Alpargatas S.A., a great turn around strong moat Brazilian footwear company.

I have analyzed two companies in this Report. Alpargatas S.A is one of them.

Alpargatas S.A. is a Brazilian manufacturing company headquartered in São Paulo. Established in 1907, it is one of Brazil's largest companies in the footwear and canvas business.

Alpargatas’ main product is Havaianas, one of Brazil's largest rubber flip-flop brands, introduced in 1962 and inspired by the Japanese Zori sandals.
The company is recovering from its failed post-pandemic international plans and bad bets on direct-to-consumer.

The operational turnaround has gradually worked out, as a return to core wholesale channels and improved inventory management have restored profitability and free cash flow after a challenging period of inventory write-downs and supply chain friction.

Returns on Invested Capital have expanded to 18%, up 1,100bps YOY; capital efficiency has also improved as working capital, especially excess finished goods inventory, was liquidated and normalized.

Higher gross margins, sitting comfortably above 55%, with operating and profit margins of 15.74% and 14.52%, and 18% ROIC and almost 8% ROA confirm the strength of the company’s moat.

The stock is down -77% in 5 years, which is an appealing pricing point for turnaround value hunters.

The company is controlled by 3 prominent Brazilian Banking and mining Families: the Setúbal, Villela, and Moreira Salles families.