LJQQ3 Lojas Quero-Quero

Lojas Quero-Quero S.A. is a Brazilian retail company founded on August 15, 1967, in the city of Santo Cristo, in the interior of Rio Grande do Sul, originally under the name Quero-Quero Comércio e Representações Ltda. The business began with a focus on agricultural implements and veterinary products, taking advantage of the economic dynamism of Rio Grande do Sul’s agribusiness at the time. Throughout the 1970s, the company expanded its portfolio to hardware, tools and construction materials, which gradually became the core of its operations. In the following decade, it began opening branches in neighboring cities, consolidating its presence in the northwestern region of the state and temporarily diversifying into the food retail business. In 1981, the retail of construction materials, furniture and home appliances was formally incorporated into the company’s corporate purpose, marking the transition to the home improvement and construction store format that characterizes its current operations.

The company’s corporate transformation took place in 1988, when it changed from a limited liability company to a corporation, adopting the name Quero-Quero S.A., later updated to Lojas Quero-Quero S.A. in 2006. In the 1990s, the chain surpassed the 50-store mark, expanded into Santa Catarina and added financial services to its business model, such as consortiums and in-house financing. In 1997, the subsidiary Quero-Quero VerdeCard Instituição de Pagamento S.A. was created, linked to the private-label credit card operation, VerdeCard, which evolved from an internal financing instrument for purchases in the stores to a means of payment accepted at affiliated establishments. In 2002, Sentinela dos Pampas Administradora e Corretora de Seguros Ltda. was founded, responsible for brokering insurance products linked to retail sales. In 2008, private equity funds managed by affiliates of Advent International took control of the company, driving the professionalization of governance and management. In 2020, Lojas Quero-Quero carried out its IPO, began trading common shares on B3 under the ticker LJQQ3, listed on the Novo Mercado segment and completed Advent’s exit from the shareholder base.

Lojas Quero-Quero’s business model combines multiformat physical retail, digital channels and financial services, focusing on small and medium-sized cities. The company reports a single operating segment, organized into three business activities: Retail, Financial Services and Credit Card. In 2024, retail accounted for 71% of gross revenue net of returns and discounts, while financial services represented 26% and the credit card activity, 3%. The retail line is structured into three main channels: physical stores, e-commerce and the Figital platform, which includes the “Loja Infinita”, a virtual showroom that expands the assortment available in the units. From a portfolio originally concentrated in construction materials, the company began to also sell home appliances, furniture, décor items, organization products and lifestyle goods, seeking to capture different stages of the construction, renovation and home furnishing cycle.

In construction materials retail, Lojas Quero-Quero operates in departments such as coverings, finishes, basic and structural materials, equipment, doors and windows, garden and forestry, and paints, offering everything from structural items to finishing products. In home appliances, the offering covers white goods, brown goods, small appliances, technology, automotive and telephony, while in furniture the company sells products for kitchen, living room, bedroom, office, service area and leisure areas. In décor, organization and lifestyle, the assortment includes bed, table and bath, housewares, sports and leisure items, children’s products, decorative items and cleaning and organization products. The construction materials activity is the most relevant within the company’s retail business, accounting for 64% of tickets sold in 2024, considering the number of sales orders for products in this segment. In-store service is predominantly assisted, with teams of sales consultants trained to guide the purchasing process, including construction professionals, who make up an important portion of the customer base.

Lojas Quero-Quero’s geographic footprint is concentrated in Brazil’s South region and in some states in the Center-West and Southeast. As of December 31, 2024, the company operated 573 stores in 483 different cities, located in Rio Grande do Sul, Santa Catarina, Paraná, Mato Grosso do Sul and São Paulo. The network is mostly geared toward municipalities with up to 300,000 inhabitants, which account for 96% of the stores. Of this total, 312 units were in cities with up to 25,000 inhabitants, 99 in locations with populations between 25,000 and 50,000, 73 between 50,000 and 100,000, 65 between 100,000 and 300,000 inhabitants and 24 in cities with more than 300,000 inhabitants. The company has also invested in expanding and modernizing its logistics infrastructure, with three distribution centers located in Rio Grande do Sul and Paraná, totaling more than 85,000 m² of storage area, in addition to 19 regional depots that optimize inventory and deliveries. Store openings have followed an accelerated pace since 2017, allowing the network to nearly double in size between 2016 and 2023, supported by investments in distribution centers and the launch of e-commerce in 2019.

Lojas Quero-Quero’s financial services area was developed to complement its retail operations, offering direct-to-consumer credit, personal loans, invoice installments, revolving credit, debt renegotiation and receivables advances for accredited merchants. These products are structured mainly through partnerships with credit, financing and investment companies, currently represented by Via Certa Financiadora S.A., under a profit-sharing model in which revenues, costs, taxes and provisions for doubtful accounts are shared in accordance with specific contracts. The company maintains its own credit analysis and collection structures, which operate within parameters defined jointly with its partner financial institutions. In parallel, through the broker Sentinela dos Pampas, it distributes extended warranty insurance, financial protection, daily hospital stay coverage, insurance against theft, robbery and cellphone damage, as well as home insurance and products aimed at protecting banking transactions, in partnership with insurers such as Assurant, Sancor, Sura and Generali, and is remunerated for distribution without assuming insurance risk.

The credit card activity is centered on the VerdeCard operation, which functions both as a payment instrument and a distribution channel for financial products. In addition to financing purchases at Lojas Quero-Quero, the card is accepted at a network of accredited merchants, using the infrastructure of acquirers such as Cielo, Stone and Banrisul Vero, which act as network service providers, while processing and settlement are carried out by Verde itself. The company uses its own capital to finance interest-free transactions and is remunerated through annual fees, the discount rate received as an acquirer, interchange fees and service fees. With expansion into new states, Lojas Quero-Quero entered into a partnership with the Elo brand to issue cards with broader acceptance outside its proprietary network, and as of 2022 it began issuing VerdeCard cards with the Elo brand in all regions. The card app evolved into the Quero-Quero PAG platform, incorporating a digital account and integration with PIX, expanding the payment features available to cardholders.

Lojas Quero-Quero operates in a regulatory environment typical of retail and financial services, subject to consumer protection rules that require clear information on the characteristics, prices, risks and conditions of products and services. On the financial and payments side, the subsidiary VerdeCard has operated as a payment institution authorized by the Central Bank of Brazil in the acquirer and postpaid instrument issuer modalities since 2021, while the insurance broker is subject to insurance sector regulation and oversight. The company also highlights sustainability and governance initiatives, such as the inauguration of six photovoltaic plants in 2023, with 7.9 MWp of installed capacity and potential to reduce CO₂ emissions by more than 1,500 tons per year, as well as the adoption of TCFD recommendations in its sustainability report. In 2024, upon completing 57 years of operation and having its common shares LJQQ3 traded on B3, the company also reported operational and social responses to the floods in Rio Grande do Sul, reinforcing the integration of its activities with the communities in which it maintains a physical and economic presence.