progress. When we see our gross margin, that was almost 56.7, but you said there's a drop of 0.6% because of the mix of channels that I was mentioning. When I have greater representativeness in our channel, and here we have a greater share of ROI, here we neutralize this, and this impacts our margin, but this was an important share of almost 15%. Operational expenses, we end with 33.3% of our net revenue, a gain of 0.6% in efficiency.

Speaker #1: This is something important to bear in mind. Now, gross profit, as I said, during this quarter, we have the mix of channel and the net revenue, but there we made progress when we see our gross margin that was almost 56.7, but you said there's a drop of 0.6%.

Speaker #1: And now our investments are almost 15 million similar to last year. Our investments are focused on brick and mortar stores and more stores. And remodeling and also technology, especially in the app that we just mentioned.

Speaker #1: Because of the mix of channels that I was mentioning, now when I have greater representativeness in our channel, and here we have a greater share of royalty, here we neutralize this, and this impacts our margin.

Speaker #1: We also there was more financial disbursement. When I see the JSCP that is our distribution. That was it was excellent. When compared to last year, we end our peer with 145 million of cash generation.

Speaker #1: But this was an important share of almost 15%. Now, on operational expenses, we end with 33.3% of our net revenue—a gain of 0.6% in efficiency.

Speaker #1: And we continue with no debt and a highly prepared balance. Which is prepared which we expect by the end of the year. Now, Fred, let's talk about TFS sports.

Speaker #1: TF sports. Well, good morning to everyone. I think all of you for being here it is excellent to see these results. And at the same time, to know that within the result, there is a strong platform that has been built.

Speaker #1: If we see these two entries, we will see sales expenses that increase 1.3. And it's important to remember that when we analyze Q2 of last year, the base was more atypic.

Operator: If we see these two entries, we will see sales expenses that increase 1.3. It's important to remember that when we analyzed Q2 of last year, the base was more atypical. The investment in marketing was slower, and this normalized during Q3 of 2025. So during Q3 this year will be more comparable for explanation. Q1 and Q2 last year was growing 30%, 34% vis-à-vis 2024. So here you can balance and you can offset things when we see the investments in the media. As a matter of fact, we will see a normal situation on 2025 and the impact during Q1 and Q2 this year. On the other side, we would like to highlight that all the SG&As that are diluted in 1.6 percentage points, this result reflects all the adjustments that were implemented at the end of Q1.

Patrícia Abibe: If we see these two entries, we will see sales expenses that increase 1.3. It's important to remember that when we analyzed Q2 of last year, the base was more atypical. The investment in marketing was slower, and this normalized during Q3 of 2025. So during Q3 this year will be more comparable for explanation. Q1 and Q2 last year was growing 30%, 34% vis-à-vis 2024. So here you can balance and you can offset things when we see the investments in the media. As a matter of fact, we will see a normal situation on 2025 and the impact during Q1 and Q2 this year. On the other side, we would like to highlight that all the SG&As that are diluted in 1.6 percentage points, this result reflects all the adjustments that were implemented at the end of Q1.

Speaker #1: Atypically, the investment in marketing was slower, and this normalized during Q3 of 2025. So during Q3 this year, it will be more comparable for explanation, and Q1 and Q2 last year were growing 30% and 34%, respectively, vis-à-vis 2024.

Speaker #1: And we'll talk a little bit more about this and simultaneously we can deliver results and in our deal we can build something differentiated. This is when we compare it to a simple retail operation to talk about our platform and our TF sport app.

Speaker #1: We had we have over 1.4 million users. This is almost a growth of 36% in terms of number of users. But it's important to state that this growth is aligned with a similar figure of growth of events that we performed we carried out 1300 events during Q2.

Speaker #1: So here you can balance and you can offset things when we see the investments in the media as a matter of fact, we will see a normal situation on 2025 and the impact during Q1 and Q2 this year on the other side we would like to highlight that all the SG&A that are diluted in 1.6 percentage points, this result reflects all the adjustments that were implemented at the end of Q1 and even more important, we can dilute this significantly placing all the initiatives during in our DC to face the growth of last year.

Speaker #1: This is a brand that has had a record number of events. And also the number of registered growing 34%. It's not only the effort of simple users and this is reflected in the chain of events and services of our app.

Operator: Even more important, we can dilute this significantly, placing all the initiatives during in our DC to face the growth of last year. Although when I see the impact of Q1 and I transfer it throughout the year, I can offset and deliver an expressive dilution. So regarding expenses, this is an important message, and this is regarding all the dynamics here in order to result in the results that we see here. When we talk our EBITDA, our EBITDA is almost 66% and growing practically 16% vis-à-vis last year, and a margin slightly above 0.1 from 23.5%, which is something extremely robust. What explains this? The dilution of 0.6 percentage points of gross margins because of the slowdown regarding the net revenue and we offset in the expenses, so we gain margin. When we see the semester, we can see basically BRL 127 million.

Patrícia Abibe: Even more important, we can dilute this significantly, placing all the initiatives during in our DC to face the growth of last year. Although when I see the impact of Q1 and I transfer it throughout the year, I can offset and deliver an expressive dilution. So regarding expenses, this is an important message, and this is regarding all the dynamics here in order to result in the results that we see here. When we talk our EBITDA, our EBITDA is almost 66% and growing practically 16% vis-à-vis last year, and a margin slightly above 0.1 from 23.5%, which is something extremely robust. What explains this? The dilution of 0.6 percentage points of gross margins because of the slowdown regarding the net revenue and we offset in the expenses, so we gain margin. When we see the semester, we can see basically BRL 127 million.

Speaker #1: And here we're able to deliver almost 35% of more users participating in the events. But the users that buy products and participate in the event, well, this increases the share of close it of the closet of the consumer say they have a more track and feel apparel within their closet.

Speaker #1: Although when I see the impact of one of Q1 and I transfer it throughout the year, I can offset and deliver an expressive dilution.

Speaker #1: So regarding expenses, this is an important message. And this is regarding all the dynamics here in order to result in the results that we see here and when we talk our EBITDA, our EBITDA is almost 66% in growing practically 16% vis-à-vis last year and a margin slightly above 0.1 from 23.5%, which is something extremely robust.

Speaker #1: And this way, we can convert this consumer to become a consumer that connects with the brand and it differentiated way. Also, when we see trainers this initiative is flat.

Speaker #1: It's flat on purpose. We still have not had a more structured rollout of our trainer platform because during the last semester, we focused more on the integration of the service channel with the product channel.

Speaker #1: What explains this? The dilution of 0.6 percentage points of gross margins because of the slowdown. Regarding the net revenue, and we offset in the expenses so we gain margin.

Speaker #1: TF small and TF sell TFC was integrated. And we're integrating this with a number of brands. So we focused on this and during the next slide, we will show you how this initiative has been very successful.

Speaker #1: Now when we see the semester, we can see basically 127 million BRLs. This is a growth of 14% vis-à-vis last year. This is a margin of 24%.

Speaker #1: Now, here we've evolved regarding TFC sales. Here we see a growth of 35% amongst people that buy food and supplements within our network. We are learning a lot about this market.

Operator: This is a growth of 14% vis-à-vis last year. This is a margin of 24%. This is a very significant figure. When we talk about net revenue here, almost BRL 45 million, net margin of almost 16%. When we compare it to last year, it's important to explain a slowdown of 1.1 percentage points regarding last year, because there was a significant impact by the income tax rate, and this impacted 0.8% of our net revenue. Why? Throughout the last years, there were a number of operations that were calculated profit, and as this was eliminated, we've lost some benefits and we're impacted. It's important to see that the actual rate of income tax, it's around 22% last year. If we see the same period, it was 19%. So this impact is reflected on our last entry.

Patrícia Abibe: This is a growth of 14% vis-à-vis last year. This is a margin of 24%. This is a very significant figure. When we talk about net revenue here, almost BRL 45 million, net margin of almost 16%. When we compare it to last year, it's important to explain a slowdown of 1.1 percentage points regarding last year, because there was a significant impact by the income tax rate, and this impacted 0.8% of our net revenue. Why? Throughout the last years, there were a number of operations that were calculated profit, and as this was eliminated, we've lost some benefits and we're impacted. It's important to see that the actual rate of income tax, it's around 22% last year. If we see the same period, it was 19%. So this impact is reflected on our last entry.

Speaker #1: This is a very significant figure. And when we talk about net revenue, here almost 45 million BRLs net margin of almost 16%. Now when we compare it to last year, it's important to explain a slowdown of 1.1 percentage points regarding last year because there was an it was a significant impact.

Speaker #1: And I believe that TFC is a new market for track and field we sell a lot through our app in terms of food and supplements.

Speaker #1: By the income tax rate and this impacted 0.8% of our net revenue why? Throughout the last years, there were a number of operations that were calculated profit and as this was eliminated, we've lost some benefits and we're impacted.

Speaker #1: The TF mall that is our marketplace with brand curatorship. Now, integrated with the app, this is a GMV that grew 37%. So our integration initiative has been very important.

Speaker #1: It's important to see that the actual rate of income tax was around 22% last year. If we look at the same period, it was 19%.

Speaker #1: These figures these figures are small for the size of the company. But but anything that delivers what we're delivering here and year on year shows that this presents a great differential.

Speaker #1: So this impact is reflected on our last entry. And in terms of cash position, well, the we had an extraordinary cash position, 96% of growth in our operating cash flow.

Speaker #1: And we are approached by premium brands to be part of our channel. And we also are paying attention to what type of product to we have to we're focused on what kind of product can complement what we already have.

Operator: And in terms of cash position, well, we had an extraordinary cash position, 96% of growth in our operating cash flow. This is, of course, because of great sales, but here we have to see how we have improved the average day of inventory. We have dropped our average period almost 16 days. Our investments are almost BRL 15 million, similar to last year. Our investments are focused on brick and mortar stores and more stores and remodeling and also technology, especially in the app that we just mentioned. We also, there was more financial disbursement. When I see the JSCP, that is our distribution. It was excellent when compared to last year. We end our period with BRL 145 million of cash generation, and we continue with no debt and a highly prepared balance, which we expect by the end of the year. Now, Fred, let's talk about TFSports.

Patrícia Abibe: And in terms of cash position, well, we had an extraordinary cash position, 96% of growth in our operating cash flow. This is, of course, because of great sales, but here we have to see how we have improved the average day of inventory. We have dropped our average period almost 16 days. Our investments are almost BRL 15 million, similar to last year. Our investments are focused on brick and mortar stores and more stores and remodeling and also technology, especially in the app that we just mentioned. We also, there was more financial disbursement. When I see the JSCP, that is our distribution. It was excellent when compared to last year. We end our period with BRL 145 million of cash generation, and we continue with no debt and a highly prepared balance, which we expect by the end of the year. Now, Fred, let's talk about TFSports.

Speaker #1: These are initiatives from this platform. Our delivery pace are innovation pace. And the experience of our platform is excellent. And our NPS is 83% in the company by and large.

Speaker #1: This is of course because of great sales, but here we have to see how we've improved the average day of inventory. We've dropped our average period almost 16 days and now our investments are almost 15 million similar to last year.

Speaker #1: This is very high. And we measure this in a granulary way. We have NPS from each one of the apps. So of the TF sport e-commerce store operation TFC and we improve we improve the we the consumer's experience.

Speaker #1: Our investments are focused on brick and mortar stores and more stores and remodeling and also technology, especially in the app that we just mentioned.

Speaker #1: We also, there was more financial disbursement. When I see the ASCP—that is our distribution—that was excellent. When compared to last year, we end our period with $145 million of cash generation, and we continue with no debt and a highly prepared balance, which is prepared, which we expect by the end of the year.

Speaker #1: And we're focusing on wellness. We want to be a one-stop shop for wellness in Brazil and we're highly satisfied with it. So regarding the new businesses we are opening our fourth new store in Portugal we're highly satisfied in being able to replicate this operation in Portugal.

Speaker #1: Portugal this is a very timid operation. But we see great potential in Portugal. So this is it. So we've had a good results. We've been able to deliver new solutions.

Speaker #1: Now, Fred, let's talk about TFS Sports. Well, good morning to everyone. I thank all of you for being here. It is excellent to see these results and, at the same time, to know that within the results, there is a strong platform that has been built.

Speaker #1: We've seen innovation in the company and we're very happy with the situation. Despite the adversities that we face in the market as a whole.

Fred Wagner: Well, good morning to everyone. I thank all of you for being here. It is excellent to see these results, and at the same time, to know that within the result, there is a strong platform that has been built. I will talk a little bit more about this. Simultaneously, we can deliver results, and in our deal, we can build something differentiated. This is when we compare it to a simple retail operation to talk about our platform and our TFSports app. We have over 1.4 million users. This is almost a growth of 36% in terms of number of users. It is important to state that this growth is aligned with a similar figure of growth of events that we performed. We carried out 1,300 events during Q2.

Speaker #1: And now we will initiate our Q&A session for investors and analysts. If you wish to pose a question, please press the button reaction and raise your hand.

Speaker #1: I will talk a little bit more about this, and simultaneously we can deliver results. In our deal, we can build something differentiated. This is when we compare it to a simple retail operation, to talk about our platform and our TF Sport app.

Speaker #1: If your question is answered, you can leave the Q and lower your hand. Our first question from Robert Ford from Bank of America. Your microphone is open.

Speaker #1: We had we have over 1.4 million users. This is almost a growth of 36% in terms of number of users, but it's important to state that this growth is aligned with a similar figure of growth of events that we performed.

Speaker #1: Congratulations for your result. Do to the frailty of the market for the consumer by and large. Can you talk about the competition and the expectations for the rest of the year and where you see strong performance in areas of weak performance and as you continue remodeling stores how do these remodelings compare to past remodelings in terms of the increase of sales in same store sales?

Speaker #1: We carried out 1,300 events during Q2. This is a brand that has had a record number of events and also the number of registered growing 34%.

Operator: This is a brand that has had a record number of events, and also the number of registered growing 34%. It is not only the effort of simple users, and this is reflected in the chain of events and services of our app. Here we are able to deliver almost 35% of more users participating in the events. The users that buy products and participate in the event, well, this increases the share of the closet of the consumer. Say they have more Track & Field apparel within their closet, and this way, we can convert this consumer to become a consumer that connects with the brand in a differentiated way. Also, when we see trainers, this initiative, it is flat on purpose.

Fred Wagner: This is a brand that has had a record number of events, and also the number of registered growing 34%. It is not only the effort of simple users, and this is reflected in the chain of events and services of our app. Here we are able to deliver almost 35% of more users participating in the events. The users that buy products and participate in the event, well, this increases the share of the closet of the consumer. Say they have more Track & Field apparel within their closet, and this way, we can convert this consumer to become a consumer that connects with the brand in a differentiated way. Also, when we see trainers, this initiative, it is flat on purpose.

Speaker #1: It's not only the effort of simple users, and this is reflected in the chain of events and services of our app. And here we're able to deliver almost 35% of more users participating in the events.

Speaker #1: I can start. Maybe Patricia can add on. Number one, well, good morning. It's excellent to have you once again in one of our video conference calls.

Speaker #1: But the users that buy products and participate in the event, well, this increases the share of close it of the closet of the consumers, say they have more track and feel apparel within their closet.

Speaker #1: Regarding the competition, our view is that that the market that we participate that is a wellness market grows at a pace that can absorb newcomers.

Speaker #1: We do not see any movements that are new in terms of competition that can affect our businesses. And we are strongly focused on our operation on the product on the client experience.

Speaker #1: And this way, we can convert this consumer to become a consumer that connects with the brand and it differentiated way. Also, when we see trainers, this initiative is flat.

Speaker #1: Of course, we see we pay attention to what the competition is doing. But the market grows at a pace that allows us that that allows the entry of new competitors.

Operator: We still have not had a more structured rollout of our trainer platform because during the last semester, we focused more on the integration of the service channel with the product channel. TF Mall and TF Sell, TFC, was integrated, and we are integrating this with a number of brands. So we focused on this, and during the next slide, we will show you how this initiative has been very successful. Here, we have evolved regarding TFC sales. Here we see a growth of 35% amongst people that buy food and supplements within our network. We are learning a lot about this market, and I believe that TFC is a new market for Track & Field. We sell a lot through our app in terms of food and supplements. The TF Mall, that is our marketplace with brand curatorship now integrated with the app.

Fred Wagner: We still have not had a more structured rollout of our trainer platform because during the last semester, we focused more on the integration of the service channel with the product channel. TF Mall and TF Sell, TFC, was integrated, and we are integrating this with a number of brands. So we focused on this, and during the next slide, we will show you how this initiative has been very successful. Here, we have evolved regarding TFC sales. Here we see a growth of 35% amongst people that buy food and supplements within our network. We are learning a lot about this market, and I believe that TFC is a new market for Track & Field. We sell a lot through our app in terms of food and supplements. The TF Mall, that is our marketplace with brand curatorship now integrated with the app.

Speaker #1: Or already competitors that were already in the market. I see no major differences from what we've seen in the past. So here this is a continuity of past periods.

Speaker #1: Fred, would you I was just going to say that our current structure that connects to our customers in different ways protects and here we have the loyalty of our customer base.

Speaker #1: So we focused on this, and during the next slide, we will show you how this initiative has been very successful. Now, here, we've evolved regarding TFC sales.

Speaker #1: Especially because of the innovation with our product they're more connected to our brand when they participate in one of our races because this is a differentiated experience.

Speaker #1: Here we see a growth of 35% amongst people that buy food and supplements within our network. We are learning a lot about this market and I believe that TFC is a new market for track and field we sell a lot through our app in terms of food and supplements.

Speaker #1: Or when they buy a product or they eat at one of our TFCs I believe that we are doing something that creates loyal customers.

Speaker #1: And this is important. And this is why we're a little bit better protected against the competition by and large. And regarding the remodeling of stores we have not seen significant changes.

Speaker #1: The TF Mall that is our marketplace with brand curatorship. Now, integrated with the app, this is a GMV that grew 37%. So our integration initiative has been very important.

Speaker #1: Regarding the first store that was remodeled in 2021 this new layout with improvements which changes you know from store to store. And we are very happy with the results that we've seen.

Operator: This is a GMV that grew 37%, so our integration initiative has been very important. These figures are small for the size of the company, but anything that delivers what we are delivering here year on year shows that this presents a great differential, and we are approached by premium brands to be part of our channel. We also are paying attention to what type of product. We will focus on what kind of product can complement what we already have. These are initiatives from this platform. Our delivery pace, our innovation pace, and the experience of our platform is excellent, and our NPS is 83% in the company. By and large, this is very high. We measure this in a granular way.

Fred Wagner: This is a GMV that grew 37%, so our integration initiative has been very important. These figures are small for the size of the company, but anything that delivers what we are delivering here year on year shows that this presents a great differential, and we are approached by premium brands to be part of our channel. We also are paying attention to what type of product. We will focus on what kind of product can complement what we already have. These are initiatives from this platform. Our delivery pace, our innovation pace, and the experience of our platform is excellent, and our NPS is 83% in the company. By and large, this is very high. We measure this in a granular way.

Speaker #1: These figures, these figures are small for the size of the company, but anything that delivers what we're delivering here year on year shows that this presents a great differential, and we are approached by premium brands to be part of our channel.

Speaker #1: And when we compare the beginning of this program of the first stores that were remodeled and the stores that are being remodeled no the results have been very similar.

Speaker #1: We've seen remodeling of recent stores with significant results. Like stores in Quitiba in the first two malls we reopened our store in the Morumbi shopping mall that that is significant in terms of growth.

Speaker #1: And we also are paying attention to what type of product to we have to we'll focus on what kind of product can complement what we already have.

Speaker #1: These are initiatives from this platform. Our delivery pace matches our innovation pace, and the experience of our platform is excellent. Our NPS is 83% in the company, by and large.

Speaker #1: Eldorado Fortaleza shopping malls these are stores that are performing above the pre-remodeling period with consistent results now. And the financial return here is significant but we work with the strategy to protect the brand so the remodeling has two roles to provide more finance better financial results and also to strengthen the brand with the more modern store.

Speaker #1: This is very high. And we measure this in a granulary way. We have NPS from each one of the ads of the TF Sport e-commerce store operation TFC and we improve we improve the we the consumers experience and we're focusing on wellness.

Operator: We have NPS from each one of the assets of the TFSports, e-commerce store operation, TFC, and we improve the consumer's experience, and we are focusing on wellness. We want to be a one-stop shop for wellness in Brazil, and we are highly satisfied with it. Regarding the new businesses, we are opening our fourth new store in Portugal. We are highly satisfied in being able to replicate this operation in Portugal. Portugal, this is a very timid operation, but we see great potential in Portugal. This is it. We have had good results. We have been able to deliver new solutions. We have seen innovation in the company, and we are very happy with the situation despite the adversities that we face in the market as a whole. Now we will initiate our Q&A session for investors and analysts.

Fred Wagner: We have NPS from each one of the assets of the TFSports, e-commerce store operation, TFC, and we improve the consumer's experience, and we are focusing on wellness. We want to be a one-stop shop for wellness in Brazil, and we are highly satisfied with it. Regarding the new businesses, we are opening our fourth new store in Portugal. We are highly satisfied in being able to replicate this operation in Portugal. Portugal, this is a very timid operation, but we see great potential in Portugal. This is it. We have had good results. We have been able to deliver new solutions. We have seen innovation in the company, and we are very happy with the situation despite the adversities that we face in the market as a whole. Now we will initiate our Q&A session for investors and analysts.

Speaker #1: We want to be a one-stop shop for wellness in Brazil and we're highly satisfied with it. So regarding the new businesses, we are opening our fourth new story in Portugal.

Speaker #1: And something that so where are we better where are we not better? Where are we worse or weaker? What can I say? Number one, we have not seen major variations amongst categories during the first semester.

Speaker #1: We're highly satisfied in being able to replicate this operation in Portugal. Portugal this is a very timid operation. But we see great potential in Portugal.

Speaker #1: All performed well. I would just like to highlight the growth of the kids line. Which which is a line that we strongly bet on.

Speaker #1: So this is it. We've had good results. We've been able to deliver new solutions. We've seen innovation in the company, and we're very happy with the situation despite the adversities we face in the market as a whole.

Speaker #1: We've improved the product. And it's improving consistently. Improving. The mini collections we performed well. We have lots of collection and we've been very assertive with these mini collections in terms of sale.

Speaker #1: And now we will initiate our Q&A session for investors and analysts. If you wish to pose a question, please press the button reaction and raise your hand.

Speaker #1: The ma the men's line the women's line has gained share. We this has been positive. By and large I believe that there has been no problems in terms of category we've launched new products these are products with new technologies with new fabrics.

Patricia Abibe: If you wish to pose a question, please press the button reaction and raise your hand. If your question is answered, you can leave the queue and lower your hand. Our first question from Robert Forth from Bank of America. Your microphone is open. Congratulations for your result. Due to the frailty of the market for the consumer by and large, can you talk about the competition and the expectations for the rest of the year and where you see strong performance and areas of weak performance? As you continue remodeling stores, how do these remodelings compare to past remodelings in terms of the increase of sales and same-store sales? I can start. Maybe Patricia can add on. Well, good morning. It is excellent to have you once again in one of our video conference calls.

Operator: If you wish to pose a question, please press the button reaction and raise your hand. If your question is answered, you can leave the queue and lower your hand. Our first question from Robert Forth from Bank of America. Your microphone is open.

Speaker #1: If your question is answered, you can leave the Q and lower your hand. Our first question. From Robert Forth from Bank of America. Your microphone is open.

Speaker #1: Congratulations for your result. Do to the frailty of the market for the consumer by and large can you talk about expectations for the rest of the year and where you see strong performance in areas of weak performance and as you continue remodeling stores how do these remodelings compare to past remodelings in terms of the increase of sales in same store sales?

Robert Ford: Congratulations for your result. Due to the frailty of the market for the consumer by and large, can you talk about the competition and the expectations for the rest of the year and where you see strong performance and areas of weak performance? As you continue remodeling stores, how do these remodelings compare to past remodelings in terms of the increase of sales and same-store sales?

Speaker #1: We just launched and we a new sneaker that's a track and feel sneaker that is essential that you can use when you go to the gym.

Speaker #1: And you can also wear it to go out for the you know for the rest of the day. And the price is highly accessible.

Speaker #1: It we've tried to launch new products and this is a trend that we will see throughout the rest of the year. I don't know if Fred or Patricia would like to add something what I was going to to mention here was regarding what didn't work.

Speaker #1: I can start maybe Patricia can add on. Number one, well, good morning. It's excellent to have you once again in one of our video conference calls.

Fernando Tracanella: I can start. Maybe Patricia can add on. Well, good morning. It is excellent to have you once again in one of our video conference calls.

Speaker #1: Regarding the competition, our view is that that the market that we participate that is a wellness market grows at a pace that can absorb newcomers.

Fernando Tracanella: Regarding the competition, our view is that the market that we participate, that is a wellness market, grows at a pace that can absorb newcomers. We do not see any movements that are new in terms of competition that can affect our businesses. We are strongly focused on our operation, on the product, on the client experience. Of course, we see, we pay attention as to what the competition is doing, but the market grows at a pace that allows the entry of new competitors or competitors that were already in the market. I see no major differences from what we have seen in the past. Here, this is a continuity of past periods.

Speaker #1: Well in an in in an an environment where you have World Cup lots of holiday high interest rates. Our projections are not as accurate there are ones with more rupture ones with less rupture.

Speaker #1: We do not see any movements that are new, in terms of competition, that can affect our businesses. And we are strongly focused on our operation, on the product, on the client experience.

Speaker #1: But there's nothing that is different from what we do on our day by day. Well well you have to well a year like this is is quite demanding.

Speaker #1: Of course, we see we pay attention as to what the competition is doing. But the market grows at a pace that allows us that that allows the entry of new competitors or already competitors that were already in the market.

Speaker #1: And we're focused. We're just focused. But this has been a challenging year because everything that has happened and we are focused and continuing to deliver results.

Speaker #1: I see no major differences from what we've seen in the past. So here this is a continuity of past periods. Fred, would you I was just going to say that our current structure that connects to our customers in different ways protects and here we have the loyalty of our customer base especially because of the innovation with our product they're more connected to our brand when they participate in one of our races because this is a differentiated experience or when they buy a product or they eat at one of our TFCs I believe that we are doing something that creates loyal customers and this is important.

Speaker #1: We're not we're not in you know we're we're always you know in uncharted waters. But we're always you know steering well our ship. Okay.

Speaker #1: Thank you very much for your answers. Our next question. Laryssa Sumer from XP. Good morning. Thank you for taking our questions and congratulations for your surprising and significant results.

Fred Wagner: Fred, would you. I was just going to say that our current structure that connects to our customers in different ways protects, and here we have the loyalty of our customer base, especially because of the innovation with our product. They are more connected to our brand when they participate in one of our races because this is a differentiated experience or when they buy a product or they eat at one of our TFCs. I believe that we are doing something that creates loyal customers, and this is important. This is why we are a little bit better protected against the competition by and large. Regarding the remodeling of stores, we have not seen significant changes regarding the first store that was remodeled in 2021. This new layout with improvements, which changes from store to store, and we are very happy with the results that we have seen.

Fernando Tracanella: Fred, would you.

Fred Wagner: I was just going to say that our current structure that connects to our customers in different ways protects, and here we have the loyalty of our customer base, especially because of the innovation with our product. They are more connected to our brand when they participate in one of our races because this is a differentiated experience or when they buy a product or they eat at one of our TFCs. I believe that we are doing something that creates loyal customers, and this is important. This is why we are a little bit better protected against the competition by and large. Regarding the remodeling of stores, we have not seen significant changes regarding the first store that was remodeled in 2021. This new layout with improvements, which changes from store to store, and we are very happy with the results that we have seen.

Speaker #1: On my side I would like you to elaborate what you see in terms of expenses here we saw lots of marketing investments. What do you see in the future if the idea is to continue investing or are you going to change?

Speaker #1: And the GNA there was a significant cut at the end of Q1. Do you see space to affect one entry to be more effective?

Speaker #1: And this is why we're a little bit better protected against the competition by and large. And regarding the remodeling of stores we have not seen significant changes.

Speaker #1: I would like to see what what you think. It's good to know that you will open more stores in Portugal. If you can give us an update regarding your international expansion speed.

Speaker #1: Regarding the first store that was remodeled in 2021 this new layout with improvements which changes you know from store to store and we are very happy with the results that we've seen.

Speaker #1: I know you have a franchise. In Portugal I don't know if there is something new regarding this new stores. In other countries. Can I start talking about the expenses?

Speaker #1: And when we compare the beginning of this program—the first stores that were remodeled—and the stores that are being remodeled now, the results have been very similar.

Fernando Tracanella: When we compare the beginning of this program of the first stores that were remodeled and the stores that are being remodeled now, the results have been very similar. We have seen remodeling of recent stores with significant results, like stores in Curitiba in the first 2 malls. We reopened our store in the Morumbi Shopping Mall. That is significant in terms of growth. Eldorado, Fortaleza shopping malls. These are stores that are performing above the pre-remodeling period with consistent results now. The financial return here is significant, but we work with the strategy to protect the brand. The remodeling has 2 roles, to provide better financial results and also to strengthen the brand with the more modern store. Something that. So where are we better? Where are we not better? Where are we worse or weaker? What can I say?

Fred Wagner: When we compare the beginning of this program of the first stores that were remodeled and the stores that are being remodeled now, the results have been very similar. We have seen remodeling of recent stores with significant results, like stores in Curitiba in the first 2 malls. We reopened our store in the Morumbi Shopping Mall. That is significant in terms of growth. Eldorado, Fortaleza shopping malls. These are stores that are performing above the pre-remodeling period with consistent results now. The financial return here is significant, but we work with the strategy to protect the brand. The remodeling has 2 roles, to provide better financial results and also to strengthen the brand with the more modern store.

Speaker #1: And I think Fred will talk about Portugal. Expenses we want to continue very lean in terms of expenses in companies structure. We performed a number of adjustments during Q1 and this was something that was necessary and all of this helped us to improve the operational cash flow during Q2.

Speaker #1: We've seen remodeling of recent stores with significant results. Like stores in Curitiba in the first two malls we reopened our store in the Morumbi shopping mall that that is significant in terms of growth.

Speaker #1: So the company is lean we have controlled our headcount. We've grown and we're trying to gain efficiency using the available technology to to avoid repetitive work.

Speaker #1: And we're in the beginning of this journey. There's there are a lot of opportunities ahead of us. I don't know if we will be able to deliver something regarding something extremely relevant when we compare it to what we're doing right now.

Speaker #1: But our company is prepared to be a lean company. And and in terms of marketing we're not changing our strategy. We are focused on our base.

Fernando Tracanella: Something that. So where are we better? Where are we not better? Where are we worse or weaker? What can I say?

Speaker #1: Patricia stated this that our base will be compared to marketing invest in terms of marketing investments during the second semester. But we're pursuing efficiency with AI we we will have less costs with production.

Operator: Number 1, we have not seen major variations amongst categories during the first semester. All performed well. I would just like to highlight the growth of the kids line, which is a line that we strongly bet on. We have improved the product, and it is improving consistently. The mini collections, we have performed well. We have lots of collection, and we have been very assertive with these mini collections in terms of sales. The men's line, the women's line has gained share. This has been positive by Anlar. I believe that there has been no problems in terms of category. We have launched new products. These are products with new technologies, with new fabrics. We just launched a new sneaker.

Fernando Tracanella: Number 1, we have not seen major variations amongst categories during the first semester. All performed well. I would just like to highlight the growth of the kids line, which is a line that we strongly bet on. We have improved the product, and it is improving consistently. The mini collections, we have performed well. We have lots of collection, and we have been very assertive with these mini collections in terms of sales. The men's line, the women's line has gained share. This has been positive by Anlar. I believe that there has been no problems in terms of category. We have launched new products. These are products with new technologies, with new fabrics. We just launched a new sneaker.

Speaker #1: All performed well. I would just like to highlight the growth of the kids' line, which is a line that we strongly bet on.

Speaker #1: We've improved the product and it's improving consistently. Improving. The mini collections we performed well. We have lots of collection and we've been very assertive with these mini collections in terms of sale.

Speaker #1: And all of this will be scalable when we think about marketing pieces. We are not changing our strategy. This is more we will be able to compare the base during the second semester.

Speaker #1: The ma the men's line the women's line has gained share with this has been positive by and large I believe that there has been no problems in terms of category we've launched new products these are products with new technologies with new fabrics.

Speaker #1: Now regarding expenses no what you said is perfect. I have no comments regarding this. No. I would like to thank to I would like to thank the entire track and field team because when we carry out these actions we can carry out these actions unilaterally.

Speaker #1: We can with the help of everyone. We have a lot of people engaged in these cuts initiatives. And and in pursuing efficiency there is an internal movement.

Speaker #1: We just launched and we a new sneaker that's a track and feel sneaker that is essential that you can use when you go to the gym and you can also wear it to go out for the you know for the rest of the day and the price is highly accessible.

Speaker #1: People are thinking differently to bring efficiency on a day by day. And especially within the management areas. It's something difficult to do because you have to change your mindset.

Fernando Tracanella: It is a Track&Field sneaker that is essential, that you can use when you go to the gym, and you can also wear it to go out for the rest of the day, and the price is highly accessible. We have tried to launch new products, and this is a trend that we will see throughout the rest of the year. I do not know if Fred or Patricia would like to add something. What I was going to mention here was regarding what did not work. Well, in an environment where you have World Cup, lots of holidays, high interest rates, our projections are not as accurate. There are ones with more rupture, ones with less rupture, but that is nothing that is different from what we do on our day by day. Well, a year like this is quite demanding, and we are focused. We are just focused.

Speaker #1: And you have to think differently. So I see the entire team strongly engaged. Everybody that is is responsible for budget they're concerned and engaged with those results.

Speaker #1: So I just wanted to take this opportunity to thank our team. I would like to make another comment which is interesting. We people are talking about the impact of AI in companies and in our mind what we what do we want?

Speaker #1: Well, in an environment where you have World Cup, lots of holidays, high interest rates, our projections are not as accurate. There are ones with more rupture, ones with less rupture, but there's nothing that is different from what we do on our day by day.

Speaker #1: We want to deliver the same operation with spending more and gaining efficiency. Not only with AI but also machine learning. And we are working not only not to inform people or or educating people internally so they can become more comfortable or more aware of technology.

Speaker #1: Well, well, you have to well, a year like this is is quite demanding and we're focused. We're just focused. But this has been a challenging year because everything that has happened and we are focused and continuing to deliver results.

Speaker #1: We want the company to grow so if if the company can continue growing at the pace that we are growing there is no need to increase the SG&A I believe that this is positive.

Robert Forth: But this has been a challenging year because everything that has happened, and we are focused on continuing to deliver results. We are always in uncharted waters, but we are always steering well our ship. Okay. Thank you very much for your answers. Our next question, Laryssa Sumer from XP. Good morning. Thank you for taking our questions, and congratulations for your surprising and significant results. On my side, I would like you to elaborate what you see in terms of expenses. Here we saw lots of marketing investments. What do you see in the future? If the idea is to continue investing or are you going to change? In the SG&A, there was a significant cut at the end of Q1. Do you see space to affect one entry to be more effective? I would like to see what you think.

Fernando Tracanella: But this has been a challenging year because everything that has happened, and we are focused on continuing to deliver results. We are always in uncharted waters, but we are always steering well our ship.

Speaker #1: We're not we're not in you know we're we're always you know in uncharted waters but we're always you know steering well our ship. Okay.

Speaker #1: I don't know if we will be able to do this. But I believe that the entire company can start analyzing these type of effects.

Speaker #1: Thank you very much for your answers. Our next question. Larissa Summer from XP. Good morning. Thank you for taking our questions and congratulations for your surprising and significant results.

Speaker #1: To you know and to to bring intelligence to repetitive tasks. And of course we need natural intelligence as well. If we're able to do this this will be extremely positive for the company.

Robert Ford: Okay. Thank you very much for your answers.

Operator: Our next question, Laryssa Sumer from XP.

Laryssa Sumer: Good morning. Thank you for taking our questions, and congratulations for your surprising and significant results. On my side, I would like you to elaborate what you see in terms of expenses. Here we saw lots of marketing investments. What do you see in the future? If the idea is to continue investing or are you going to change? In the SG&A, there was a significant cut at the end of Q1. Do you see space to affect one entry to be more effective? I would like to see what you think.

Speaker #1: On my side I would like you to elaborate what you see in terms of expenses here we saw lots of marketing investments what do you see in the future if the idea is to continue investing or are you going to change and the GNA there was a significant cost cut at the end of Q1 do you see space to affect one entry to be more effective I would like to see what what you think it's good to know that you will open more stores in Portugal if you can give us an update regarding your international expansion speed.

Speaker #1: Of course maintaining the organizational structure. Now regarding Portugal we are extremely excited with the results. This is an operation is presenting good results not only for us but for our franchisees.

Speaker #1: We are going to open two stores one one in Chiado Chiado neighborhood that is a very central neighborhood in Lisbon. So yes we are excited.

Patricia Abibe: It is good to know that you will open more stores in Portugal. If you can give us an update regarding your international expansion speed. I know you have a franchise in Portugal. I do not know if there is something new regarding these new stores in other countries. Can I start talking about the expenses? I think Fred will talk about Portugal. Expenses. We want to continue very lean in terms of expenses in company structure. We performed a number of adjustments during Q1, and this was something that was necessary, and all of this helped us to improve the operational cash flow during Q2. So the company is lean. We have controlled our headcount, we have grown, and we are trying to gain efficiency using the available technology to avoid repetitive work. We are in the beginning of this journey. There are a lot of opportunities ahead of us.

Laryssa Sumer: It is good to know that you will open more stores in Portugal. If you can give us an update regarding your international expansion speed. I know you have a franchise in Portugal. I do not know if there is something new regarding these new stores in other countries.

Speaker #1: I know you have a franchise in Portugal I don't know if there is something new regarding this new stores in other countries. Can I start talking about the expenses?

Speaker #1: We are also analyzing other types of possibilities in other countries. But our philosophy is to know people and to know our potential franchisees. So now we're prospecting.

Fernando Tracanella: Can I start talking about the expenses? I think Fred will talk about Portugal. Expenses. We want to continue very lean in terms of expenses in company structure. We performed a number of adjustments during Q1, and this was something that was necessary, and all of this helped us to improve the operational cash flow during Q2. So the company is lean. We have controlled our headcount, we have grown, and we are trying to gain efficiency using the available technology to avoid repetitive work. We are in the beginning of this journey. There are a lot of opportunities ahead of us.

Speaker #1: And I think Fred will talk about Portugal. Expenses we want to continue very lean in terms of expenses in company structure. We performed a number of adjustments during Q1 and this was something that was necessary and all of this helped us to improve the operational cash flow during Q2.

Speaker #1: Potential new franchisees in other countries. And I believe that we are we are reassured. This could be a good avenue of growth for us.

Speaker #1: And the strategic avenue of growth. So thank you very much and congratulations for your results. Our next question from Victor Rogatis Itaú BBA. Well good morning Tracanella Fred Paty number one would be the inventory is there a level of inventory days that you want to achieve by the end of the day?

Speaker #1: So, to lean, we have controlled our headcount. We've grown, and we're trying to gain efficiency using the available technology to avoid repetitive work. We're at the beginning of this journey.

Speaker #1: Is there a level where you feel comfortable and this should not impact negatively the day of suppliers and rupture in stores? Now when we see same store sales how could we think about same store sales performance when you compare it to own stores and print the and price and volume?

Speaker #1: There's there are a lot of opportunities ahead of us. I don't know if we will be able to deliver something regarding something extremely relevant when we compare it to what we're doing right now.

Fernando Tracanella: I do not know if we will be able to deliver something regarding something extremely relevant when we compare it to what we are doing right now. But our company is prepared to be a lean company. In terms of marketing, we are not changing our strategy. We are focused on our base. Patricia stated this, that our base will be compared to marketing invest in terms of marketing investments during the second semester, but we are pursuing efficiency with AI. We will have less costs with production, and all of this will be scalable when we think about marketing pieces. We are not changing our strategy. This is more, we will be able to compare the base during the second semester. Now, regarding expenses. No, what you said is perfect. I have no comments regarding this.

Speaker #1: But our company is prepared to be a lean company and and in terms of marketing we're not changing our strategy. We are focused on our base.

Speaker #1: You you talked about a base of comparison during the second semesters. We are in comparable basis of marketing. Logistic expenses. But when we see the top line especially during Q3 with selling revenue was extremely significant.

Speaker #1: Patricia stated this that our base will be compared to marketing invest in terms of marketing investments during the second semester but we're pursuing efficiency with AI we we will have less costs with production and all of this will be scalable when we think about marketing pieces.

Speaker #1: I would like to know how do you see this comparison base when you think about top of line? Top days inventory days last year we ended with an average inventory day better than the past years.

Speaker #1: We are not changing our strategy. This means we will be able to compare the base during the second semester. Now, regarding expenses, what you said is perfect.

Speaker #1: We do not have a target. We do have an objective. The main objective in our mind has been the following. To reduce rupture when we see the inventory we have to guarantee an inventory to supply my entire network in an additional two a network that delivers to these maturing stores and the stores that will still open so when this volume is seen in a first portrait it has an impact.

Speaker #1: I have no comments regarding this. No. I would like to thank to I would like to thank the entire track and field team because when we carry out these actions we can carry out these actions unilaterally.

Patrícia Abibe: No, what you said is perfect. I have no comments regarding this.

Fernando Tracanella: I would like to thank the entire Track&Field team because when we carry out these actions, we cannot carry out these actions unilaterally. We can with the help of everyone. We have a lot of people engaged in these cuts initiatives. In pursuing efficiency, there is an internal movement. People are thinking differently to bring efficiency on a day by day and especially within the management areas. It is something difficult to do because you have to change your mindset and you have to think differently. So I see the entire team strongly engaged. Everybody that is responsible for budget, they are concerned and engaged with those results. So I just wanted to take this opportunity to thank our team. I would like to make another comment, which is interesting. People are talking about the impact of AI in companies, and in our mind, what do we want?

Speaker #1: We can with the help of everyone. We have a lot of people engaged in these cuts initiatives and and in pursuing efficiency there is an internal movement.

Speaker #1: People are thinking differently to bring efficiency on a day by day and especially within the management areas. It's something difficult to do because you have to change your mindset and you have to think differently.

Speaker #1: We cannot say I'm going to maintain 15 days by the end of the year. Of course we see the period of pre pandemic period the it could it could be close to what we would like to achieve today.

Speaker #1: So I see the entire team strongly engaged everybody that is is responsible for budget their concern and engage with those results. So I just wanted to take this opportunity to thank our team.

Speaker #1: I can't tell you we're going to end the the year this year. We just want to avoid ruptures but with all of with all of our initiatives last year we we improved production that was our production cell.

Speaker #1: I would like to make another comment, which is interesting. These days, people are talking about the impact of AI in companies, and in our mind, what do we want?

Speaker #1: So as there is a need of production for a store and it took you a lot long time to react to this need these cells were able to supply these products.

Speaker #1: We want to deliver the same operation while spending more and gaining efficiency not only with AI but also with machine learning. And we are working not only to inform people or educate people internally so they can become more comfortable and more aware of technology.

Speaker #1: And with this we diminish pressure. We have the pre order from our franchisees. With more sensitive products that would be watersports so when we think about this category that's a bit more sensitive we have the pre order period.

Fred Wagner: We want to deliver the same operation with expanding more and gaining efficiency, not only with AI, but also machine learning. We are working not only to inform people or educating people internally so they can become more comfortable or more aware of technology. We want the company to grow. If the company can continue growing at the pace that we are growing, there is no need to increase the SG&A. I believe that this is positive. I do not know if we will be able to do this, but I believe that the entire company can start analyzing these type of effects and to bring intelligence to repetitive tasks. Of course, we need natural intelligence as well. If we are able to do this will be extremely positive for the company, of course, maintaining the organizational structure.

Speaker #1: This was very assertive from our side. So what else? We've analyzed our stock very carefully with no with nothing drastic. Because there is no need for drastic changes.

Speaker #1: We want the company to grow so if if the company can continue growing at the pace that we are growing there is no need to increase the SGNA I believe that this is positive.

Speaker #1: I don't know if we will be able to do this. But I believe that the entire company can start analyzing these type of effects to you know and to to bring intelligence to repetitive tasks and of course we need natural intelligence as well.

Speaker #1: And our main objective is to have our products available to maintain the client's experience with good results for our franchisees. So demand forecast operation outlets there are things that can improve this.

Speaker #1: If we're able to do this this will be extremely positive for the company of course maintaining the organizational structure. Now regarding Portugal we are extremely excited with the results.

Speaker #1: We do not want to put at risk our brand the customer experience or our franchisee. This is going to be done. This is going to be something that will be done slowly.

Speaker #1: This is an operation is presenting good results not only for us but for our franchisees we are going to open two stores one one in Chiado Chiado neighborhood that is a very central neighborhood in Lisbon so yes we are excited we are also analyzing other types of possibilities in other countries but our philosophy is to know people and to know our potential franchisees so now we're prospecting potential new franchisees in other countries and I believe that we are we are reassured.

Fernando Tracanella: Regarding Portugal, we are extremely excited with the results. This is an operation that is presenting good results, not only for us, but for our franchisees. We are going to open two stores, one in Chiado neighborhood. That is a very central neighborhood in Lisbon. Yes, we are excited. We are also analyzing other types of possibilities in other countries, but our philosophy is to know people and to know our potential franchisees. Now we are prospecting potential new franchisees in other countries, and I believe that we are reassured this could be a good avenue of growth for us and a strategic avenue of growth. Thank you very much and congratulations for your results. Our next question from Victor Hogattis, Itaú BBA. Well, good morning, Tracanella, Fred, Patty. Number 1 would be the inventory.

Fred Wagner: Regarding Portugal, we are extremely excited with the results. This is an operation that is presenting good results, not only for us, but for our franchisees. We are going to open two stores, one in Chiado neighborhood. That is a very central neighborhood in Lisbon. Yes, we are excited. We are also analyzing other types of possibilities in other countries, but our philosophy is to know people and to know our potential franchisees. Now we are prospecting potential new franchisees in other countries, and I believe that we are reassured this could be a good avenue of growth for us and a strategic avenue of growth.

Speaker #1: We do not have to do anything fastly. And this is a long term view not a short term view. We will we will not have more markdowns.

Speaker #1: This is bad for the brand. This is bad for the business. And because then what are you doing? Your client is getting is getting used to always buying during sales periods.

Speaker #1: We don't want that. So so old. Stores and franchise and same store sales. There is something that we will continue seeing the own stores are mature stores with high sales volume.

Speaker #1: So when you see say the average sale of an own store and a franchise there is a difference. And in the terms of franchises you have the ramp up period.

Speaker #1: This could be a good avenue of growth for us. And a strategic avenue of growth. So thank you very much and congratulations for your results.

Speaker #1: Our next question from Victor Hogatis, Ital BBA. Well, good morning, Tracanella, Fred, Patti. Number one would be the inventory. Is there a level of inventory days that you want to achieve by the end of the day?

Speaker #1: So this is where the difference lies when you see own stores these are mature stores with a sales volume per square meter which is high.

Laryssa Sumer: Thank you very much and congratulations for your results.

Operator: Our next question from Victor Hogattis, Itaú BBA.

Speaker #1: Now in franchises there is also the effect of the effect of the ramp up. And these are stores that need to mature. Sometimes it takes more or less two years.

Victor Rogatis: Well, good morning, Tracanella, Fred, Patty. Number 1 would be the inventory.

Speaker #1: Is there a level where you feel comfortable, and this should not negatively impact the day of suppliers and lead to stockouts in stores? Now, when we look at same-store sales, how should we think about same-store sales performance when comparing to our own stores? And when you break down price and volume—you talked about a base of comparison during the second semester—we are now on a comparable basis for marketing and logistics expenses. But when we look at the top line, especially during Q3 when sales revenue was extremely significant, I would like to know how you see this comparison base when you think about the top of the line, stock days, inventory days. Last year, we ended with an average inventory day level better than in past years.

Victor Hogattis: Is there a level of inventory days that you want to achieve by the end of the day? Is there a level where you feel comfortable and this should not impact negatively the day of suppliers and rupture in stores? When we see same-store sales, how could we think about same-store sales performance when you compare it to own stores and price and volume? You talked about a base of comparison during the second semester. We are in comparable bases of marketing and logistic expenses. But when we see the top line, especially during Q3 where the sell-in revenue was extremely significant, I would like to know how do you see this comparison base when you think about top of line? Stock days, inventory days. Last year, we ended with an average inventory day better than the past years. We do not have a target.

Victor Rogatis: Is there a level of inventory days that you want to achieve by the end of the day? Is there a level where you feel comfortable and this should not impact negatively the day of suppliers and rupture in stores? When we see same-store sales, how could we think about same-store sales performance when you compare it to own stores and price and volume? You talked about a base of comparison during the second semester. We are in comparable bases of marketing and logistic expenses. But when we see the top line, especially during Q3 where the sell-in revenue was extremely significant, I would like to know how do you see this comparison base when you think about top of line?

Speaker #1: And we have a good franchisee operation. We have an excellent franchisee base which also explains the good performance. I will talk about expenses and comparable basis marketing.

Speaker #1: We have the first semester and then second semester. We will have more comparable basis. The logistic is more concentrated at the end of Q3 but it will be more comparable during Q4.

Speaker #1: That is the period where we started working with the second shift in logistics. So we have the DC working practically 24 hours with two shifts.

Speaker #1: And this improved our replenishment and this is one of the main responsible points to improve our replenishment. Now you asked about the significant significant representativity we had last year.

Speaker #1: We can even believe how relevant this was during the quarter. The sell in was I think it was 5 percentage points. The expectation let's say that we we will embark highly optimistic during Q3 with a marvelous summer collection.

Fernando Tracanella: Stock days, inventory days. Last year, we ended with an average inventory day better than the past years. We do not have a target.

Speaker #1: We do not have a target we do have an objective the main objective in our mind has been the follow to reduce rupture when we see the inventory we have to guarantee any inventory to supply my entire network in an additional two a network that delivers to these maturing stores and the stores that will still open so when this volume is seen in a first portrait it has an impact we cannot say I'm going to maintain 15 days by the end of the year of course we see the period of pre-pandemic period the it could it could be close to what we would like to achieve today I can't tell you we're going to end the the year this year we just want to avoid ruptures but with all of with all of our initiatives last year we we improved production that was our production cell so as there is a need of production for a store and it took you lot long time to react to this need these cells were able to supply these products and with this we diminish pressure we have the pre-order from our franchisees with more sensitive products that would be watersports so when we think about this category that's a bit more sensitive we have the pre-order period this was very assertive from our side so what else we've analyzed our stock very carefully with no with nothing drastic because there is no need for drastic changes and our main objective is to have our products available to maintain the client's experience with good results for our franchisees so demand forecast operation outlets there are things that can improve this we do not want to put at risk our brand the customer experience or our franchisee this is going to be done this is going to be something that will be done slowly we do not have to do anything fastly and this is a long-term view not a short-term view we will we will not have more markdowns this is bad for the brand this is bad for the business and because then what are you doing your client is getting is getting used to always buying during sales periods we don't want that so so all stores and franchise.

Fernando Tracanella: We do have an objective. The main objective in our mind has been the following, to reduce rupture. When we see the inventory, we have to guarantee an inventory to supply my entire network in an additional to a network that delivers to these maturing stores and the stores that will still open. So when this volume is seen in the first portrait, it has an impact. We cannot say, "I am going to maintain 15 days by the end of the year." Of course, we see the period of pre-pandemic period. It could be close to what we would like to achieve today. I cannot tell you we are going to end the year this year. We just want to avoid ruptures. But with all of our initiatives, last year, we improved production. That was our production cell.

Speaker #1: And so we expect a highly attractive collection. And we want our franchisees to be highly engaged in sales. Our our simulations predict something similar to the behavior last year.

Speaker #1: We're improving the productive chain and replenishment. We can we can receive earlier the collections and of course the franchisee will receive even earlier these products.

Speaker #1: The profile will be similar to last year. I don't know if there will be you know we will see more that revenue or something significantly higher.

Speaker #1: I would like to strengthen one point. Although with the World Cup effect that was the end of June well this the World Cup impacted the retail market by and large.

Operator: So as there is a need of production for a store, and it took you long time to react to this need, these cells were able to supply these products. With this, we diminish pressure. We have the pre-order from our franchisees with more sensitive products. That would be water sports. When we think about this category that is a bit more sensitive, we have the pre-order period. This was very assertive from our side. What else? We have analyzed our stock very carefully with nothing drastic, because there is no need for drastic changes. Our main objective is to have our products available to maintain the client's experience with good results for our franchisees. So demand forecast, operation, outlets. There are things that can improve this. We do not want to put at risk our brand, the customer experience, or our franchisee.

Fernando Tracanella: So as there is a need of production for a store, and it took you long time to react to this need, these cells were able to supply these products. With this, we diminish pressure. We have the pre-order from our franchisees with more sensitive products. That would be water sports. When we think about this category that is a bit more sensitive, we have the pre-order period. This was very assertive from our side. What else? We have analyzed our stock very carefully with nothing drastic, because there is no need for drastic changes. Our main objective is to have our products available to maintain the client's experience with good results for our franchisees. So demand forecast, operation, outlets. There are things that can improve this. We do not want to put at risk our brand, the customer experience, or our franchisee.

Speaker #1: But there was an effect in July that impacted because the slow of customers diminished because lots of people are highly engaged with the World Cup.

Speaker #1: And well the World Cup we will only have one in four years. I believe that July was the month that was mostly impacted. Especially well also the end of June but especially the month of July.

Speaker #1: All of this because of the World Cup. So our Q&A session has come to an end. Mr. Fernando Tracanella you have the floor for your final remarks once again.

Speaker #1: I would like to thank all of you for being interested in our company to thank the team Fred Patricia the IR team and everyone that organized this call.

Speaker #1: I would like to thank the team for this exceptional result. All our partners our franchisees our investors suppliers. So we're extremely happy and very reassured for the second semester.

Fernando Tracanella: This is going to be something that will be done slowly. We do not have to do anything fastly, and this is a long-term view, not a short-term view. We will not have more markdowns. This is bad for the brand. This is bad for the business. Because then, what are you doing? Your client is getting used to always buying during sales periods. We don't want that. So, owned stores and franchise and same-store sales. There is something that we will continue seeing. The owned stores are mature stores with high sales volume. When you see the average sale of an owned store and a franchise, there is a difference. In the terms of franchises, you have the ramp-up period. This is where the difference lies when you see owned stores. These are mature stores with the sales volume per square meter, which is high.

Speaker #1: We wish you a great day. The track and field video conference call has come to an end. We thank you for your participation and have an excellent day.

Patricia Abibe: Now, in franchises, there is also the effect of the ramp-up, and these are stores that need to mature. Sometimes it takes more or less 2 years. We have a good franchisee operation. We have an excellent franchisee base, which also explains the good performance. I will talk about expenses and comparable basis marketing. We have the H1 and then H2, we will have more comparable basis. The logistic is more concentrated at the end of Q3, but it will be more comparable during Q4. That is the period where we started working with the second shift in logistics. We have the DC working practically 24 hours with 2 shifts, and this improved our replenishment, and this is one of the main responsible points to improve our replenishment. Now, you asked about the significant representativity we had last year.

Patrícia Abibe: Now, in franchises, there is also the effect of the ramp-up, and these are stores that need to mature. Sometimes it takes more or less 2 years. We have a good franchisee operation. We have an excellent franchisee base, which also explains the good performance. I will talk about expenses and comparable basis marketing. We have the H1 and then H2, we will have more comparable basis. The logistic is more concentrated at the end of Q3, but it will be more comparable during Q4. That is the period where we started working with the second shift in logistics. We have the DC working practically 24 hours with 2 shifts, and this improved our replenishment, and this is one of the main responsible points to improve our replenishment. Now, you asked about the significant representativity we had last year.

Patricia Abibe: We can't even believe how relevant this was during the quarter. The sell-in was, I think it was 5 percentage points. The expectation, let's say that we will embark highly optimistic during Q3 with a marvelous summer collection. We expect a highly attractive collection. We want our franchisees to be highly engaged in sales. Our simulations predict something similar to the behavior last year. We're improving the productive chain and replenishment. We can receive earlier the collections, and of course, the franchisee will receive even earlier these products. Perhaps the profile will be similar to last year. I don't know if we will see more net revenue or something significantly higher. I would like to strengthen one point. Although with the World Cup effect, that was the end of June. Well, the World Cup impacted the retail market by and large.

Patrícia Abibe: We can't even believe how relevant this was during the quarter. The sell-in was, I think it was 5 percentage points. The expectation, let's say that we will embark highly optimistic during Q3 with a marvelous summer collection. We expect a highly attractive collection. We want our franchisees to be highly engaged in sales. Our simulations predict something similar to the behavior last year. We're improving the productive chain and replenishment. We can receive earlier the collections, and of course, the franchisee will receive even earlier these products. Perhaps the profile will be similar to last year. I don't know if we will see more net revenue or something significantly higher. I would like to strengthen one point. Although with the World Cup effect, that was the end of June. Well, the World Cup impacted the retail market by and large.

Fernando Tracanella: But there was an effect in July that impacted because the flow of customers diminished, because lots of people are highly engaged with the World Cup. Well, the World Cup, we will only have one in four years. I believe that July was the month that was mostly impacted. Especially, well, also the end of June, but especially the month of July. All of this because of the World Cup. So our Q&A session has come to an end. Mr. Fernando Tracanella, you have the floor for your final remarks. Once again, I would like to thank all of you for being interested in our company, to thank the team, Fred, Patricia, the IR team, and everyone that organized this call. I would like to thank the team for this exceptional result, all our partners, our franchisees, our investors, suppliers.

Operator: So our Q&A session has come to an end. Mr. Fernando Tracanella, you have the floor for your final remarks.

Fernando Tracanella: Once again, I would like to thank all of you for being interested in our company, to thank the team, Fred, Patricia, the IR team, and everyone that organized this call. I would like to thank the team for this exceptional result, all our partners, our franchisees, our investors, suppliers.

Fernando Tracanella: We are extremely happy and very reassured for the second semester. We wish you a great day. The Track&Field video conference call has come to an end. We thank you for your participation and have an excellent day. Thank you very much.

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Q2 2026 Track & Field SA Co Earnings Call

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