GRND3 Grendene

Grendene S.A. is a Brazilian footwear company whose common shares are traded on B3 under the ticker GRND3. Its origins date back to February 25, 1971, with the incorporation of Plásticos Grendene Ltda., initially as a limited liability company focused on the industrialization of plastics in general. The first product line was concentrated on the manufacture of plastic packaging for wine demijohns, replacing traditional wicker solutions. Over the course of the 1970s, the company diversified its production into plastic parts for agricultural machinery and equipment, then moved into footwear components such as soles and heels, pioneering the use of polyamide (nylon) as a raw material. In 1979, already under the name Grendene S.A., it launched its first sandal lines under the Nuar and Melissa brands, marking the beginning of a strategy based on proprietary footwear brands.

Grendene’s industrial expansion was accompanied by a significant geographic repositioning. Seeking more competitive labor costs and tax incentives, the company began, from 1990 onward, to move its production from the Serra Gaúcha region in Rio Grande do Sul to the state of Ceará. The establishment of units in Fortaleza (1990), Sobral (1993) and Crato (1997) consolidated Ceará as its main manufacturing hub, with Sobral becoming the company’s corporate headquarters. These plants were set up in regions where the workforce initially had limited specialization in the footwear industry, especially in injected footwear technology, which required heavy investment in training and in specific industrial processes. The company also maintained operations in Farroupilha (RS), focused on the manufacture of plastic artifacts, integrating the synthetic footwear production chain.

Grendene’s business model is focused on the production and sale of footwear for women, men and children, both in the domestic and international markets. The company states that it operates a single business segment, entirely dedicated to footwear, with integrated management of product lines and no managerial segmentation by target audience or brand. Its industrial structure is vertically integrated, including 11 footwear factories, tooling operations, distribution centers and its own PVC plant, the main input used. This verticalization is supported by proprietary thermoplastic injection technology developed over more than five decades, in which the upper and components are fused to the sole during the injection process, providing flexibility to quickly adjust the product portfolio in response to fashion trends and product acceptance.

In its brand portfolio, Grendene brings together well-established names in the Brazilian and international markets, such as Melissa, Rider, Grendha, Ipanema, Zaxy, Cartago, Pega Forte and Grendene Kids, in addition to using third-party brands and licensing characters and celebrities. Licensing partnerships include Azaleia, Mormaii and various intellectual property owners in the children’s and youth universe, such as Disney, Mattel, Warner, Marvel, Maurício de Sousa, Universal, Nintendo, Netflix and Viacom. Brand value creation is based on design, marketing and intensive use of licensing, with the Melissa brand receiving selective distribution treatment and a dedicated sales area. The importance of proprietary and licensed brands is pointed out by the company as one of its main competitive advantages in the footwear sector.

From a commercial standpoint, Grendene structures its sales through commercial representatives in the domestic market, distributors and direct exports, as well as subsidiaries in strategic markets. The company reaches approximately 65,000 points of sale in Brazil and around 45,000 abroad, serving both traditional and non-traditional retailers. Gross revenue originates predominantly in the domestic market, which accounted for about 78% of net revenue in 2024, with the remainder coming from exports to more than 100 countries. Foreign sales are distributed across North America, Europe, Asia and Oceania, Latin America and regions of Africa and the Middle East, with no material concentration in any single client, country or currency, and no customers exceeding 5% of net revenue.

Grendene’s internationalization gained a new component in 2021, with the incorporation of Grendene Global Brands Limited (GGB), initially as a joint venture with the fund Radar Private Fund I LP, based in the United Kingdom and focused on the distribution and commercialization of products in markets such as the United States, Canada, China and Hong Kong. In November 2024, Grendene acquired the remaining 50.1% stake in GGB, taking full control of the company, which reinforces its global expansion strategy and the strengthening of direct-to-consumer (DTC) channels in international markets. In parallel, in its relationship with consumers in Brazil, the company operates concept stores such as Galeria Melissa and Rider Spaces in São Paulo, as well as a franchise network of the Melissa brand, which expands its presence in physical retail and complements the traditional model based on representatives and distributors.

On the production front, Grendene’s differential lies in the combination of scale and proprietary technology. Its reported installed capacity is approximately 250 million pairs per year, equivalent to around 800,000 pairs per day, supported by industrial automation, in-house PVC formulation and machine adaptation according to internal specifications kept as trade secrets. PVC and plasticizing oils, the main raw materials, have their quality requirements tied to Brazilian, US and European regulations related to restricted chemical substances, such as CPSIA and REACH. Its scale strategy allows it to negotiate inputs in large volumes, including with suppliers such as Braskem S.A. in the case of thermoplastic resins, although the company does not consider itself dependent on a single supplier, while acknowledging that possible simultaneous difficulties with the main domestic supplier and with imports could impact production.

Grendene operates in a regulatory context that, although it does not require specific authorizations for footwear manufacturing, demands licenses related to environmental issues, urban zoning, health and safety. The company’s units in Ceará and Rio Grande do Sul have operating licenses issued by state and municipal environmental agencies, with conditions related to self-monitoring of effluents, atmospheric emissions and solid waste management. Grendene’s activities are registered in Ibama’s technical records, and the company holds specific licenses from the Federal Police for the use of certain chemical products. In addition, the company declares compliance with labor regulations, including the hiring of apprentices and people with disabilities, and maintains a structure of Specialized Services in Safety Engineering and Occupational Medicine (SESMT) to manage occupational health and safety.

In sustainability and environmental, social and corporate governance, Grendene publishes annual sustainability reports, prepared based on frameworks such as Integrated Reporting, the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and the UN Sustainable Development Goals. Since 2020, the company has monitored its greenhouse gas emissions through an inventory aligned with the GHG Protocol, covering scopes 1, 2 and 3, with third-party verification and attainment of the Gold seal in the Brazilian GHG Protocol Program. It also responds to the Carbon Disclosure Project (CDP) questionnaires on Climate Change, Water Security and Forests. In 2024, it expanded its energy and climate agenda with the acquisition of a significant stake in Várzea SPE, which is responsible for the Solatio Várzea 4 solar plant in Minas Gerais, a photovoltaic facility with a capacity of 45,000 kW aimed at supplying clean and stable energy to its industrial operations.

Grendene’s position in the Brazilian and global footwear market is reflected in a significant share of domestic production and sector exports. In 2024, the company accounted for a relevant share of Brazilian footwear production, apparent domestic consumption and export volumes in pairs, focusing on synthetic footwear with varied designs and a competitive price profile. GRND3 shares on B3 represent exposure to a business that is essentially industrial and discretionary consumer-oriented, with a production base located entirely in Brazil, revenue flows predominantly domestic and an international presence spread across more than one hundred countries, in a highly competitive, fragmented sector that is sensitive to domestic and external economic conditions.