The escalation of inflation in 2022 and, especially, in the second quarter of the year, made retail move its profit margins. In April, the IPCA (Extended National Consumer Price Index) reached a peak of 12.13% in 12 months, to close June at 11.89% in the year to date.
According to a survey carried out by the consultancy Economatica for Folha de S.Paulo, of the 29 retailers with shares traded on Bovespa, 21 reduced their gross margin in the second quarter (difference between revenue and cost of goods sold), either in relation to to the first quarter of the year, or compared to the second quarter of 2021.
The survey pointed out that, between April and June this year, retailers applied gross margins between 10.5% and 67.6%. In the period, the indicator presented reductions between 0.1 percentage point (pp) and 7.5 pp
“Reductions in gross margin indicate that retail sought to partially contain the increase in inflation and not pass it on in its entirety to the consumer, in order not to lose sales,” said Carlos Vieira, chief analyst at TC Economatica.
According to Vieira, the trend is that now, in the second half of the year, with the increase in the payment of Auxílio Brasil of R$ 600 in the economy, retailers will recompose their margins – that is, pass on the entire cost of inflation.
“At the same time, companies tend to absorb the reduction in freight costs, provided by the drop in fuel prices”, says the economist.
The survey by Economatica, one of the largest providers of financial information in the country, took into account the international sector classification NAICs Level 1, where most of the publicly traded retailers are located.
The American companies, C&A, Dimed (owner of the Panvel pharmacy chain), Enjoei, Magazine Luiza, Pague Menos, RaiaDrogasil and Via (Casas Bahia and Ponto) did not reduce their margins in the second quarter. Of these 8, however, 3 showed a drop in net revenue (Via, Magazine Luiza and Americanas) and 3 recorded a loss in the period (Magazine Luiza, Americanas and Enjoei).
In the opinion of retail consultant Alberto Serrentino, a partner at Varese Retail, the main movement in the second quarter was the tightening of the net margin (percentage of net income in relation to total revenue).
“Most retail companies have some level of financial expense associated with credit to customers or financing the operation,” says Serrentino. “With the soaring of interest, this financial expense was much higher and compresses the net margin.”
In the case of large retailers like Carrefour, which saw gross margin decline in the second quarter of the year, Serrentino believes it was a strategic move. “Holding prices was clearly an initiative not to lose market share,” he said.
Sought, Carrefour did not respond to the request for an interview. The companies Grupo Pão de Açúcar, Assaí, Renner, Marisa, SBF/Centauro, IMC, Track & Field and Grupo Mateus also did not respond to the report.
5G AND CUP
Electronics retailer Allied confirms that the biggest problem has been the cost of money. “The cost of credit was the main factor in compressing margins in the first and second quarters”, says Silvio Stagni, president of Allied.
According to him, electronics inflation is dollar-backed and, despite some spikes in the currency this year, there was not a large variation compared to last year.
At the same time, the electronics market performed exceptionally well in 2020 and 2021, he recalls, due to the increase in online activities. “Now we are back to the level of 2019, with the difference that we face a much higher interest rate.”
The company has its own e-commerce (Mobcom), is an authorized reseller of the Apple, Google, HyperX and Xiaomi brands in large marketplaces, and operates 160 Samsung points of sale in the country.
Silvio Stagni, 61, president of Allied Tecnologia Press Release A gray-haired man in a blue shirt and jeans smiles, leaning against a blue wall **** The executive, however, is optimistic about the second half of the year. “The arrival of 5G moves the smartphone market, increasing the average ticket of the category”, he says.
As an example, he cites the survey by the consultancy GfK, which pointed to an average price of R$1,350 for a 4G smartphone, while a 5G device costs R$3,055.
Stagni recalls that November is the traditional best time for TV sales, the World Cup, which this year will be held in Qatar.
“Unfortunately, the date coincides with another important moment for electronics, Black Friday”, he says. “We end up missing a date, but, anyway, margins should start to improve.”
For the retail consultant Eugênio Foganholo, from Mixxer Desenvolvimento Empresarial, in this third quarter consumption is still walking sideways.
“But the last months of the year should be very heated”, says Foganholo. “After the elections, with the definition of a new presidential term, regardless of who takes over, the consumer will have renewed confidence”, says the consultant.
In Foganholo’s view, segments that demand financing, such as electronics and construction material, should be more favored. “Even though, objectively, there isn’t a lot of money available,” he says.
Carlos Vieira, from Economatica, agrees that the holiday season and the increase in job creation should boost retail in the last quarter, with emphasis on the clothing and cosmetics segments. “Even if these jobs are not accompanied by an increase in income.”
Alberto Serrentino, on the other hand, believes that the outlook for the second half depends on the interest rate scenario for next year. “Inflation is already subsiding, although based on temporary measures and considering the fuel variable”, he says.
“But if the price of fuel follows an accommodation and fall movement in the international market, and if there is no other global turmoil that causes new inflationary surges, Brazilian inflation may observe a downward trend, with a decrease in interest”, he says. “Which would immediately improve the scenario for retail, with a relief in financial expenses.”