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Lojas Renner profit drops in Q1
02 May '09
5 min read
The normal seasonal hiatus in the retail business was compounded this year by an adverse macroeconomic environment due to the worsening international financial crisis, which had begun in September 2008. Reported results were also impacted by a high comparative base in 1Q08, unseasonable summer temperatures, adjustments in inventory profile in January in the light of business realities, and the later launching of the 2009 collection in the stores.
Net Revenue from Merchandise Sales posted a fall of 5.4% in the quarter while Same Store Sales dipped 12.0% in 1Q09, principally due to the higher comparative base in 1Q08, when the company had reported an increase of 11.5% in this item in the period. Another factor influencing the performance was the particularly strong competition from small retail chain stores and boutiques. However, this reflected the need for aggressive discounting in the early months of the year to run down high residual inventories following the year-end peak selling period, and in the Company's view, is unlikely to be sustained.
Customer receptiveness to the new fall-winter collection at the stores since mid-March has been positive in spite of persistently high temperatures. In-house research suggests that prices are competitive and the selection of merchandise well aligned to prevailing customer needs. Set against this background, the first quarter was a particularly challenging one for Lojas Renner.
However, despite the adverse economic scenario, management continued to focus on adjusting its business to the changed circumstances of our customers as well as seeking to leverage opportunities with respect to the sale of financial services. Management believes that the first months of 2009 cannot be used as a yardstick for annual forecasts given the high comparative base figures for the same quarter 2008 and the changing competitive environment due to the international economic crisis.
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Net Revenue from Merchandise Sales posted a fall of 5.4% in the quarter while Same Store Sales dipped 12.0% in 1Q09, principally due to the higher comparative base in 1Q08, when the company had reported an increase of 11.5% in this item in the period. Another factor influencing the performance was the particularly strong competition from small retail chain stores and boutiques. However, this reflected the need for aggressive discounting in the early months of the year to run down high residual inventories following the year-end peak selling period, and in the Company's view, is unlikely to be sustained.
Customer receptiveness to the new fall-winter collection at the stores since mid-March has been positive in spite of persistently high temperatures. In-house research suggests that prices are competitive and the selection of merchandise well aligned to prevailing customer needs. Set against this background, the first quarter was a particularly challenging one for Lojas Renner.
However, despite the adverse economic scenario, management continued to focus on adjusting its business to the changed circumstances of our customers as well as seeking to leverage opportunities with respect to the sale of financial services. Management believes that the first months of 2009 cannot be used as a yardstick for annual forecasts given the high comparative base figures for the same quarter 2008 and the changing competitive environment due to the international economic crisis.
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LOJAS RENNER S.A.
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