Lojas Renner S.A., the second largest apparel department store in Brazil,
Management Comments
The results for this third quarter reflect the consistency of the Company's view held since early 2012 of acceleration in economic activity in the second half of the year. In this context, the third quarter registered an increase in Net Revenue from Merchandise Sales of 22.2% and growth in Same Store Sales at Renner of 13.2%.
This result is principally due to the Company's strategy of: anticipating the launch of the spring-summer collection in relation to the same period last year; the effectiveness of the recently-opened operations and the recovery in sales at the stores that had been undergoing remodeling in recent quarters; the assertiveness of the new collection and favorable climatic conditions during the quarter.
Gross Margin from the Retailing Operation was also significant, registering an important expansion of +1.2p.p. in 3Q12 compared with 3Q11. Contributing favorably to this result was a combination of falling cotton prices, positively affecting both domestic and imported products, the correct management of inventories and the early launch of the spring-summer collection in July. The Renner operation alone posted a gain in Gross Margin of +1.5p.p. in 3Q12.
EBITDA from the Retailing Operation recorded growth of 47.6%, equivalent to a Margin of 13.1% against 10.8% in 3Q11, resulting from a combination of stronger sales and better gross margin combined with the strict management of costs.
Results from Financial Services in 3Q12 posted a significant growth of 26.5% in relation to 3Q11, the highlight of the period being the greater contribution from financed Private Label and co-branded credit card sales. The reduced levels of non-performance - more particularly in the Personal Loans portfolio where losses recorded were lower than the same period in 2011 - also contributed importantly to the end result.
In the light of the foregoing comments, total EBITDA surged strongly in the period increasing by 40.8% in relation to the same period last year. The total EBITDA margin reached 18.4%, an increase of +2.4p.p. compared with 3Q11. The Company's net income rose 20.9% in relation to 3Q11, representing a net margin of 8.5%.
During the quarter, the Company unveiled its new Distribution Center in Rio de Janeiro, the Shared Services Center (SSC), the new E-commerce platform and the Renner Card's 'Clube de Vantagens'(Advantage Club).
