Lojas Renner Drops Most in Week as Income Trails Estimates

Lojas Renner SA (LREN3), Brazil’s biggest clothing retailer, fell the most in a week after reporting fourth-quarter net income that trailed analysts’ estimates.

Shares dropped 0.5 percent to 75.30 reais at the close of trading in Sao Paulo, the steepest decline since Feb. 21. Trading volume was 2.7 times the three-month daily average, according to data compiled by Bloomberg. The benchmark Bovespa index (IBOV) rose 0.6 percent.

Fourth-quarter adjusted net income was 147.7 million reais ($74.9 million), according to data compiled by Bloomberg after the company filed results yesterday following the market’s close. The average estimate of nine analysts was 153.2 million reais. The share of the retailer’s own credit card in sales dropped to 51.2 percent from 54.2 percent a year earlier.

“The consumer finance operation did not meet our optimistic estimates,” Itau BBA analysts Juliana Rozenbaum and Vitor Paschoal said in a research note to clients. The deteriorating consumer finance numbers might signal a contraction in profitability while the overall result for the quarter was “in line with strong estimates,” the analysts wrote. Renner shares are still the equivalent of a buy, according to Itau.

Renner has advanced 20 percent in the past year. The Bovespa has lost 12 percent during the same period.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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