ALPA3 Alpargatas

Alpargatas S.A. is a Brazilian publicly traded company, with ALPA3 and ALPA4 shares listed on B3, whose origins date back to the early 20th century. Its trajectory began in 1900 with the founding of Sociedade Anonyma Fábrica Brazileira de Alpargatas S.A. e Calçados, which shortly thereafter was renamed São Paulo Alpargatas Company S.A., in reference to the industrial base installed in the Mooca district in São Paulo. The company went public in 1913 on what was then the São Paulo Stock Exchange and, over the following decades, built a portfolio of relevant brands in the Brazilian footwear market, such as Conga, Rainha, Topper, Mizuno and Timberland, in addition to developing production capacity in rubber sandals and sporting goods. From the 2000s onwards, the group went through profound corporate and strategic transformations, including Camargo Corrêa’s entry as controlling shareholder in 2002, the creation of Instituto Alpargatas in 2003 and a subsequent divestment movement focused on brands considered strategic.

In the 21st century, the company consolidated a shift toward internationalization and lifestyle brand management, especially with the expansion of the Havaianas brand into markets outside Brazil. In 2010, its corporate name was officially changed to Alpargatas S.A., reflecting the ambition to position itself as a global company. The 2010s were marked by acquisitions such as a stake in the Osklen brand and the full incorporation of Alpargatas Argentina, followed by changes of control: in 2015 J&F Investimentos took over, and in 2017 the controlling block passed to Itaúsa, Cambuhy I Fundo de Investimento em Ações and Cambuhy Alpa Holding S.A., which today hold a significant stake in the company’s capital. Starting in 2016, the company began a portfolio rationalization process, selling brands such as Topper, Rainha and, later, ending the Timberland licensing agreement, in order to concentrate efforts on Havaianas and, in a complementary way, on equity interests and businesses associated with footwear and technology.

Alpargatas’ current business model is centered on the manufacturing and sale of footwear, especially rubber sandals, as well as lifestyle apparel and accessories linked to its brands. Havaianas is the main asset in the portfolio and accounts for most of consolidated net operating revenue, split between Havaianas Brazil and Havaianas International operations. The company operates as a manager of lifestyle-positioned brands, exploring not only flip-flops and sandals, but also espadrilles, apparel items and accessories, with a focus on design, comfort and a visual identity associated with summer spirit and Brazilian flair. In 2024, Alpargatas reported net operating revenue of approximately R$ 4.1 billion, with 23.2% coming from international operations, underscoring the relevance of sales outside Brazil within its business model.

In its portfolio of brands and equity interests, in addition to Havaianas, highlights include a 49% stake in Rothy’s Inc., a U.S. company specializing in sustainable footwear and accessories, and Ioasys, an innovation and technology company fully acquired in 2021. Rothy’s operates with a focus on sustainability, producing footwear from recycled materials, such as plastic transformed into fiber, at its own manufacturing facility in China, and sells flats, boots, sneakers, bags and accessories mainly in the U.S. market. Ioasys, in turn, operates as the digital transformation arm, responsible for developing digital products and experiences, covering everything from strategy, UX/UI and systems architecture to development and maintenance of solutions. This acquisition represented a move to vertically integrate Alpargatas’ digital capabilities, especially in omnichannel, e-commerce and recurring sales, integrating technology into the core business of brands and footwear.

Alpargatas’ operations are organized by geographic operating segments, classified as Domestic Operations, which include Brazil, and International Operations, which encompass the United States, Europe, Asia, Oceania, Latin America and India, as well as direct exports. In 2024, around 76.8% of net operating revenue from continuing operations originated from customers in Brazil, totaling approximately R$ 3.153 billion, while 23.2% came from foreign markets. Within international operations, Europe accounted for the largest share of revenue, followed by Asia and the United States, demonstrating the reach of the Havaianas brand and other products in more than 130 countries. The company has hundreds of thousands of points of sale in Brazil and abroad, operating a distribution network that includes wholesalers, regional distributors, footwear retail chains, supermarkets, department stores, multi-brand boutiques and exclusive brand stores, both owned and franchised.

From an industrial standpoint, Alpargatas’ core operations lie in the process of manufacturing rubber sandals, whose production cycle involves weighing and mixing compounds, vulcanization or injection, stabilization, cutting, finishing, decorating soles and applying PVC straps, in addition to customization stages with ornaments. Lifestyle apparel and accessories tied to the brands are developed internally by in-house design teams, but manufactured by third parties using raw materials such as cotton, polyamide, linen, silk, viscose, polyester, organic cotton and sustainable fabrics. The commercial strategy favors a combination of broad distribution reach with brand and consumer experience control, which is reflected in a strong presence in exclusive Havaianas stores in Brazil and abroad, alongside digital channels and multi-brand partners. There is no significant concentration of risk in individual customers, since no single buyer accounted for more than 10% of consolidated net revenue in 2024.

The company operates in a competitive sector, within a global footwear industry in which Brazil ranks among the world’s largest producers, with particular relevance in open footwear and flip-flops. In the domestic flip-flop market, estimated consumption in 2024 was approximately 415 million pairs, of which Alpargatas supplies around 49%, positioning it as one of the main suppliers in this category in the country. Globally, the company’s estimated market share in flip-flops is about 4%, an indicator that reveals potential room for international expansion. In European countries such as Italy, Spain, the United Kingdom and France, the Havaianas brand has, at different times, reached top positions in brand awareness in the flip-flop category, which translates into higher recognition and sales conversion compared with local and global competitors, especially in seasonal-climate markets with high demand for summer products.

Alpargatas is subject to a wide range of regulatory requirements in Brazil and abroad, inherent to the industrial and commercial activities of footwear, apparel and retail. Its factories, distribution centers and stores require municipal operating licenses, fire department permits, urban zoning authorizations and environmental licenses, in line with applicable federal, state and municipal legislation. The company must comply with rules related to effluent treatment, solid waste management, atmospheric emissions and noise, and is subject to administrative, civil and criminal liability in the event of environmental damage. Environmental licensing follows a three-phase model of preliminary, installation and operating licenses, which must be renewed periodically. The company is also subject to economic freedom laws that simplify licensing for low-risk activities, particularly in retail stores.

In international markets where it has operations or subsidiaries, such as the United States, Europe and Asia, Alpargatas must comply with local competition laws, corporate rules, anti-corruption regulations, labor laws, labeling requirements, product safety standards and consumer protection rules. In particular, in the United States, the business is exposed to specific regulations related to employers, advertising, privacy and data security, as well as potential international trade tariffs and treaties that may impact costs and final prices. Despite these obligations, foreign regulation is not described by the company as a factor that materially affects its operations, being treated as a structural component of its global activities. In parallel, Alpargatas highlights its commitments to environmental, social and governance practices, expressed both in the sustainability agenda of its brands, such as Havaianas and Rothy’s, and in the work of Instituto Alpargatas in educational and sports initiatives in the communities where it maintains production units.

In terms of corporate governance, the company joined B3’s Level 1 Corporate Governance segment back in the 2000s, seeking alignment with practices of transparency, protection of minority shareholders and disclosure of information to the market. The evolution of the controlling block, now led by Itaúsa, Cambuhy and associated investment vehicles, has resulted in important strategic reviews, such as the decision to concentrate capital and management on Havaianas’ global expansion and on building digital and sustainability capabilities. The recent strategic update, focusing on strengthening core products and markets, bolstering marketing, improving efficiency, increasing profitability and ensuring disciplined capital allocation, reflects an effort to adapt the business model to a globalized competitive environment and to a consumption profile shaped by casualization, digitalization and greater sensitivity to ESG themes. This combination of a global brand, a significant production base in Brazil and a diversified international presence characterizes the position of Alpargatas ALPA3 and ALPA4 in the universe of companies listed on B3 in the footwear and lifestyle apparel segment.