Difficult economic scenario not shakes expansion plans of Lojas Renner

SAO PAULO (Reuters)-the absence of any concrete signs of resumption of consumption in Brazil not shakes the confidence of Lojas Renner about his store expansion plan over the next five years, as the company has been reviewing processes and strengthening its balance sheet, focusing on strategies for the long term.
"This moment of most challenging scenario can bring growth opportunity too," said in an interview with Reuters the Chief financial and investor relations officer of the company, Lawrence Garcia, when asked about the company''s expansion plans.
The Lojas Renner, who also has the flags Camicado and Youcom in your portfolio, you''re still finalising the budget for 2017, which should bring investments and anticipation of opening shops for the period.
According to Garcia, the plan must be voted on by the Board of Directors in January, but he said that company has four stores opening expectation in Uruguay in 2017, which will mark the beginning of international expansion of the company.
In May this year, the retailer''s Board approved the revision of the number of stores planned for the Renner in Brazil until 2021 to 450 units compared with 408 in the initial estimate. So, over the next five years, the company needs to open, on average, about 30 stores a year to fulfill the pace more than 2014, 2015 and 2016.
The Executive considered that the last two years have been difficult, with low economic activity rate, negative results on GDP, but the company has also tapped to review processes and operational efficiency, which has been reflected in the results.
"Although in a scenario more difficult, the profitability of the company has increased the cash generation is also growing, we reduce the debt, we have a solid box," he said.
In the nine months to September, the free cash flow was 360,800,000 reals, jump over 250% on annual basis. In the same period, sales at same stores were virtually stable, with increase of 0,1% compared to the first nine months of 2015.
For analysts at Goldman Sachs, Lojas Renner offers a convincing structural growth story and mentioning that the relentless investment behind its supply chain, merchandising and logistics are driving competitive advantage relevant in a fragmented market.
SECTOR
The Board of Lojas Renner to keep the expansion plan despite the economic crisis contrasts with the strategy of other competitors of the company.
The Riachuelo, Guararapes group, closes with six stores opening 2016, drastic reduction in relation to 28 open in 2015 (record year of investment due to the new automated distribution center in Guarulhos) and 45 units in the previous year.
"Briefly, as is prudent, we are reviewing our aggressive expansion plan to double in five years," said the Chief Executive of the company, Flavio Rocha, on the third quarter results conference call to be held in early November.
"Next year, even with a focus on the box and in decreasing the debt at the company''s conservatism, are gaining competitiveness in our meetings of investment investments in reforms," said Rock on occasion, stating that more reforms will be 2017 inaugurations.
In the same vein, Marisa executives stated on the company''s results Conference in late October they were pursuing "with absolute determination and obstinacy" the strict control of expenditure of the company, as well as focusing on generation of capital, the management of working capital.
The retailer has been closing stores liquid, with the number of establishments at the end of September totaling 398 units, against 409 stores by the end of 2015 and 416 stores in 2014. The contributions for this purpose have fallen dramatically, from 37,800,000 dollars in 2014, to 5,200,000 reais the following year and to 1.6 million in the first nine months of this year.