Retail: Lessons learned from 4Q22 and what to expect from companies in 1Q23

Closed on results season From the fourth quarter of 2022, the market should start focusing on the beginning of the year for companies listed on the Exchange.

In this last crop of balance sheets, the retailin particular, drew attention due to the change in positioning of some companies and the effect of world Cup out of time.

To the XP Investimentosfive lessons stood out within the sector:

1. as expected, the macroeconomic environment remains challenging;
2. the World Cup was more of a “villain” than the “hero” of the season, as it ended up affecting the flow of people (although it did benefit the demand for electronics);
3. financial services remain under pressure due to worsening defaults; It is
4. cash generation and profitability are priorities, given the deterioration of the macro.

“High interest rates and strong expansion plans continue to weigh on companies’ margins and debt costs. Operational efficiency was one of the main topics addressed in several earnings conference calls, mainly in terms of expenses and working capital”, highlights XP’s sectoral analysis team.

The lesson for 2023

Opinions on the first quarter of 2023 are mixed. XP expects high-income retailers to maintain solid growth trends, while the posture for the e-commerce segment is more optimistic after the case. Americans (AMER3).

In addition, companies must slow down the pace of M&A (mergers and acquisitions) and capex (investments), with the exception of Arezzo (ARZZ3).

In the case of networks pharmaciesthe broker expects the players to maintain the indicator SSS (Same Store Sales) above inflation.

For middle-income apparel retailers and companies in the process of restructuring/recovery, such as Natura (NTCO3) It is Multilaser (MLAS3), the perspective is still one of pressured results.