Magazine Luiza's profit drops 89% in the 3rd quarter; e-commerce stands out 1r391y

Despite all the success last year, the profit of the Magazine Luiza showed a drop of almost 90% in the third quarter when compared to the same period last year. However, this does not mean that sales have dropped and on the contrary: the company has sold more in 2021, with e-commerce as its main source of income. When we make a comparison between 2020 and the current year, there was a growth of 12%. 3b3k6e

The drop in profit can be explained by the low choice of people to make purchases in physical stores of Magazine Luiza, since despite being big on the internet, these establishments still directly impact the company's earnings. Understand all the details about the profit of the Magalu right now.

Total sales grow 12%, despite the drop in Magazine Luiza's profit 5t4g2b

When we make a comparison with data from the third quarter of last year, which was a period where more people were making purchases over the internet due to physical stores being closed, there was an 89% drop in profit Magazine Luiza. If between July and September 2020, the company reached a profit of BRL 215,9 million, this amount was BRL 22,6 million in the current year.

Many people can imagine that this was due to a slump, where in fact, the company actually stopped having more sales in its physical stores. But it turns out that sales in the third quarter of 2021, sales were 12% higher than the same period last year.

Talking about non-recurring net profits, which may originate from debt renegotiation, concessions, etc., the Magazine Luiza had a net income in the third quarter of 2021 (the money that was actually booked as earned after all discounts) of R$143,5 million. This amount is 30,5% lower than what the company recorded in the past, when it reached R$ 206 million in net income.

The past year can be considered very adaptive for all consumers, where many people who were left with no option then were opting to shop online. The Great Boom e-commerce in general it was essential so that merchants did not have to close their doors and going to the digital market was almost mandatory.

E-commerce was most used by the company's customers 2p2k4g

Despite the profit of Magazine Luiza having presented a drop of almost 90% when we make a comparison between the third quarter of 2020 and 2021, it can be said that the company had more sales in the current year. Adding total sales, talking about physical stores and virtual environments, there is a growth of 12%. In 2020, the Magazine Luiza grew by 148% due to more people making more purchases online.

Looking at this year's data, the company has a profit of R$ 13,8 billion in all sales channels that it has available in the market (physical stores and marketplaces with its own stocks). we mentioned that people are now buying more online? O Magazine Luiza also knows this and saw its digital channels sell BRL 10 billion for the first time in history. This company channel already represents 72,46% of all sales and had a growth of 22%.

Consumers who made purchases over the internet are returning to making digital purchases precisely for practicality and those who have not yet done so are venturing out for the first time due to the benefits.

o Magazine Luiza also mentioned that its physical stores had an 8% drop in sales compared to 2019, when we were not yet experiencing a pandemic moment. This public action also influenced the company's profit drop, since it is the main place where low-income people make purchases.

“What actually happened was the exit from the second wave of the pandemic with a more difficult macroeconomic scenario and which will probably continue.”

The company's EBTIDA also fell by 37,5% year-on-year qn6q

Since the data represents the result of the company's operation, we also had a drop in 2021, using information from last year as a basis. Also called earnings before interest, taxes, depreciation and amortization, the EBITDA do Magazine Luiza showed a drop of 37,5% compared to 2020.

In practice, this is the margin used for companies to know their reality and if all expenses can be paid according to the amount available in the company. Despite the somewhat negative number in a year with more sales, Magazine Luiza still has a large market share. It is worth mentioning that if a company has a EBITDA negative, there are major management problems. What is not the case for Magazine Luiza, at least for now.

Online shopping success 3jx13

If you weren't one of the people who made a first online purchase in 2020, you surely know someone who has. Last year, the e-commerce in general it went through a real high, reaching numbers never seen in its entire history. Only on Black Friday, a great commercial date that anticipates sales for the end of the year, it is estimated that there was a profit of R$ 5,1 billion in Brazil alone. A 31% growth compared to 2019.

Despite this, VIA, which is a competitor of Magalu and owner of big stores like Bahia Houses e Point, also failed to maintain a high profit in the third quarter of 2021 compared to the same period last year. This company had a loss of R$ 638 million, with its shares closing down 12%.

Companies now need to act to keep their digital channels, which are now being chosen more by consumers, to keep growing. In fact, this is already happening, where we are already seeing a lot of promotions that are only focused on the digital realm.

With Black Friday 2021 coming and the other holiday parties “knocking on the door”, it remains to be hoped that all this will and if companies really will have positive results. In the last two months of this year, do you intend to make more purchases in physical or digital locations? Comment with us!

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Did you know that in May of this year, it was announced that the Magazine Luiza is at the top of the value generationr? Understand this right now:

Magazine Luiza leads the ranking of value creation, with a return of 226% per year

Sources: Valor Econômico, The Globe, InfoMoney e Your money