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Same store sales posts double digit growth at Lojas Renner
Apr '11
LOJAS RENNER S.A., the second largest apparel department store in Brazil announces its first quarter results (1Q11).


• Net Revenue from Merchandise Sales reported a growth of 17.6% in the period
• Same Store Sales increased 11.2%
• Gross Margin from the Retail Operation remained stable at 53.0%
• Results from Financial Services reached R$ 38.5 million
• Total EBITDA was R$ 85.2 million with an EBITDA Margin of 16.4%
• Net Income for the period recorded growth of 29.0%

Management Comments

The first quarter of the year was a positive one for Lojas Renner and sales in the period increased by 17.6%. Same store sales reported double digit growth and the figures for the combined two years, with reported growths of 15.1% and 11.2% on the 1Q10 and 1Q11 respectively, showed that there has been no deceleration in the Company's post-Christmas sales.

The margin from the retail operation held steady at 53.0% in spite of higher raw cotton prices. During the quarter, the Company implemented various alternatives for reducing costs as well as in the engineering of the products in order to mitigate the impact of more expensive raw materials. Some price adjustments were also made, ensuring good margins without affecting sales volume and accepted by customers. Higher volumes of imported goods also made a notable contribution to margins.

The financial services segment reported positive results, growing 46.1% to R$ 38.5 million in 1Q11. Delinquency remained at low levels and the participation of the Renner card was 53.9%.

On fronts complementary to the core operation, the first Blue Steel store was launched as a test run for the potential creation of a specialized network. Subsequently, on April 4, the Company announced the signature of an agreement to acquire Camicado Houseware, with this acquisition Renner reentering the home and decoration segment. The deal is still subject to shareholder approval by Extraordinary General Meeting to be held on May 4 2011.

During the course of 2Q11, nine new stores, both compact and traditional, are planed to be rolled out. We continue confident as to the opportunities and good results which we shall be able to present up to the yearend.

Operational Data

Sales for 1Q11 benefited from the positive acceptance of the collections, the absence of Carnival festivities in February this year and from the lesser impact this public holiday had in the month of March with the summer season drawing to a close. Lower temperatures in the Southeast region since the middle of the quarter have also contributed to the good sales performance, which was R$ 517.7 million, a growth of 17.6% in the period compared with 1Q10.

On the basis of the Same Store Sales concept, 1Q11 posted an increase of 11.2%, a particularly positive result when set against growth of 15.1% reported for 1Q10. Store productivity evolved in the period from R$ 1,757 per m² to R$ 1,883 per m². The average ticket for purchases using the Renner Card saw growth of 11.0%. These indicators are evidence of the good acceptance of the more recently opened stores and the positive evolution of the Company's operations as part of the expected maturation process.

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