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Brazilian fast-fashion retailer Lojas Renner SA reports 14 percent sales drop in Q2

By Angela Gonzalez-Rodriguez

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New York - Brazilian fast-fashion retailer Lojas Renner SA reported on Tuesday a 14.4 percent fall in second-quarter net profit, dragged by growing taxes and operating expenses. Foreign currency exchange rates also dented the company’s profits.

In a securities filing cited by Reuters, the company said its quarterly net profit dropped 14.4 percent year-on-year to 235.1 million reais (62 million dollars.)

“This was the quarter with the slowest operational growth, but for the third and fourth quarters we expect a more positive scenario,” Chief Financial Officer Laurence Gomes told Reuters in an interview on Tuesday.

Gomes further explained that inventory was at a healthy level even though winter came later than usual in Brazil this year and the company will not need to provide so many discounts in the coming months, which should benefit its future margins.

Looking ahead, the company could benefit from the reported economic stimulus package the Brazilian Government is said to be working on. “Any stimulus measure improves confidence, but what will truly boost the economic recovery is the continuity of key economic reforms,” he said.

Lojas Renner’s net revenue grew 13.4 percent in the second quarter to 2.019 billion reais, while operational expenses increased 1.2 percent to 683.8 million reais. Same-store sales growth was weaker than in the same period a year ago, coming in at 9.2 percent (compared to 12.7 percent in the first quarter and 2.5 percent in the second quarter of 2018.)

Adjusted earnings before interest, taxes, depreciation and amortization (EBIDTA) went up year on year, growing by 1.8 percent from 441.9 million reais, including both retail and financial operations.

Lojas Renner