Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lojas Quero-Quero SA (BSP:LJQQ3, Financial) reported a 10% growth in same-store sales, indicating a positive trend in retail performance.
- The company opened 10 new stores, expanding its footprint and focusing on smaller cities for faster cash generation.
- Digital sales accounted for 24% of total sales, showing steady growth and providing a platform for future expansion without significant physical store investments.
- The company demonstrated strong community support during the floods in Rio Grande do Sul, providing aid and selling products at cost to affected customers.
- Lojas Quero-Quero SA (BSP:LJQQ3) secured BRL150 million in cash from a legal settlement, enhancing its financial position.
Negative Points
- The floods in Rio Grande do Sul negatively impacted 12 stores, with additional costs incurred for recovery and donations.
- The company experienced a slight increase in delinquency rates due to the floods, affecting credit and collection performance.
- Retail margins were affected by selling products at cost price during the floods, impacting overall profitability.
- The macroeconomic environment remains challenging, with interest rates not decreasing as expected, potentially affecting consumer spending.
- Despite growth, the company faced a negative cash flow in the first half of the year, consistent with historical seasonality but still a concern.
Q & A Highlights
Q: Are you planning to continue selling retail products at lower costs to help communities affected by the floods, and are there any additional expenses expected related to the floods?
A: Our policy is to sell listed products at cost prices to affected communities, and most of this has already occurred. In terms of expenses, everything was booked in the second quarter. We might see an additional BRL5 million to BRL6 million in sales, but no significant costs are expected beyond what has already been accounted for.
Q: How do you view the credit portfolio's stability and delinquency rates, and what are the results for stores in Santa Catarina and Paraná?
A: Our credit portfolio continues to grow at a stable, sustainable level with controlled delinquency rates. We do not expect major changes in our credit policies. The macroeconomic scenario is improving slowly, and stores outside the flood-affected areas have shown growth in sales, aligning with previous trends.
Q: What are your expectations for the results in Rio Grande do Sul for the third quarter, and how long do you anticipate higher revenue levels?
A: We cannot discuss third-quarter specifics, but July still saw some carryover costs. Typically, after such disasters, there's an initial increase in sales of furniture and appliances, which is now normalizing. Construction-related sales take longer to recover.
Q: How has the macroeconomic scenario impacted your operations, particularly regarding interest rates and deflation?
A: The drop in financing costs and stable inflation have been beneficial. However, the expected decrease in interest rates has not materialized as anticipated, affecting the consumption scenario. Deflation's impact is lessening, which is positive for our sales volumes.
Q: Can you elaborate on the company's investment strategy and debt management?
A: We continue to invest in store openings, with 11 new stores and BRL27 million in CapEx. Despite the macro challenges, our debt remains stable, and we have secured additional financing to support our credit portfolio growth. We expect cash generation in the second half of the year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
