There is a lot of doubt about the effect of the World Cup on retail, says Grupo Soma

Grupo Soma outlined two distinct scenarios in terms of inventories and strategy on Black Friday, given the uncertainties that exist in retail about the impact of the World Cup on sales, said the company’s chief executive on Tuesday (8).

“If there was no World Cup scenario, we would be quite optimistic for the fourth quarter,” said Roberto Jatahy, in conferences with analysts.

“Today, there is a lot of doubt about the size of the impact of the World Cup on retail as a whole, and what we are doing here is preparing for two scenarios: a very good scenario and a more conservative scenario”, he added, without detailing which ones. would be the strategies in each.

He highlighted that the group is “super-prepared to have a positive quarter”.

Soma, which owns brands including Hering, Farm and Animale, last night reported 59.2% growth in adjusted net income in the third quarter from a year earlier, with all brands showing more than 20% growth in gross revenue. individually on an annual basis.

Analysts at Citi and Itaú BBA saw better-than-expected results and the stock rose 1.4% early this Tuesday afternoon, while the Ibovespa advanced 0.4%.

Last week, the president of Lojas Renner also stated that the company was preparing a different strategy for Black Friday 2022 due to the potential impact of the World Cup, which takes place between November and December, on sales.

HERING MARGIN

The financial director of Grupo Soma, Gabriel Lobo, said on Tuesday that the expectation for Hering’s profit margin is “gradual evolution” during 2023 until it is “closer”, to normalized levels, of 2019.

The brand saw gross margin rise 2.2 percentage points in 12 months to 42.6%.

Soma has been working on the restructuring of Hering, acquired in 2021, under strong market attention. The group has renovated stores, is expanding mega stores and has been implementing plans to reduce the share of outsourced manufacturing in total clothing production.

Jatahy also said that Hering did not benefit from a longer winter, especially in the South and Southeast, and that the lack of higher temperatures has been “harming” the summer collections.