INSUBCONTINENT EXCLUSIVE:
weaker-than-expected first-quarter earnings.The operator of DrogaRaia and Drogasil stores posted a 17% annual decline in net income to
R$177.1 million ($29.5 million), despite a 10.8% revenue increase to R$10.8 billion ($1.8 billion).Adjusted EBITDA fell 5.3% to R$644
million ($107 million), with margins shrinking to 6% as rising labor costs and aggressive promotions squeezed profitability
The company burned R$123.8 million ($20.6 million) in free cash flow during the quarter, compounding concerns about its expansion
Analysts cited weaker demand for cosmetics and hygiene products as a key drag.They also pointed to fewer dengue fever cases compared to 2024
and calendar effects from the leap year
in Q1 2025 as Market Share Gains Fail to Offset Costs
(Photo Internet reproduction)Goldman Sachs maintained a buy rating with a R$25.00 ($4.17) price target, betting on digital investments and a
planned 330-350 new stores in 2025
driven by patent expirations and government cost-cutting initiatives.However, intensifying competition from online pharmacies and physical
from government-mandated drug price controls taking effect later this year.
