Crisis increases pressure on retailers at end of year
With Black Friday and year-end holidays just around the corner, major retailers work with stocks higher than 2020 and mid-year as profits fall. This backdrop puts greater pressure on the chains to sell stocks of goods at higher margins in the coming months.The finding comes from annual and third-quarter reports unveiled in recent days. Valor analyzed the results of the 10 major public chains: Americanas, Magazine Luiza, Via, Allied, Renner, Riachuelo, C&A, Marisa, Hering and Arezzo.Some chains have even raised provisions for losses in the year-to-date to try and protect themselves in case the levels of default rise, considering that faster inflation has been affecting income.Despite the lack of certain durable goods, a reflection of the crisis in the global production chain, the retailers managed to negotiate larger purchases hoping to see an increase in demand. According to the data from the quarterly reports, at the end of September, Brazil’s 10 largest chains had R$27.5 billion in stock, up 8.3% from June (R$25.2 billion) - a single-digit expansion may also signal certain caution in stockpiling.In relation to September 2020, when the demand for electronics was already on the rise thanks to the federal emergency aid paid during the pandemic, the nominal increase, not adjusted by inflation, is higher (29%)."The big retailers bought what they could in this scenario of greater disruption, but respecting a conservative projection. One must consider the return of brick-and-mortar stores, which always helps, but also take into account all income deterioration seen this year," said Roberto Wajnsztok, founder of Origin5 Consultoria and a former executive at Walmart.com.The analysis also shows lower margins due to higher costs of goods in the second half of the year. Of the 10 chains, nine reported lower quarter-over-quarter gross margin, while four chains saw lower rates compared with the previous year.The results strengthen the strategy of offering lower discounts on Black Friday and year-end holidays. The uncertainty about a further weakening of the real in 2022 - which raises costs and may force companies to disburse more working capital to purchase goods - also plays a role.The weakened real raises the cost of goods sold by stores (measured by the purchase value of products), which reduces gross profit and margin. For profitability to be preserved, sales have to rise more than the cost."We are unlikely to see aggressive discounts this year...
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