Magazine Luiza (MGLU3) exceeds forecasts with profit in 1Q24, increased margin and stable cash flow; check the retailer’s numbers

After the Casas Bahia (BHIA3) presented pressured results, but better than expected in the first quarter, the performance of Magazine Luiza (MGLU3) during the period was highly anticipated by investors, who are trying to measure the temperature of the Brazilian retail — and Magalu exceeded projections.

This Thursday (9), the company reported adjusted net profit of R$29.8 million between January and March, reversing an adjusted net loss of R$309.4 million compared to the same period of the previous year. Without adjustments, net profit for the period totaled R$27.9 million, a reversal of R$391.2 million in losses from a year earlier. The result was much better than the projection of a net loss of R$6.52 million, according to data from Bloomberg.

A Net Revenue of Magazine Luiza totaled R$9.2 billion in the first quarter, which represents an increase of 1.9% compared to the same period in 2023. The market expected R$9.43 billion in revenue.

O Ebitda (earnings before interest, taxes, depreciation and amortization), in turn, was R$684.9 million in the quarter, a result 111.3% higher in annual terms and also above Bloomberg’s estimate of R$679.7 million for the period. Adjusted EBITDA totaled R$687.8 million, an increase of 53.5% year-on-year.

Magazine Luiza’s Ebitda margin rose 3.8 percentage points (pp), to 7.4%, while the adjusted Ebitda margin rose 2.5 pp, to the same 7.4%.

Operating cash generation in the last 12 months was R$2.7 billion, influenced by the evolution of operating results and working capital. Between January and March, working capital was R$2.1 billion better than in the same period of the previous year.

Magalu ended the quarter with an adjusted net cash position of R$2.4 billion, an increase of R$2.5 billion year-on-year, and a total cash position of R$9 billion, stable compared to the fourth quarter 2023.

A net debtin turn, totaled R$4.3 billion compared to a projection of R$8.11 billion according to Bloomberg.

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Mercado Livre: a threat to Magazine Luiza?

O Mercado Livre (MELI34) is one of the biggest concerns for Brazilian e-commerce, especially after the robust results released last week — in addition to seeing profits soar 71% in the first quarter, which sales volume (GMV) of Meli increased 36% in Brazil compared to the same period in 2023.

And one of the risks for Magazine Luiza (MGLU3) is precisely the increase in competition in the 3P marketplace market — when the retailer carries out the entire sales and delivery process.

Magalu’s e-commerce reached R$11 billion in sales in the period, growing 1% compared to the same period of the previous year. Marketplace sales reached R$5 billion, an increase of 6% on an annual basis, consolidating itself as the second largest sales channel and representing more than 40% of online sales.

In physical stores, Magazine Luiza sales reached R$5 billion in the quarter, an increase of 8% compared to the same period in 2023. In the same stores criterion, growth reached 9%. As a result, Magalu expanded its market share by 0.7 pp between January and March.

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MagaluPay’s performance

The total volume of transactions processed (TPV) from the fintech of Magazine Luiza reached R$24.9 billion between January and March, an increase of 6% on an annual basis. One of the highlights was the 14% growth in the volume of payments for sellers and in MagaluPay digital accounts.

In credit cardrevenue reached more than R$14.1 billion in the quarter, an increase of 3% on an annual basis — with 7 million credit cards issued and R$20 billion in credit portfolio.

Highlight the sequential drop in rates of default — 3.4% and 9.4% in the short and long term, respectively — and the company’s net profit Luizacred (R$ 13 million).