February 8, 2019 / 10:25 AM / 5 months ago

Brazil retailer Lojas Renner says strong 2018 finish carried into 2019

SAO PAULO, Feb 8 (Reuters) - Brazilian apparel chain Lojas Renner SA made an annual profit of more than 1 billion reais ($269 million) for the first time last year, helped by double-digit revenue growth which has carried over into the first weeks of 2019.

“We see good customer traffic and the same pace we had at the end of last year,” Chief Financial Officer Laurence Gomes said in a telephone interview with Reuters on Thursday.

He said economic conditions seemed more favourable, despite uncertainty related to the approval of the new government’s economic reforms.

In the fourth quarter, Lojas Renner’s net profit rose 33 percent from a year earlier, to 440 million reais, roughly in line with an average estimate compiled by Refinitiv of 434 million reais.

In 2018, the fashion retailer’s net profit of 1.02 billion reais was 39 percent higher than in the previous year. Net margin rose 2.5 percentage points to 13.6 percent.

“We had a challenging first half, with the truckers’ strike, the World Cup and not-so-favorable weather, but sales recovered in the second half,” Gomes said.

Earnings before interest, tax, depreciation and amortization (EBITDA) rose 20 percent to 1.773 billion reais.

Higher cash flow and low interest rates allowed the company to reduce its net debt.

Gomes said Renner was standing by plans to open three new shops in Argentina in the second half of 2019, as part of efforts to operate outside Brazil.

“It is a volatile market, but we are starting there with only three shops, so the risk is low”, Gomes said. ($1 = 3.7160 Brazilian reais) (Reporting by Gabriela Mello; editing by Emelia Sithole-Matarise)

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