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Same Store sales up 5.3% in fourth quarter at Lojas Renner

Feb '12
LOJAS RENNER S.A. announces its earnings results for the fourth quarter (4Q11) of 2011. The fourth quarter of the year was characterized by a relative return to growth, after the period of economic deceleration seen in the previous quarter.

The weather also improved, and the collections were well accepted. Same Store Sales increased 5.3% in the quarter, an indication of the recovery and, even with the high comparison base, the Company accelerated growth in comparison with 4Q10. The newly launched stores contributed to the Company achieving a 12.4% growth in the quarter, which confirms the importance and success of the expansion plan.

For 4Q11, retail operation deserves highlighting, reporting a Gross Margin increase of 1.7 percentage points to 52.8% and an EBITDA Margin of 22.9%, with a 1.3 percentage point increase. Financial Services Result came to R$ 20.5 million, affected by the initial expenses of the co-branded operations with MasterCard and Visa. Bad debts were higher than in the same period of last year, but even so remained below the historical levels. The participation of the Renner Card represented 54.2% of sales in 4Q11, with 646.2 thousand new Cards.

During 4Q11, the Company opened 23 stores and reached the historical landmark of 36 launches in one single year, in line with the Expansion Plan. At the end of the period, the Company operated 164 Renner stores, 30 Camicado and 3 Blue Steel pilot stores.

The consolidation and integration process of Camicado continues developing, with the greater part of the administrative areas integrated. Projects related to commercial activities continue progressing, and should beimplemented in stores throughout 2012. Management is optimistic and confident of the potential of this business, both in terms of operating margins and opportunities for rapid expansion.

Net Revenue from Merchandise Sales was R$ 972.2 million in 4Q11, reporting a growth of 18.0% over Renner sales in 4Q10. The growth reported was influenced by the entrance of the summer collection, which consumers received well, and by the good performance of the Christmas sales, despite the high comparison base of 2010.

The macroeconomic scenario also helped, with a slight improvement in relation to 3Q11, when inflation indicators and the potential of a crisis in Europe caused reductions in the level of consumer confidence. Gross Profit from Retail Operation in 4Q11 reached R$ 513.5 million, presenting a growth of 22.1% year on year. Gross Margin was 52.8%, with an important increase over the 51.1% reported by Renner in 4Q10. This improvement results from the success of the collections, from the adjustments in stock levels, the reduced need for markdowns, the lower cost of cotton for some items from domestic suppliers as well as from the assortment offered in the summer collection.

The integration of Camicado had a minimum diluting effect on Gross Margin. As for Operating Expenses in 4Q11, Selling Expenses were R$ 233.9 million, representing 24.1% of Net Revenue from Merchandise Sales, versus 23.8% in the same period of the previous year. This small increase is a result of the higher pre-operational expenses incurred by the more aggressive expansion plan effected in 2011 when, in 4Q11 alone, 23 stores were opened. The Consolidation of Camicado also brought a slight pressure on Selling Expenses.

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