How Americanas finances itself with small and medium-sized suppliers

The R$ 20 billion accounting scandal on Americanas’ balance sheet, denounced by its former president, Sergio Rial, on the last 11th, left several questions open. It is known that the operation that originated this amount is common in retail, called “advances to suppliers”. But it is still unknown how this operation entered the balance sheet differently than it should (or if it did not).

THE Sheet heard specialists and consultants in retail to understand how advances to suppliers work, why it is essential for retail and what may have happened in the operation involving Americanas. The report also contacted the retailer to clarify these points, but the company declined to comment.

“Brazilian retailers are very dependent on credit for everything. Even for semi-durable products, such as clothing: clothes are not sold on credit in the world, in six times, as we do here”, says consultant Alberto Serrentino, partner at Varese Retail. The need to “finance the customer” makes the demand for retail working capital very heavy, he says.

“But you can’t ask the supplier industry to finance its sale in the same proportion that the retailer finances the customer, although retail does exert a lot of pressure for longer terms. But, mainly, when it comes to small suppliers, they they don’t have the stamina for it,” says Serrentino.

Triangulation then occurs: a financial agent anticipates payment to the supplier, charging interest for it. “Retailers buy a product for R$10, within a period negotiated with the supplier. But the supplier wants to pay in advance and negotiates with a bank: he ends up receiving R$9 for the goods. The bank keeps the difference”, he says. him.

At the other end, the bank extends the period to receive from retail. “If the retailer has to pay the R$ 10 to the supplier in 60 or 90 days, he asks the bank for 120 or 150 days, which gives him a break in working capital, it is a financial breath”, says Serrentino. “For that, of course, the bank will charge R$ 11, for example”.

The difference between the R$9 that the bank paid to the supplier and the R$11 that he received from the retailer is his financial spread.

Retailer negotiates up to six months to pay for goods

“But Americanas has always been very aggressive in negotiating with suppliers – perhaps too aggressive, beyond any market standard”, says André Pimentel, partner at the consultancy Performa Partners, who worked on Americanas’ restructuring in the late 1990s, when he was at Galeazzi & Associados and, before that, he worked at PwC, the current auditor of Americanas.

According to him, the payment terms negotiated by Americanas with suppliers have always been very long, longer than average. “While retail works with a payment of 30, 60 or a maximum of 90 days, Americanas adopts up to 180 days for payment to suppliers. But most of them are small and medium-sized companies, which cannot deal with their flow of box, with such a long receipt period”, says Pimentel.

At this point, the retailer’s negotiating capacity comes into play, which has credit in the financial market: they contract the banks to pay the suppliers in advance, who bear a financial discount on the amount to be received. “Eventually, even a very big discount”, says Pimentel. Americanas assumes responsibility for paying the bank within the period agreed with the supplier.

To explain the fact that R$ 20 billion did not appear on the balance sheet, André Pimentel has a theory.

“When the retailer owes the supplier, this debt is in the accounts payable column. As the bank anticipates and settles the amount with the supplier, and Americanas assumes with the bank the responsibility of returning the money to it, this passes to be a financial debt”, says Pimentel. “From an accounting point of view, it would be a short-term debt, as it is less than 12 months, and would go to current liabilities.”

But when Americanas carried out this operation, instead of transferring the amount from the ‘accounts payable’ column to the ‘financial debt’ column, the company left the amount in the ‘accounts payable’ column, until the date of settling the amount with the bank says.

“She owed the supplier, the bank settled it. At the original due date, when she should pay the bank, she compensated for the cash outflow with the write-off of accounts payable”, he says.

According to him, those who saw the operation from the outside, just following the large numbers, did not realize that the debt with the supplier became a debt with the bank, because the amount was paid.

“But if you start to reconcile this with the retailer’s financial movement, you realize that the operation was wrong. Because instead of a deposit being made into the supplier’s account, it was made into the bank account”, he says.

The higher the financial expense, the lower the profit.

But there is an indication that something does not add up: the financial costs of the operation, the interest that the retailer needs to pay to the bank. “Once the bank advanced the payment to the supplier, and Americanas started to owe the bank, the company had a financial expense. It had to pay the value of the merchandise plus the interest”, says Pimentel.

“This interest is a financial expense, which ends up reducing the company’s result. So, instead of putting this interest as a financial expense – which could raise doubts about the origin of the operation, leading to the discovery of a much higher volume of payment of interest –, Americanas accounted for this interest in an account that did not impact the result”, he says.

That is, according to Pimentel’s theory, artificially, over a long period, Americanas’ result was presented higher than it was in reality. “If we think about the volume of operations at Americanas that, over the last few years, involved many advances, and on which the company paid a financial expense –which may have been very high, depending on the interest–, and the amount is corrected until As of today, it is possible to reach R$ 20 billion”, he says.

Therefore, says Pimentel, the correction of R$ 20 billion in the retailer’s balance sheet should not come in the debt line, but in the result.

“The correction will have to be made when they have to assume unaccounted losses. This will bring a problem to the company’s equity. The shareholders will have to capitalize the company, so that it does not become insolvent”, he says.

Did Rial already know what he was called for?

André Pimentel, who attended Sergio Rial’s presentation to Americanas investors on Thursday morning (12), says that the executive gave some “clues” of what should happen to the company. “He mentioned the need for an operational restructuring, said that the company had to improve its inventory management, which were very high, and that this type of retail is at a time when consolidations might be interesting.”

According to him, the hiring of Rial, a ‘banker’ and not a ‘retailer’, announced in August last year, would already indicate a strategy for Americanas to deal with a crisis situation, including communication with the market and the lack of credibility that the company must face from now on.

THE Sheet contacted Rial to clarify these issues, but the executive did not return until the closing of this text.

It is worth remembering that Rial remains in the business as advisor to the main shareholders, formed by the trio of partners of 3G Capital (Brazilian billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira).

Pimentel had his first contact with Americanas in 1999, when the retailer underwent its first restructuring, under the command of consultant Claudio Galeazzi, called by 3G to lead the company.

“From what I follow from Americanas and its e-commerce operation, I confess that I never understood how the business stopped standing in terms of profitability”, he says.

Retail needs to discuss whether the model is sustainable

The contributions made in recent years by the main shareholders, in the order of R$ 8 billion, according to Pimentel, draw attention. “The e-commerce operation, in general, consumes a lot of capital and is not very profitable, especially when you have strong competitors and you need to grow a lot, so that the market makes a good analysis of the company”, he says.

“This has always made Americanas’ results questionable. But as the company has 3G behind it, made up of businessmen with a very good reputation, with successful global businesses, people are even embarrassed to criticize the operation”, he says. .

THE Sheet it has even shown that more than half of the revenue of three of the largest retailers in the country –Americanas, Magalu and Via– come from e-commerce.

Recently, the market has been analyzing more carefully, however, the large retailers that work with e-commerce, he says.

“At the height of the capital market, there was an excessive valuation of retailers, but the shares began to fall sharply. Because no one sees profitable operations in these companies, capable of sustaining themselves in the long term. This is the big question that needs to be asked, after the impacts of that meteor that was the accounting scandal in Americanas”, he says.

In the opinion of consultant Eugênio Foganholo, a partner at Mixxer Desenvolvimento Empresarial, 3G Capital is known for not founding companies. “He buys opportunities”, he says, referring to businesses with potential to generate greater value than they present at the moment.

“3G arrives with scissors to cut costs, which generates profit in the short term. However, afterwards, the company stagnates, because in general they are mature companies, not startups”, he says. Hence the need to often earn in the financial market.

RAIO-X AMERICANAS SA
(data for the 3rd quarter of 2022)
Foundation: 1929, in Rio de Janeiro
Net Revenue: BRL 5.4 billion
EBITDA: BRL 582.3 million
Net loss: BRL 211.6 million
Shops: 3,601
Employees: about 40 thousand
Mainly competitors: Via (Casas Bahia and Ponto), Magazine Luiza
Source: company