After a long, steady decline, Vulcabras' share price began to stabilize after the publication on Nov. 5 of the Brazilian company's financial results, which showed a tiny net profit of 3.1 million reais (€1.0m-$1.2m) for the third quarter ended Sept. 30, compared with a loss of R$6.2 million in the year-ago period. It was the first quarterly profit in three years, but the share price still lies 77 percent below its value two years ago, when the Grendene family that controls the company brought in new management to restore it to profitability.

The company owns two fashion brands, Azaleia and Dijean. It also owns a sports brand, Olympikus, and has a management agreement for Reebok in Brazil and two other Latin American countries. No details were given about the performance of the individual brands and segments, but Vulcabras reported a 0.7 percent increase in gross operating revenues to R$402.3 million (€127.8m-$158.7m) in the latest quarter.

The quarterly sales increased by 9.3 percent to R$303.0 million (€96.2m-$119.5m) in Brazil in spite of a difficult market situation. They were also up by 5.8 percent for the first nine months of the year. On the other hand, Vulcabras booked sales declines in foreign markets of 18.8 percent in the quarter and 17.5 percent for the nine-month period.

The gross margin improved to 32.6 percent in the quarter from 25.9 percent a year ago, and it increased also for the nine months, reaching 26.8 percent against 24.1 percent. A 22.3 percent increase in operating expenses, including higher marketing expenditures, did not prevent Vulcabras from posting improved quarterly operating margins of 10.3 percent before amortization (Ebitda) and 10.5 percent after amortization (Ebit). For the nine months, the Ebitda margin was up to 3.1 percent but the Ebit margin recorded a decline to 1.8 percent of sales.

Excluding extraordinary charges, the Ebitda margin increased from 15.5 percent to 17.2 percent for the quarter and from 10.2 percent to 11.2 percent for the nine months. Net debt remained high at R$689.2 million (€219.0m-$271.8m), but the group has reduced it by R$100 million since the beginning of this year.

The company managed to produce a net profit in the quarter thanks to a 7.7 percent drop in net interest charges to R$26.3 million (€8.4m-$10.4m). For the first nine months, net losses were 18.1 percent higher than a year ago at R$84.0 million (€26.7m-$33.1m).