Retail and industry see 2nd semester more favorable with 5G, Cup and aid

The main Brazilian retailers listed on the stock exchange expect a recovery in sales in the second half of the year, in the face of a series of favorable events – from the World Cup to Christmas – and prospects of improvement in the scenario of interest and inflation, a panorama also seen by the electronics industry that supplies the sector.

However, entrepreneurs from three of the largest retail chains in the country —Americanas, Via and Magazine Luiza— were careful to define the magnitude of these expectations, speaking of “cautious” optimism and a “more favorable” semester for analysts and journalists at the end of the week. last.

In addition to the World Cup and Christmas, executives also mentioned Black Friday, in November, the recent launch of 5G technology, which should help with cell phone sales, and the increase in the Auxílio Brasil program to R$600.

“We are very confident about the second half of this year, remembering that there are very important events for the coming months,” said Marcio Cruz, who heads the digital area at Americanas, to analysts on Friday.

The optimism comes after interest rates at their highest peak in Brazil since 2017 and the biggest advance in 12-month inflation in nearly two decades put pressure on retailers’ sales in the first half of the year.

The net revenue of Via, owner of the Ponto and Casas Bahia banners, dropped 2.5% in the first half, while that of Magazine Luiza was practically stable and that of Americanas rose 16.6%. In the same period of 2021, the three managed to increase sales of 32.7%, 59.8% and 37.9%, respectively.

Cruz said that Americanas sales until this half of the third quarter continue to grow in a “consistent” way in physical stores, pulled by lower average value products, but online demand for its own products, such as appliances, “remains timid”.

At Via, the company’s Chief Executive, Roberto Fulcherberguer, said that sales follow the “same beat” seen in the second quarter, and that the third quarter should still “be more challenging”.

The assessment is that the factors favorable to sales are more concentrated in the fourth quarter, increased even by greater effects related to an expectation of relief in inflation and stability in interest rates.

“Sales of more traditional categories of products (such as furniture, appliances and cell phones) tend to reflect the evolution of these indicators, mainly inflation and interest rates”, said the financial director of Magazine Luiza, Roberto Bellissimo.

“We are seeing an increase in demand between 30% and 40% for 5G devices (in cities where the technology has already been implemented),” said Fabrício Bittar, vice president of operations at Magazine Luiza, noting that these devices have an average price above of BRL 2,000.

INDUSTRY ALSO IN EXPECTATION

Manufacturers in the first half were hit by lower demand and global issues such as higher input prices due to sea freight and supply chain bottlenecks, but the “second half should be better”, said the chief executive of Eletros ( National Association of Electronics Manufacturers), Jorge Nascimento.

“This year there is still an important event that is the World Cup when traditionally there is a greater consumption of televisions, audio and video products and refrigerators”, he said. The association encompasses companies such as Philco, LG, Panasonic, Samsung and Whirlpool.

In the data until May, the Brazilian industry suffered a 24% drop in retail product deliveries compared to 2021, according to Eletros. “We are in a moment of crisis with retraction of consumption and we need the customer to consume again”, said Nascimento.

At Abinee (Brazilian Association of Electrical and Electronics Industry), the expectation is of “moderate optimism”. The entity, which is associated with companies such as Siemens, Apple, Dell and Motorola, projects a 9% increase in the sector’s revenue in reais in 2022, against an increase of 22% in 2021.

If on the supply side the cost of freight, the rise in inputs such as steel and plastic and the semiconductor crisis disrupted the industry in the first half of the year, in terms of demand, the high levels of inventories accumulated by retailers in previous quarters also served to reduce the orders.

Humberto Barbato, executive president of Abinee, said that “it seems that the retailers are managing to spawn the stocks”.

The assessment is reiterated by the companies. “We do not think that inventories are high, we believe that in the second half the sales perspective is better for what we believe it is possible to do in terms of growth, inventories are already normalized”, said Frederico Trajano, President of Magazine Luiza.

The stock market has been buoyant with the sector and the shares of the three retailers —Magazine Luiza, Via and Americanas— have reduced accumulated losses in the year, as new positive macroeconomic data are released. The three had the biggest drops among Ibovespa shares in 2021.

Only in August, until Wednesday afternoon, Magazine Luiza’s shares led the Ibovespa gains, with a rise of around 60%. Even so, the shares are down around 43% in the year. Via advances approximately 45% in the month and has a drop of almost 34% in the year, while Americanas has an appreciation of 3% in August and a decline of 53% in 2022.