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2Q22 Results

August 4, 2022 – Lojas Renner S.A. (B3: LREN3; USOTC: LRENY), the largest fashion retailer in Brazil, announces its Results for the second quarter of 2022 (2Q22). For the sake of comparability with the market and in line with the Financial Statements, as from 4Q21, the Company has now begun to report information on EBITDA on a post-IFRS 16 basis (excluding Depreciation and Interest on leasing).

Robust growth of sales of 41% and 57% in net revenue from retailing vs 2Q21 and 2Q19

Total EBITDA (post-IFRS16) of R$702m, +47% vs 2Q21 and +29% vs 2Q19 with Net Profit of R$ 360m, +87% vS 2Q21 surpassing pre-pandemic levels (+56% vs 2Q19)

Free cash flow

generation of R$85m,

+R$508m vs 2Q21

Enchantment: record of very satisfied customers in the 2nd quarter

18.9 MM customers active in the ecosystem (+18.9%). Omni

customer base +26% vs 2Q21

Growth of 27% in Digital GMV

and penetration of 13.0%

Delivery in D+2: +6p.p (45%)

Delivery Same/Next Day (SP and RJ): +19p.p (48%) Decline of ~18% of cost per shipment vs 2Q21

Realize: greater occupation of

the ecosystem, with an

increase of 19% in the active

customer base

Consistent gain in market share

in 2Q22, based on PMC, IBGE

RX Ventures makes

first investment in a startup

in July

Acceleration in the production

of content with +600

activations of influencers and

12 lives

Markdowns at their lowest levels with Gross Margin similar to that of 2019

Transfer of the Camicado

operation to the new DC and integration of Uello, with pilot operations in transit points for management of last mile

Renner has been Top of Mind in online fashion for 18 consecutive months and leader in visits among domestic players

Renner Marketplace – renamed to Alameda Renner, with better availability of the 3P assortment. Renner and Camicado sellers already represent 7.5% of GMV Digital

August 5, 2022

13:00 (BRT) | 12:00 noon (US-EST)

The videoconference will be held in Portuguese with a simultaneous translation to English. To access, click hereor use the QR Code below:

The statements contained in this document relate to the prospects for the business, estimates for operating and financial Results. and those related to growth prospects of Lojas Renner S.A. are merely projections and, as such, are based exclusively on the expectations of the Company’s management concerning the future of the business. Such forward-looking statements depend substantially on changes in market conditions, the performance of the Brazilian economy, the sector and the international markets and are therefore subject to change without prior notice.

All variations and totals as well as roundings presented herein are calculated on the basis of numbers in thousands of Reais.

Consolidated Information

(R$ MM)

2Q22

2Q21

Var.

1H22

1H21

Var.

Net revenue from Retailing¹

3,175.7

2,258.7

40.6%

5,405.4

3,623.1

49.2%

Growth in Same Store Sales

37.9%

308.6%

-270.7p.p.

46.1%

70.2%

-24.1p.p.

Digital GMV

545.8

428.9

27.3%

979.9

741.8

32.1%

Penetration of Digital Sales

13.0%

14.5%

-1.5p.p.

13.9%

15.7%

-1.8p.p

(R$ MM)

2Q22

2Q21

Var.

1H22

1H21

Var.

Gross Profit from the Retailing¹

1,781.7

1,241.9

43.5%

3,009.6

1,952.8

54.1%

Gross Margin from Retailing¹

56.1%

55.0%

1.1p.p.

55.7%

53.9%

1.8p.p.

Operational Expenses (SG&A)²

(1.057.5)

(837.5)

26.3%

(1,985.5)

(1,587.1)

25.1%

% SG&A / Net Revenue from Retailing

33.3%

37.1%

-3.8p.p.

36.7%

43.8%

-7.1p.p.

(R$ MM)

2Q22

2Q21

Var.

1H22

1H21

Var.

Adjusted EBITDA from Retailing³

689.7

425.3

62.2%

987.7

387.5

154.9%

Adjusted EBITDA Margin from Retailing³

21.7%

18.8%

2.9p.p.

18.3%

10.7%

7.6p.p.

Financial Services Result

11.9

51.9

-77.0%

97.1

121.5

-20.0%

Total Adjusted EBITDA³

701.6

477.2

47.0%

1,084.9

509.0

113.1%

Total Adjusted EBITDA Margin (Post-IFRS 16)³

22.1%

21.1%

1.0p.p.

20.1%

14.0%

6.1p.p.

(R$ MM)

2Q22

2Q21

Var.

1H22

1H21

Var.

Net Profit

360.4

193.1

86.7%

552.0

45.4

1116.7%

Net Margin

11.3%

8.5%

2.8p.p.

10.2%

1.3%

8.9p.p.

Earnings per share

0.36

0.21

69.5%

0.56

0.05

1005.0%

ROICLTM

10.6%

4.6%

6.0p.p.

10.6%

4.6%

6.0p.p.

  • The Retailing Operation includes revenue from the sale of merchandise as well as service revenue (commissions and costs of the marketplaces and Repassa). ² Operating Expenses (SG&A) do not include Depreciation and Amortization expenses.
    ³ Total Adjusted EBITDA (post-IFRS 16), without depreciation and financial expenses relating to leasing.

Message from the Management

The second quarter of 2022 recorded robust growth in sales of +41% versus 2021 and +57% versus 2019, a total EBITDA (post-IFRS16) of R$ 702 million (+47% versus 2021 and +29% versus 2019) and Net Income of R$ 360 million (+87% versus 2021 and 56% versus 2019). The period saw strong performance driven by the early arrival of more rigorous winter temperatures together with the need to renew wardrobes following the resumption of social interactions and greater personal mobility. Such factors contributed to the acceleration in sales of the Fall-Winter collection, the number of transactions and tickets reaching levels ~10% greater than 2019. Apparel and accessories were particularly strong performers, registering a sharp rise of 45% versus 2021 and 60% versus 2019, outstanding in this context being the Youcom youth fashion brand which once more posted an increase of more than 100% (+67% versus 2021 and +113% versus 2019). The strong seasonal focus of the period with events such as Mothers’ Day, Valentine’s Day and the São João festivities, combined with the consolidation of a range of different omni-initiatives and a value proposition suited to the customers, drove gains in market share for all three months in the quarter.

Digital sales continued to follow a trajectory of growth, despite strong performance by the physical stores in the period. GMV for the quarter recorded an increase of 27% and 387% versus 2021 and 2019, respectively, with participation in the Company’s sales of 13%. The marketplace – newly named Alameda Renner – turned in a particularly significant performance with good level of complementing categories and price ranges favoring cross selling with 1P products. The platform currently has totals of 330 and 310 sellers for Camicado and Renner, respectively, together accounting for 7.5% of digital GMV. The new digital sales channels – Marketplace, Renner Favorites, B2B and WhatsApp – also continued to gain relevance, representing approximately 25% of digital GMV. In the quarter, Renner retained absolute leadership in the Monthly Active Users (MAU) metric among domestic players in the fashion business. Likewise, the Company has been Top of Mind in fashion retailing for the past consecutive 18 months.

Hence, the combination of the sales channels performance and the assertiveness of the collection, together with the optimization of inventories and the use of data in the processes contributed to maintaining markdown at their historically lowest levels. These aspects practically compensated for the challenges of the currency translation effect and raw material and freight charge inflation, benefiting the gross margin dynamic, which in 2Q22 reached 56.1%, similar levels to those of 2019.

As with the preceding quarter, pursuing the objectives of gains in digital efficiency, we reduced last mile shipment costs. Also, the content and branding front played a key role in the search for CAC optimization. During the quarter, we expanded communication formats with podcasts and digital fashion shows, as well as different formats of lives and more than 600 influencer activations. These and other actions have brought greater customer flows, awareness, engagement, and monetization with an increase of 42% in digital flows from the social networks.

As to the last mile, we continue to make progress in levels of both service and productivity aligned with investments in the omni journey. At the new Cabreúva DC, the process of transferring the Camicado operation was completed on plan. Currently, we are at the phase of testing technology and systems’ integration – set for conclusion in 2023 – and in November we shall begin the gradual migration of the other operations. We continue with the integration process of the Uello logtech, acquired in April, which will contribute to last mile gains with greater velocity and quality, and the last mile system is already in use in certain locations. It is worth registering in this respect that delivery in D+2 recorded an increase in representativeness of 6.6 p.p. compared with 2021 (45.0%) while cost per shipment decreased for one more consecutive quarter (-18% versus 2Q21).

The omni journey proceeded during the quarter with the rollout of 16 stores of which 7 Renner, 4 units of which in cities where the Company had no previous footprint. This serves to further leverage our integrated operation, since e- commerce sales traditionally rise approximately 20 p.p. when we open stores in new population centers. Youcom continues to implement its expansion plan for new locations – of the 8 stores opened, 7 are pioneers in cities and towns where previously we had no presence. In addition, an Ashua store was opened in the quarter. First half 2022 store rollouts totaled 18, in line with the expansion plan of 40 store openings for the year. As to alternative mediums of store checkout, Pague Digital, a process of instore checkout by the customers themselves using their own cell phone, continued to increase in popularity. By the end of the first half, self-service totems had been installed in 47 stores. In the light of a more flexible and complete experience, Omni customer participation continues to represent about 30% of sales, leveraging the potential of our ecosystem.

As to the offer of financial solutions, Realize reported growth in revenues on the back of strategy for expanding and monetizing the offer of Meu Cartão. However, results suffered the impact of the more challenging scenario for both credit and delinquencies pervading the industry as a whole. Higher portfolio delinquency led to increased levels of provisioning, in turn affecting Realize’s operating results in the period. The Company adopted various actions in customer capture, maintenance, and collections – all of which are proving their effectiveness in the quality of the new customer base. Turning to new strategic initiatives in line with the greater occupation of the ecosystem, use of the Renner Card was bolstered through targeting communication at store level and as well as direct to the customer base as to the acceptance of the card at Youcom’s bricks-and-mortar stores. Of particular note also was the rollout of the digital account for 25 stores, with expectations that this can be concluded by year-end. Overall, the financial institution posted growth of 48% in TPV while the active customer base was 19% higher on an annual comparative base.

Message from the Management

On the Sustainability front, in April we published the Annual Report 2021 in April, presenting the Company’s results and ESG initiatives during the year. Also, Renner and Youcom launched the first jeans to be tracked by blockchain, a technology which allows the consumer to monitor the production cycle via QR code from growing of the cotton to the manufacture of the apparel. Finally, our targets for reducing CO2 emissions were approved by the SBTi, our aim being to reduce greenhouse gas emissions by 2030.

The strong operating result combined with gains in efficiency and scale has made for robust financial performance. Total EBITDA (post-IFRS16) was 47% higher than the same period in the preceding year and 29% more than 2019, with the SG&A/NOR ratio close to 2019 levels. Net Profit surpassed pre-pandemic levels by 56%. We ended the first half in line with our ambitions: robust growth with gains in market share, gross margin and Total EBITDA (pre-IFRS16) close to 2019 levels.

With the aim of ramping up efficiency in the capital structure, we concluded the Share Buyback Program, initiated in January, totaling 18 million shares at an average price of R$25.20. We also announced the anticipation of the payout of Interest on Equity for 1Q22 and 2Q22, the latter which originally due to be paid out in April/23. We have chosen not to roll over debt falling due in 2H22. These and other measures, in addition to optimizing our capital structure, also improve the ROIC without compromising the maintenance of a solid net cash position. This gives us the flexibility and security for traversing a period of major economic uncertainty as well as ensuring the implementation of our strategic investments.

The RX Ventures – Lojas Renner’s Corporate Venture Capital fund launched in March – made its first investment in July: in the Logstore startup, dedicated to the development of innovative solutions in technology for retailing. This minority capital injection was made in a round managed by Domo Invest, one of the leading VC managers in Brazil. RX Ventures plans to invest R$155 million through minority participations in at least 10 startups across a range of different segments over the next few years.

With this, we come to the second half of the year! Third quarter sales are in line with estimates for the period and we expect to maintain a good rhythm of sales in the short and medium terms. Notwithstanding the greater caution which the macroeconomic climate inspires, we are prepared and well capitalized: we are convinced as to our capacity to execute the operations and believe that brands with meaning and a clear value proposition generate competitive differentials and create conditions for gains in market share. We continue confident in our strategy: we are the largest omni player in apparel in Brazil, committed to our projects for increasingly consolidating our position as the ecosystem leader in the segment, maximizing enchantment still further among our customers and generating value for our shareholders.

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Disclaimer

Lojas Renner SA published this content on 04 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2022 21:36:10 UTC.

Publicnow 2022

All news about LOJAS RENNER S.A.

Sales 2022 12 714 M
2 432 M
2 432 M
Net income 2022 1 271 M
243 M
243 M
Net cash 2022 1 907 M
365 M
365 M
P/E ratio 2022 20,9x
Yield 2022 1,63%
Capitalization 27 714 M
5 301 M
5 301 M
EV / Sales 2022 2,03x
EV / Sales 2023 1,76x
Nbr of Employees 25 474
Free-Float 98,2%



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Income Statement Evolution

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Mean consensus OUTPERFORM
Number of Analysts 14
Last Close Price 28,25 BRL
Average target price 34,40 BRL
Spread / Average Target 21,8%


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