Shares of fashion retailers go out of fashion

Retailers C&A, Hering, Marisa and Riachuelo have closed their stores indefinitely, and at least in the short term, clothing chains are unattractive to investors. The week should be a new wave of questioning as more cities across Brazil order citizens to stay at home. At the beginning of the year, there was an expectation that the sector's roles could be valued, driven by the growth of the country's gross domestic product (GDP) and the individual digital transformation of networks. Only the coronavirus pandemic changed that scenario. In 2020, C&A shares have already fallen 66.7%, Hering's shares fell 67.1% and Marisa's 71.5%. The shares of Guararapes – riachuelo's controller – depreciated 54.5%. The reaction of investors is related to the geographical performance of retailers. The four concentrate their stores in São Paulo, a state that accounts for 40.8% of the confirmed cases of the new coronavirus, according to a report by UBS bank, signed by Gustavo Oliveira, Gabriela Katayama and Rodrigo Alcantara. São Paulo has since the weekend closed malls and begins on Tuesday, 24, quarantine established by the state government, in which only essential services stores can open. Even before the announcement of Governor João Doria (PSDB), made over the weekend, networks such as Riacheulo and Renner had already anticipated and announced the closing of stores. So the way out for the next few months, analysts say, will be in the digital transformation processes that networks have begun to implement in the last two or three years. Companies have not yet disclosed how much of their sales come from e-commerce, but said in their balance sheets that the segment grew by double digits in 2019, above sales in physical stores. Desire to buy online the consumer has. The fashion and accessories market was the leader in the number of e-commerce orders in 2019, according to the intelligence firm Compre&Confie, accounting for 21% of orders (in revenue, ranked fourth, with 11% of revenue semre$ 75 billion e-commerce). This share should continue to grow as Brazil enters the so-called "second wave" of e-commerce, with more purchases of various items besides traditional telephony and computing. "The period is quite troubled for retailers, they lose sales in physical stores, where most of them occur. However, it is a good time for consumers to know the service of buying via e-commerce, which may mean a future opportunity for companies," analysts at broker Guide write in a report sent to clients. The next few months will serve to see who actually got a sufficient stage of digital transformation (and box) to deal with this moment.