Renner gives more discounts and sells less, but cheers investors

With the pandemic of the new coronavirus, Renner had to close all its stores at a time when it presented the fall and winter collection. When the stores began to reopen, the fashion retailer soon began giving discounts to circulate the stock, before the arrival of spring, and anticipated the reappointments normally planned for the end of the season.
"We took a more aggressive strategy and understood that it was an appropriate decision, because of the low flow," laurence Gomes, chief financial officer and investor relations officer, said in a conference call on the results.
As a score, the gross margin of the retail operation fell 11.6 points to 44.8%. Gomes believes that this number should return to a balance in the coming months with the normalization of the flow of visitors in stores.
Net sales revenue fell 73.3% in the quarter. In adjusted terms, the company had a loss of R$ 228 million, compared to a profit of R$ 230.7 million a year earlier. However, considering the effects of the victory of a lawsuit on the exclusion of ICMS from the pis and cofins calculation base, which resulted in a net gain of R$ 1 billion, Lojas Renner started to have net income of R$ 818.1 million.
As with other retailers, the highlight was the digital channel that grew more than 200% in the period, reaching 36% of sales in the second quarter. One of the doubts about e-commerce is whether this model will continue to grow in the following quarters or whether it gained momentum only by replacing physical stores. According to the company, digital sales remained strong in August, up 200%, even with the reopening of all physical stores.
In addition to the website and application, the company invested in sales through WhatsApp. About 70 stores already have the feature, which has a higher average ticket and 30% conversion, much higher than in other digital tools.
The company also has added new delivery modalities. About 180 stores, of renner's 602 units, are used as mini distribution centers for internet shopping deliveries. The drive-thru for deliveries is available in 216 malls and delivered 13,000 orders. Today 10% of virtual orders are fulfilled from some store.
- Optimism with the resumption
For the company, the worst moment has passed and, despite the impacts felt in the quarter, is recovering sales and margins. "We are in a moment of resumption," says fabio faccio, the company's executive chairman. "It is one of the most challenging periods we have ever experienced, unprecedented, but we take actions anchored in our convictions and values. All of this has made us stronger, faster and even more resilient.
"The positive outlook cheered investors." The company said that sales in physical stores continue to recover, while online sales expanded 200% on an annual basis in July and August even with the reopening of stores," said Régis Chinchila, an analyst at Terra Investimentos. "The result was weak, which was expected, but it is something that was left in the rearview mirror. The signal that the company gave that it is already delivering the same sales volume as 2019 seems to be making more price," he says. The stock today rose 5% and are up 4% at 5:30 p.m.