Magalu has a lack of R$ 135 million, with a drop in bodily shops and a rise within the Selic
Company achieved gross profit and margin gains in the period
O Magazine Luiza still bitter the effects of the double high inflation and high interest on sales in physical stores and the higher financial expense, with the increase in the Selic. This combination caused the company to record a loss compared to the same period last year, even with the pass-through of costs to products — which allowed margin gains. The loss for the period was R$135 million, reversing a profit of R$95.5 million in the second quarter of 2021. In the adjusted version, excluding non-recurring effects, the result was negative by R$112.1 million.
In the quarter, the company’s net revenue was R$ 8.5 billion, down 5% in the annual comparison. Two points draw attention and help to understand the numbers. In the case of Magazine Luiza, whose 1P sales are concentrated in durable goods, the benefit of the strong return of movement to physical stores did not bring sales expansion, unlike the fashion sector. Sales in physical stores dropped 0.3% and online commerce of own products (1P) dropped 6.8%. Even with all the efforts to grow the marketplace (third-party products or 3P), as it is a sales commission, the 26.5% growth, to a total of BRL 630.6 million, does not compensate for the drop in 1P .
“3P will continue to be our sales growth engine. The physical store has a good flow of customers, but they still feel the macroeconomic scenario of high inflation”, says Vanessa Papini, IR manager at Magazine Luiza, to the EXAM IN. The company’s way out to bring a more positive view amid this scenario is to present revenue data together with “Total Sales” in the period. In this metric, which considers store revenue, 1P sales revenue and 3P GMV, there was an increase of 1.3% compared to the same quarter last year, to R$13.9 billion. Digital retail accounts for 72% of this total.
To increase earnings in an environment like this, the company focused its performance in the quarter on increasing margins. Strategies such as reducing the number of interest-free installments, increasing the amount of digital services and passing on cost increases to products were put into practice and brought results: Magalu achieved a 3 percentage point increase in gross margin, which reached 28.6 %.
Operating expenses increased 3.7% compared to the same period last year, to R$1.9 billion, mainly related to the lower dilution of expenses in physical stores and the growth of the marketplace.
As a result, Ebitda, in the period, remained stable (down 1.7%) at R$ 457.4 million, as well as the Ebitda margin (down 0.1 percentage point), to 5.3%.
The financial result in the period was an expense of R$ 493.8 million, more than double the amount recorded in the second quarter 2021. The Selic increase in the period is the main point for this. Interest on loans and financing rose 701.2%, as did those on prepayment of receivables: 67.4% on the third-party card, with an expense of R$ 150 million, and 45.1% on the Luiza Card, totaling R$ 86.7 million.
Credit card TPV grew 42.4% in the second quarter, reaching R$13.6 billion, the highest quarterly revenue ever. With the increase in the portfolio, delinquency also grew. In operating expenses, it is possible to see that losses on doubtful accounts increased by 80%, to R$ 59 million.
In Luizacred, the portfolio overdue for more than 90 days was 7.7% in the quarter, a variation of 3 percentage points compared to the same period last year, still below pre-pandemic levels, according to the document. The portfolio overdue from 15 to 90 days represented 3% of the total, a variation of 1 percentage point compared to the same period last year, “due to the increase in the number of new customers and the recent deterioration in macroeconomic indicators”, according to the swing.
Investments in the period totaled R$ 184.2 million, down 40% compared to the same period of the previous year. Technology was the biggest target of the investments, with R$ 116.7 million, an increase of 16% in the annual comparison.
Expenses with new stores, on the other hand, fell 80% compared to the second quarter of last year, to R$ 14.8 million. Remodeling expenses also dropped by 49%, to R$8.1 million. In the period, the company opened 90 stores and currently has 1,429.