AZZA3

Azzas 2154 S.A., historically known as Arezzo, is a Brazilian publicly held company with shares traded on B3 under the ticker AZZA3, in the Novo Mercado corporate governance segment. Founded in 1972 in Belo Horizonte (MG), initially as Vivenda Comércio e Representações Ltda., the company was created with the goal of integrating Brazilian footwear production with Italian fashion references, in a period of strong European influence on footwear design in the country. Over the course of the 1970s, it consolidated the Arezzo brand as a reference in women’s shoes and handbags, highlighted by the launch in 1979 of the jute-covered wedge sandal Anabela, which became one of the company’s first major commercial successes. Its corporate evolution included its transformation into a corporation in 2007 and its IPO in 2011, when its shares began trading on B3, initially under the ticker ARZZ3, consolidating its trajectory in the Brazilian capital markets.

During the 1980s and 1990s, Arezzo underwent an important transition in its business model. Initially, it operated in an integrated manner, with its own industrial shoe production in Minas Gerais, manufacturing up to 1.5 million pairs per year with around 2,000 employees. In the 1990s, the company discontinued direct shoe production and began outsourcing manufacturing to suppliers located in Vale do Sinos, in Rio Grande do Sul, one of the world’s main footwear hubs. This move allowed its strategic focus to shift to research and development (R&D), brand management, design and marketing, bringing its operating model closer to that of a fashion company oriented toward branding and fast fashion. In this phase, the opening of Arezzo’s flagship store on Rua Oscar Freire in São Paulo and the strengthening of the franchise channel significantly expanded the reach of its distribution across Brazil.

Building a broad brand portfolio is a central element of Azzas 2154’s business model. The acquisition of Schutz, originally created in 1995 by Alexandre Birman, and the launch of Anacapri in 2008 marked the company’s diversification into different price ranges and styles within the women’s footwear and accessories segment. From 2019 onward, the company became the exclusive distributor of the global brand Vans in Brazil, entering more structurally into categories such as men’s and children’s footwear and apparel related to action sports. In the following years, the group strengthened its presence in the luxury segment with the Alexandre Birman brand of high-end women’s shoes and with the acquisition of Vicenza, in addition to the international expansion of Schutz, which opened its own store in New York and was recognized as Brand of the Year in the U.S. footwear market in 2016.

Starting in 2020, then still named Arezzo, the company took an important step by expanding its operations beyond shoes and handbags, becoming a fashion house of brands with the incorporation of Grupo Reserva, which has a strong presence in men’s apparel. This move was accompanied by the launch of its own marketplace, ZZ Mall, and complementary acquisitions such as the Carol Bassi brand in the premium women’s fashion segment. In 2022, the acquisition of Sunset, a company focused on export agency and intermediation, reinforced supply chain management and the international expansion strategy, while the acquisition of HG, a handbag factory, increased its capacity to develop products in this category. In 2023, the acquisition of the Italian brand Paris Texas represented its first M&A transaction outside Brazil, related to luxury women’s footwear, although later, after a corporate restructuring, its results stopped being fully consolidated.

The business combination completed on July 31, 2024 between Arezzo and Grupo de Moda SOMA was a transformational milestone, giving rise to Azzas 2154 S.A. and the unification of two significant fashion platforms in Brazil. With this transaction, Grupo SOMA was succeeded universally by the company, former SOMA shareholders became part of Azzas 2154’s shareholder base, and SOMA’s controlling shareholders joined the joint controlling block, governed by a shareholders’ agreement. As of August 1, 2024, the common shares began trading on B3 under the ticker AZZA3, with the trading name AZZAS 2154. The combination significantly expanded the brand portfolio, geographic reach, operations in different apparel categories and the diversity of target audiences, consolidating the company as one of the largest fashion and footwear retail groups in the country.

The core activities of Azzas 2154 focus on the development, patternmaking, manufacturing (both in-house and outsourced) and sale of shoes, handbags, accessories and apparel items for women’s, men’s, children’s and mass-market segments. As of December 31, 2024, the portfolio was organized into four business verticals: Footwear and Accessories, with brands such as Arezzo, Schutz, Anacapri, Vans, Alexandre Birman and Vicenza; Women’s Apparel, with Farm Rio, Animale, NV, Maria Filó, Cris Barros, Carol Bassi, Fábula and Off Premium; Men’s Apparel, with brands such as Reserva, Foxton, Oficina Reserva, Reserva Mini and others; and Mass-Market Apparel, led by Hering and its line extensions. Although there is diversification in products and brands, the company reports only one operating segment: retail of shoes, handbags, accessories and clothing, which accounts for 100% of net operating revenue. In 2024, consolidated gross revenue reached around R$ 10.2 billion, with net revenue of approximately R$ 8.38 billion and net income of R$ 338.5 million, already incorporating Grupo SOMA’s results from August of that year onward.

Azzas 2154’s production strategy combines its own factories and an extensive network of third parties, with a strong emphasis on R&D, design and rapid collection turnover. In the footwear and accessories segment, collections are designed in-house, with up to around 10 collections per year per brand, and gradual release of products to points of sale to keep high turnover and trend updates, in line with the fast fashion concept. Part of the footwear production for brands such as Schutz and all of Alexandre Birman is carried out at the company’s own industrial park in Campo Bom (RS), with capacity of more than 1 million pairs per year, while a large portion of items for the Arezzo, Schutz, Anacapri and Vans brands is manufactured by partners in the Vale dos Sinos footwear cluster. The company uses technological tools such as CAD, CAN, CNC and the SENDA system for patternmaking, materials inventory control and sample development, and maintains a 1,000 m² material library for input management and innovation in materials.

In apparel, the group’s brands generally produce four collections per year, aligned with the seasons, with independent creative teams but with their own style directions that preserve each brand’s identity. Production takes place in the company’s own factories and through outsourced suppliers, including industrial units incorporated with Grupo SOMA and Hering, located in Rio de Janeiro, São Paulo, Santa Catarina and Goiás. These plants may encompass the full stages of knitting, finishing, cutting, sewing and finishing, and part of the process may be outsourced to small workshops. The company maintains operational efficiency initiatives by placing orders with suppliers in advance, continuously improving production processes and seeking to reduce selling and administrative costs.

Distribution of Azzas 2154’s products is based on a highly capillary multichannel model. As of December 31, 2024, the company had 2,129 stores, of which 596 (or 606, depending on the comparison base) were company-owned stores and 1,495 were franchises in Brazil, in addition to company-owned and franchised units abroad. In parallel, the group’s brands were sold through e-commerce channels (websites and apps) and approximately 23,000 multibrand points of sale in several countries. Most of consolidated gross revenue is generated in the domestic market, which accounted for 95.6% of the total in 2024, while 4.4% came from international operations. In Brazil, revenue is distributed among franchises, company-owned stores, multibrand clients and e-commerce, with no material concentration in a single client, as none of them accounted for more than 10% of net revenue in the period.

From a regulatory and ESG standpoint, Azzas 2154 operates in a typically industrial and retail environment, subject to operating licenses and environmental and labor regulations. The production units maintain environmental licenses issued by the relevant authorities, and the company adopts formal procedures to monitor compliance with legal requirements at the federal, state and municipal levels. In the field of data protection, the company is subject to the LGPD, the Brazilian Civil Rights Framework for the Internet and the Consumer Protection Code, having made adjustments to its personal data processing procedures, published privacy policies and appointed a data protection officer, in line with the requirements of the National Data Protection Authority (ANPD). In addition, the company and a significant portion of its suppliers are members of the Brazilian Textile Retail Association (ABVTEX), which seeks to promote a more ethical and sustainable fashion chain, reinforcing its commitment to responsible practices in the footwear and apparel supply chain.