Pedro Baptista, equity analyst for apparel, footwear and textiles in Latin America at Jefferies, likes what he sees as Havaianas owner Alpargatas S.A. shifts its operating model from direct operation to distribution.
Following a fireside chat with Alpargatas CFO Andre Natal, Baptista concluded that the company is successfully executing a multi-pronged turnaround with clear strategic intent.
“The U.S. pivot removes a long-standing drag on profitability, while Brazil and Europe show signs of sustainable recovery,” the analyst wrote in a note on Friday. “Rothy’s monetization and capital structure optimization add further upside.”
In June, the São Paulo-based company inked a deal with The Eastman Group for the distribution of the Havaianas brand of flip-flops in the U.S. and Canada. Alpargatas said at the time that the partnership provides it with cost efficiency so it could operate on a leaner local structure. It would then focus on marketing and production.
“Eastman is expected to unlock access to mid-tier retail channels such as sports and specialized stores, where Havaianas has no presence despite strong brand awareness,” Baptista said, adding that tariffs are expected to have minimal impact due of low production costs and and high retail price point. In addition, the U.S. strategic shift creates a “leaner, smarter, scalable” model at the São Paulo-base company.
The analyst also noted that Alpargatas has implemented a series of operational fixes in Europe, with logistics and delivery challenges resolved. On-time in-full delivery is now at more than 80 percent. He noted that June and July sales saw solid sell-out growth that is expected to continue into 2026.
Baptista has a “Buy” rating on shares of Alpargatas. In the background is the forthcoming decision on shoe brand Rothy’s.
Alpargatas is still mulling a call option on the remaining 51 percent of Rothy’s that it doesn’t yet own. That option is set to expire in December 2025.
“Rothy’s is exploring alternatives to China [such as Vietnam] to mitigate tariff risks and align with sustainability goals,” the analyst said, “Retail execution remains strong with 10 stores opened last year, zero cash burn and all stores profitable in year one.”
Rothy’s net sales grew 7 percent year-over-year to $63 million in the second quarter of 2025.
The Brazilian footwear brand is set to launch next month its first-ever 3D-printed flip-flop in collaboration with Zellerfield during Copenhagen Fashion Week.
Havaianas in March debuted supermodel Gigi Hadid as its new global brand ambasssador.