Magazine Luiza has almost 50% jump in revenues in the 2nd quarter

Magazine Luiza saw a jump in sales in the second quarter, as its e-commerce sales offset the drop in sales of physical stores, which have been closed since mid-March due to social isolation measures to contain the Covid-19 pandemic.
The retailer specializing in durable products reported on Monday that its total sales from April to June totaled R$ 8.6 billion, an increase of 49% compared to the same period in 2019, surpassing rival Via Varejo, with R$ 7.26 billion in the quarter.
Reflecting the surge in internet shopping in the period, Magazine Luiza saw its sales jump 182% in total e-commerce, while its street stores and shopping malls sold 45% less.
Operating income measured by ebitda (earnings before taxes, interest, depreciation and amortization) adjusted was R$ 147.2 million in the quarter, down 61.3% year-on-year.
"Considering the circumstances, it was an epic result," said the company's chief executive, Frederico Trajano.
In any case, Magazine Luiza had an adjusted loss of R$ 62.2 million in the second quarter, compared to a profit of R$ 85.2 million a year earlier. In net terms, the loss was R$ 64.5 million. Still, the last line of the result came better than the average forecast of analysts consulted by Refinitiv, of loss of R$ 125 million reais.
One of the consequences of the rapid migration of sales channels - the share of e-commerce rose from 41.5% to 78.5% in the annual comparison - the company's gross margin fell from 29.3% to 25.8%. According to Trajan, with the gradual reopening of stores - 92% of the 1,100 are open - this drop has decreased.
Cash flow, adjusted for receivables, totaled R$ 2.2 billion in the quarter and inventory turnover fell to less than 60 days in June, one of the best indexes in recent years. The company closed the half year with an adjusted net cash position of R$ 5.8 billion, an increase of R$ 5 billion in one year.
The company said that in July its total sales grew 82% year-on-year, while e-commerce advanced 162% and sales in physical stores grew 10%.
With these indicators, Trajano said the company has positive prospects for the second half of the year, planning to hire about 2,500 people by September, focusing on the areas of service and logistics.
The executive admitted that the result had important support from financial support measures, especially the monthly emergency aid of 600 reais to low-income families and advocated that the program be maintained for longer.
"The 'coronavoucher' effect has helped significantly cushion the effects of the recession and I don't think it's yet the time to back off countercyclical measures," Trajan told Reuters.