Lojas Renner has just announced a strong result for the second quarter of the year – beating market expectations in practically all DRE lines and bringing its margins closer to pre-pandemic levels.
Revenue came to R$ 3.2 billion; the market expected R$ 3.07 billion.
EBITDA was R$705 million; the market expected R$ 655 million.
Net income was R$360 million; the consensus was R$ 320 million.
“The champion is back,” celebrated a manager bought on paper.
Renner said sales were boosted by an earlier and more rigorous winter, and by people’s need to renew their wardrobe with the resumption of social events.
According to the company, sales of the autumn-winter collection had volumes and tickets about 10% higher than in 2019.
Today’s strong result is the second that CEO Fabio Faccio will be able to celebrate after Renner’s market value dropped 40% from peak to valley during the last year. From January to now, the paper rose 22%.
The two results show that the rise in inflation and interest rates did not significantly affect the fashion retailer’s business – which for the time being has been able to pass on costs.
The retailer has also been gradually recovering margins, after seeing them plummet during the pandemic.
Gross margin was 56.1% in the second quarter, 0.3 percentage point below the second quarter of 2019. On the other hand, the retail EBITDA margin was only 0.70 point below 2019, decreasing the gap compared to the previous quarter (when this difference was 590 bps).
“Both gross margin and EBITDA margin had much smaller declines compared to 2019 than in the previous quarter,” wrote BTG analyst Luiz Guanais.
According to him, Renner is well positioned to gain market share in the coming quarters in a fragmented market.
“This should lead to a solid momentum despite expectations of a second-half sales slowdown (with a strong comparison base from last year),” the analyst wrote.
The negative highlight was the results of Renner’s financial division – a Realize, typically responsible for around 18% of EBITDA.
This vertical’s EBITDA dropped 77% year-on-year and came in 61% below Santander’s lowest analyst estimate.
The weak result had to do with the increase in loan losses and provisions, which reached R$281 million against R$77 million a year earlier.
in the cards co-brandedlosses reached 5.3% of the portfolio, compared to 1.9% in Q2 2021.