Hering, Brazil’s second-largest clothing retailer by market value, rose 3.1 percent to 34.37 reais at 12:15 p.m. in Sao Paulo, the most on a closing basis in one week. Bigger competitor Lojas Renner SA (LREN3) advanced 2.8 percent to 68.31 reais. The Ibovespa benchmark increased 0.6 percent.
Companies that sell in the local market advanced after a central bank survey showed that economists covering Brazil forecast that gross domestic product will expand 2.40 percent this year, up from a 2.35 percent estimate a week earlier. A report last week showing that the country’s retail sales increased more than forecast in July also helped to spark demand for the shares, said Joao Pedro Brugger, a portfolio manager at Leme Investimentos.
“Retail sales have been growing faster than GDP, and that will probably continue to be the case for a while,” Brugger said in a phone interview from Florianopolis, Brazil. “Many stocks in this sector are attractive. Renner is one of my favorites.”
Hering trades at 15.1 times forecast earnings for the next four quarters, which compares with a ratio of 17.8 times for Renner, data compiled by Bloomberg show. They’re the cheapest retailers on the Ibovespa, which trades at an average ratio of 21.2 times estimated earnings.
Retail sales in Brazil increased 3.7 percent in July from a year earlier, the national statistics said Sept. 12. That exceeded the median estimate of 3.1 percent among analysts surveyed by Bloomberg.
To contact the editor responsible for this story: David Papadopoulos at email@example.com