RIO DE JANEIRO, BRAZIL – The Vivara jewelry chain (VIVA3) has been in the spotlight since going public in early October. The operation injected R$500 million (US$125 million) into the company’s cash flow, allowing it to speed up – and greatly so – its pace of store opening.
It opened four stores last week alone, totaling 31 in 2019. By meeting its 2019 target, the company has set itself a bolder target for next year: to open 50 stores throughout the country.
The chain was founded in 1962 in the store opened by Romanian goldsmith David Kaufman, in downtown São Paulo.
Civil engineer Nelson, his son, eventually started a small construction company, but he returned to the company in the ’80s and was in charge of building and expanding the brand throughout Brazil in the following decade.
“My father is my mentor and he was the great entrepreneur of Vivara,” says Marcio Kaufman, the grandson, who joined the network at 24 in 2004 and has been running the business since 2010. The family also controls the Etna furniture and decoration store chain.
For at least 15 years, Marcio set the goal of extending the stores’ reach, previously dedicated only to the niche of those who can afford gold jewelry.
Little by little, the chain grew into silver products, glasses, watches, perfumes, and leather accessories. All packed by an aspiring brand, in the style of Bulgari and Tiffany. But with prices suited to the Brazilian reality.
To support this strategy, the company intends to expand its presence in malls from the current 33 to 70 percent by 2024.
“We’ve been talking for at least four years about this IPO (initial public offering), in order to carry out the expansion strategy”, says Marcio. “We have tested our presence in smaller cities and malls, with promising results.”
Vivara’s initial share offering was a success among individuals, who have sought stock profitability and recognized the well-known brand. Shortly after launching the shares, market analysts said they appreciated the growth project, although they could see obstacles along the way.
Among the advantages is a market leader which can be consolidating through organic growth or acquisitions.
There is also the production verticalization, focused in Manaus, and the varied portfolio. In addition, there is an e-commerce operation with a growing trend. As a result, analysts have seen the potential for appreciation of shares.
Listed at R$24, the shares have the potential to appreciate between 23 and 25.4 percent, according to different houses.
“In general, we like retailers with plans for expansion,” says Thiago Macruz, an analyst at Itaú BBA. “Vivara sets up modest and small stores, with relatively low investment, has a higher average turnover (consumer spending) than shopping mall stores in general and, therefore, easy to pay for”.
Obstacles
According to several analysts, the issue begins with the fact that the trademark has no previous records of such aggressive expansion.
Retailers in other areas have tried the same strategy unsuccessfully. “The Restoque (owner of Le Lis Blanc) is an example,” wrote Joseph Giordano in a report, an analyst at JP Morgan. The analysts mention the risk that jewelry is no longer the object of desire of the young public.
To generate recurring purchases, Vivara launches no less than 30 collections per year, which reach the stores two months after the designs have been created.
“It’s not a common practice in the sector, which works only with events like Christmas, Mother’s Day and Valentine’s Day”, says the jewelry store’s president.
A member of a family that prides itself on discretion, Marcio has been trying to get used to the spotlight imposed by a publicly-traded company. However, he is not ready to discuss handing over his reign.
“At some point, we will discuss succession, but for the next few decades I intend to remain here.”
Source: Infomoney