The rise in inflation and the rise in interest rates are impacting the consumption of Brazilian families in full and the impact on commerce has been gigantic. Companies like Magazine Luiza, Via and Lojas Americanas are suffering losses in the value of their shares.
Magazine Luiza was the one that most felt the impact and saw its shares fall by around 72% last year, reaching the worst performance of the Ibovespa (the main indicator of the Brazilian stock exchange). And the year did not start very well for the retailer. In the first 10 days of 2022 alone, the network recorded a devaluation of 18.69%.
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“Even though Magalu is a large retail company and very famous on the Brazilian stock exchange, with a rise of 1,400% since the 2016 revolution with the arrival of Frederico Trajano, who is the company’s CEO, and being focused on investment in technology, there was a large drop due to inflation and the challenge of passing on these costs, due to economic instability, to the final consumer”, says Enzo Ribeiro, a specialist in smart financial solutions and a postgraduate in Economics.
The current scenario is very different from that of 2020, when Magalu’s shares rose by 109%, thanks to the digitization that began much earlier on the network and, when the pandemic confined everyone at home, the company was already prepared to serve customers virtually .
But last year, with the advance of vaccination, the consumer returned to the physical market. However, without the economic recovery, retail was not able to achieve the expected growth.
Not to mention the entire macroeconomic context that casts doubt on economic policy and made stocks, especially in the retail sector, collapse.
“Another important factor was the increase in margins, increased competition, including from other countries, also had an impact”, says Enzo Ribeiro.
“And another reason is associated with the fall and growth of the platform’s gross sales value to 22% per year, below the main competitors in the same period and this has a direct impact on the investment of new investors due to all these risks and downfalls caused for these reasons and mainly associated with inflation”, concludes the specialist.
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