Natura Cosmeticos, Lojas Renner Lead Retailer Rally on Profit Outlook

Natura Cosmeticos SA and Lojas Renner SA led a rally for retailers on speculation consumer demand will keep profits growing without spurring inflation.

Lojas Renner, the clothing retailer that is scheduled to report second-quarter results today, jumped 3.8 percent to 54.48 reais. Natura Cosmeticos SA, Brazil’s biggest cosmetics maker that said July 22 profit jumped 14 percent, surged 4.4 percent to 44.57 reais.

Brazil’s central bank said today in minutes from its July 20-21 meeting that economic growth may have slowed to sustainable levels since the start of the year, helping to contain inflation risks.

“We have some good results to come, and what’s come out has been good, too,” said Joao Pedro Brugger, who helps oversee 70 million reais ($39.8 million) at Leme Investimentos in Florianopolis, Brazil. “The central bank seems more relaxed and the economy should stay heated for a good while longer.”

A slowing Chinese economy and doubts about the strength of the U.S. recovery are helping to fight inflation that’s been above the government’s 4.5 percent target since January, the bank said today in the minutes of its July 20-21 meeting.

A drop in the inflation rate and evidence Latin America’s biggest economy is slowing prompted the central bank to reduce the pace of interest rate increases last week. Policy makers increased the Selic rate by 50 basis points to 10.75 percent, surprising 48 of 51 analysts surveyed by Bloomberg who expected a third straight 75 basis-point increase.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.

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