Lojas Renner Falls Most in 11 Weeks as Sales Trail Forecasts
Lojas Renner SA (LREN3), Brazil’s biggest publicly traded clothing retailer, dropped the most in 11 weeks after third-quarter results trailed forecasts. Bank of America Merril Lynch lowered its rating on the stock.
Shares fell 8.5 percent to 52.37 reais at 2:15 p.m. Sao Paulo time, the worst performance since Aug. 8. Brazil’s benchmark stock index gained 0.1 percent.
Net income dropped to 56.7 million reais ($33.5 million) from 57 million reais a year earlier, the Porto Alegre-based company said in a statement. The results missed the average estimate of 64.5 million reais among seven analysts surveyed by Bloomberg. Sales at stores open at least a year, a measure known as same store sales, rose 3.8 percent.
“Like all its chief rivals, Renner’s same store sales slumped to 3.8 percent, the weakest growth of its main peers,” analysts at Banco BTG Pactual SA including Fabio Monteiro said in a note to clients today. They had forecast an increase of 5.8 percent.
Bank of America Merrill Lynch lowered its rating on the stock to “neutral” from “buy,” citing “expectations of slower sales growth into the holiday selling season, compounded by higher labor and pre-opening expenses,” analysts including Robert Ford said in a note sent to clients today. “We also forecast higher consumer delinquency rates.”
Rival Cia. Hering SA gained 1.3 percent to 37.38 reais, headed for the highest closing price since the company first sold shares in 1997. Same store sales rose 9 percent in the third quarter, Hering said yesterday in a statement.
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