Magazine Luiza’s Profit Grows 54 Percent in 2019 to R$921.8 Million

RIO DE JANEIRO, BRAZIL – Magazine Luiza‘s total net income amounted to R$921.8 million (US$230 million) in 2019, an increase of 54.3 percent over the previous year. Total sales reached R$27.3 billion. In the period, e-commerce’s profit share was 45.3 percent (R$12.4 billion). In the previous year, it represented 35.7 percent.

Particularly in the fourth quarter, a period in which e-commerce sales accounted for almost half (48 percent) of turnover, net income stood at R$168 million, down 11.4 percent from the same period in 2018. Total sales in the period amounted to R$9 billion, up 51 percent.

The drop in quarterly net income, according to a report released by the company on Monday, February 17th, was due to an increase of 50.6 percent in operating expenses, which rose due to the incorporation of Netshoes into the company and additional investments.

The retailer bought all Netshoes shares in June last year, for approximately R$115 million.

The growth in the company’s e-commerce – comprising website, sales Apps, marketplace and the Netshoes, Zattini, and Época Comésticos operations – was 76 percent in 2019.

According to the report, the growth is explained by the gain in market share compared to the Apps’ performance, which, according to the company, reached 19 million active monthly users.

In the year, sales in the physical stores grew by 17.9 percent, while the sales generated in the same stores grew by 7.8 percent.

In a report for 2020, the company stated that it plans to further incorporate the acquired companies, increase the number of partners in the marketplace – which currently represents 32.4 percent of total e-commerce sales – and include all product catalogs.

In late January, the company announced the purchase of ‘Estante Virtual’ (“Virtual Bookcase”), for R$31.1 million. The retailer was the only one to submit a proposal for the purchase of the online used book platform.

Financial

Luizacred – a financial company founded by Magazine Luiza and Itaú Unibanco and in charge of financing a large portion of the retailer’s sales – recorded a total turnover of R$20.6 billion for the year, 32.5 percent up compared to 2018.

According to the report, Luizacred’s result is influenced by the increase in the card base and the credit limit available to the best customers.

In 2019, the Luiza Card’s total revenue was R$20.3 billion, an increase of 33.8 percent in the same comparison. The total credit portfolio grew 37.4 percent to R$11.5 billion.

Source: Folhapress