Business

Lojas Renner (LREN3) saw market gain and April continues to accelerate

The CEO of Lojas Renner (LREN3), Fabio Adegas Faccio, said this Friday (6th) that there is an acceleration in net retail revenue, above the market, which has brought, as a consequence, a gain in market share to the company over the years. of the first quarter.

According to him, the results of January were still impacted by the effects of the pandemic, but in February and March, there was an acceleration of revenue and the flow of people in stores. The flow is still below 2019, but with gradual improvement month by month.

“April continues to accelerate in the volume of parts and transactions around double digits. The sales result has been super positive”, said Faccio, highlighting the good sales performance so far with Mother’s Day.

The statements took place during a conference call with analysts to comment on the results of the first quarter, when Lojas Renner reversed a loss and made a profit of R$ 191 million.

In this Friday’s trading session (6), the retailer’s shares stood out among the highest on the Ibovespa, closing with an appreciation of 5.99%, quoted at R$ 24.24, while the Ibovespa had a slight decline.

Margins of Lojas Renner

For the company’s CEO, one of the biggest challenges this year is to maintain healthy margins, on an ongoing basis. Due to the current economic environment, Renner sees that the challenges of maintaining healthy margins presented in 1Q22 should continue throughout the year.

Renner’s gross margin in the 1st quarter recorded an important recovery, at 55.1%, close to the pre-pandemic level (55.3% in 1Q19). “This performance reflects efficiency gains and the correct integration of inventories, even with inflation transfers”, said CEO Fabio Adegas Faccio.

According to Daniel Martins dos Santos, CFO of Renner, the Ebitda result should improve over the next few months, aiming for a return on capital that is around 15% to 20%.

“It is difficult to say when and if it is possible to reach the same levels as in 2019, but what we will have is a sequential improvement in the coming quarters”, he said.

The conjunctural effects and the greater penetration of online, as well as relevant investments for the ecosystem initiatives with sequential improvement in the quarters of the year, should generate greater scale and efficiency gains for Renner.

prices

Regarding prices, Faccio said that the company does not intend to raise prices too quickly, which could help at first, but that, given the volatility of the market, “it could be worse”.

“Renner has been consciously scaling to use tools and solutions to gain efficiency, profitability, better inventory positioning and better volumes,” he said.

Throughout 2022 and 2023, according to him, the company understands that it will have efficiency gains, with logistics operations and CRM structure, having profitability in the digital channel “closer to the profitability of physical stores”.

“We try to be very conscientious. This has helped us to make consistent gains,” she said.

investments

Regarding investments, Santos stated that the investment of R$ 1 billion planned for 2022 is at the same level as in 2021, being used mainly for technology, finalization of investments in CDs, opening of stores and expansion.

According to him, Renner continues to have a high cash position, but its capital structure improves.

Recently, the company announced that its physical expansion strategy foresees the opening of around 40 new stores this year, for all the Company’s brands.

They are in the plan: 20 for Renner; 10 for Youcom (youth lifestyle brand); 5 for Camicado (specialized in home decor); and 5 from Ashua (focused on the curve and plus size segment). Today, the Company’s portfolio (all brands) totals 639 stores. Last year, 32 units were opened.

Scenario

Renner’s CEO also highlighted that the company is well prepared for the economic reality of 2022 and that the investments made by Renner during the pandemic were fundamental to bringing differentials to the company.

“We remain committed to the purpose of consolidating our ecosystem in Latin America and with optimism in the short term. We have seen significant demand for our products and market gains,” he said.

Renner informed that it focuses on continuing to accelerate online, expanding its customer base omnichannel, investing in technological platforms and advancing investments in Realize. The company wants to expand the digital assortment, increase active customers, customer base and deliveries within two days.

Balance sheet analysis Lojas Renner

For Bradesco BBI analysts, Lojas Renner presented results above expectations in the first quarter, with strong revenue growth.

The document highlighted that revenue is the main issue for investors to focus on, as higher revenue and cost dilution in the coming quarters (and some years) will allow the company to expand margins back to historic levels.

The difference of 7 percentage points in the Ebitda margin between 1Q22 and 1Q19 was in line with expectations and should not come as a surprise to the market.

Gross margin continues to recover compared to 2019, which is clearly positive, so the final issue to be “fixed” is the opex (with greater pressure from the investments that management has made to support the ecosystem strategy), and the solution for this is revenue growth and cost dilution.

BBI maintains ranking outperform for paper, with a target price of R$37.

pressured profitability

For XP, Lojas Renner had solid revenue growth, but profitability remains under pressure.

Consolidated net revenue grew +38% vs. 2019, driven by the retail recovery and Realize’s revenue growth of +72% YoY, supported by the expansion of its portfolio combined with higher spending on Meu Cartão.

XP reiterates buy recommendation for Renner and target price of BRL 42.00.

Purchase opportunity? XP Strategist Reveals 6 Cheap Stocks to Buy Today. Watch here.

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