Same store sales posts double digit growth at Lojas Renner
29 Apr '11
6 min read
Gross Margin from the Retail Operation was 53.0%, equal to the percentage registered in 2010. All efforts taken in the period to mitigate the effects of higher raw cotton costs and the passing on to prices were duly implemented. In 1Q11, the average price of merchandise increased about 10% in relation to the same period in 2010, this translating into a growth in sales of 7.6%, a consequence of an expanded selling area and more robust store traffic.
As forecast, there was some upward pressure on Operating Expenses due to the large number of stores being prepared for inauguration, teams which are being recruited and trained and support areas which have been revamped to provide necessary backing for more vigorous growth. Logistics overheads also impacted the 1Q11. Selling Expenses reached R$ 167.0 million, representing 32.3% of Net Revenue from Merchandise Sales (against R$ 137.1 million and 31.1% for the preceding year) and General and Administrative Expenses were R$ 51.5 million, equivalent to 9.9% of Net Revenue (against R$ 41.0 million and 9.3% in 1Q10).
The combined impact of a favorable sales scenario with a steady gross margin was offset by higher expenses, reducing the EBITDA Margin from the Retail Operation to below levels posted in 2010. Hence, in 1Q11, EBITDA from the Retail Operation was R$ 46.7 million, on a Margin of 9.0% against R$ 46.8 million and a margin of 10.6% in 1Q10.
Results from Financial Services registered growth of 46.1% in 1Q11 on total revenue of R$ 38.5 million, against R$ 26.3 million in 1Q10. This improvement is based on the consistent results reported during the period, principally the 0+8 interest-bearing plan, on the lower cost of the operations with interest and on past-due payments, which represented a saving of R$ 3.2 million in relation to 2010 due to the FIDC, as well as the lower levels of delinquency and provisions. Continued improvement in credit performance and greater refinement of the propensity models for offering products through CRM (Customer Relationship Management) initiatives have equally been contributing to reported results.
Credit losses on sales effected with the Renner Card Net of Recoveries were 2.5% of Net Revenue from Merchandise Sales, 1.8 percentage points less than the 4.3% recorded in 1Q10. During the quarter, the total number of Renner Cards issued was 17.5 million, 53.9% of the Company's total sales of merchandise being settled against the store card. In 1Q11, sales in 0+5 interest-free installments accounted for 41.8% of total sales and in 0+8 with interest installments a further 12.1%.
The average ticket for Renner Card sales in the period was R$ 128.20, representing a growth of 11.0% against the R$ 115.53 in 1Q10.
In the personal credit products segment, the total loan portfolio reached R$ 104.2 million (R$ 76.8 million adjusted to present value) and losses were R$ 5.7 million versus R$ 4.7 million in the same period in 2010. The average loan ticket recorded was R$ 601.00 and the average tenor, 8.2 months.
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