O Magazine Luiza (MGLU3) recorded a loss of R$135 million in the second quarter, reversing the profit of R$95.5 million recorded in the same period last year, according to a document sent to the market.
Adjusted net profit amounted to R$112 million, after a profit of R$89 million a year earlier, taking into account the effect of interest on the financial result and the slight increase in sales.
The figure was higher than expected Bloombergwho expected a loss of 86 million reais.
It’s the third straight loss for the company, which has been posting negative numbers since the fourth quarter of 2021 as the economy deteriorates.
Net revenue fell 5% to R$8.5 billion. Ebitda, which measures operating income, amounted to 457 million reais, down 1.7%.
The Ebitda margin remained stable, with a decrease of 0.1 percentage point.
Adjusted EBITDA margin was 5.7%, up 0.6 percentage points from a year earlier and 0.7 points from the first quarter.
THE Reutersthe company’s chief financial and investor relations officer, Roberto Bellissimo, said the margin growth is due to market expansion, an online platform for third-party sales and strategies such as the impact of inflation on prices and the increase in interest-bearing sales. . .
Total sales were BRL 14 billion, with BRL 10 billion generated from e-commerce and BRL 4 billion from physical stores.
Total income, however, saw only a slight increase. Retailers across the country have suffered from slowing earnings given the recent rise in interest rates and inflation, which are affecting consumer demand for the products.
Additionally, the baseline is strong given the increase in online revenue in 2020 and 2021 amid the pandemic.
The total sales of Magazine Luiza reached 13.9 billion reais in the second quarter, up 1.3% compared to the same period in 2021.
In e-commerce, sales rose 1.9% – and accounted for 72.1% of the total – as sales of products from the retailer’s own inventory fell 6.8%, while those from its marketplace grew by 22%.
In the operation of physical stores, sales fell by 0.3% and in the same indicator of stores, they fell by 8.2%.
The financial result was the main cause of the trader’s accounting loss, after being negative at 493.8 million, a deterioration of 115% compared to the same period of the previous year, in particular due to the increase in interest, the Selic rate fell from 2.75% per annum at the beginning of April last year to 13.25% per annum at the end of June this year, the company said.
Inventories stood at nearly 8 billion, down just over 100 million from March.
2nd quarter of Magazine Luiza
Bellissimo said that sales of more traditional categories, such as electronics, tend to mirror in the second half the evolution of macroeconomic indicators, such as inflationwhich fell in July – although it is still above 10% in 12 months -, and the interest rate, which part of the market believes has peaked in the current high cycle, at 13 .75% per year.
Plus, he said, the second half is usually better for retail, with Black Friday and Christmas.
This year there will always be the World Cup, which usually boosts sales of televisions and other products – the company, for example, owns the sporting goods brand Netshoes.
Luiza magazine reached 200,000 sellers in its marketplace and said that despite weaker performance of traditional products, new categories such as fashion and beauty are seeing strong growth.
Recently, the cost reduction of Magazine Luiza have also reached the market, as have competitors.
About two months ago, the retailer increased its commission for sellers who receive early, and earlier this year it revised its free shipping policy.
Bellissimo explained that the prepayment measure was a pass-through of interest, which had not been done since the start of Selic’s high cycle, and said that no new measures were planned to reduce costs on the market.
Asked about the market’s doubts about the long-term impact of these measures, in a highly competitive e-commerce environment, he said that “even with this impact on interest rates, we continue with a value proposition very competitive and one of the most efficient on the market”.
The market contributed more to the company’s margins thanks to these measures and grew “in the same way”, he added.
Another action that generated noise was a promotional video by Luiza magazine for customer credit, with the presence of the president of the board of directors, Luiza Trajano.
Bellissimo said the retailer was taking a number of actions, noting that this one was for pre-approved customers only.
“It’s a sales search action, but this time we did it with an extra video.”
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