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B2W Slumps After Fifth Consecutive Loss: Sao Paulo Mover

B2W Cia. Global do Varejo, the Brazilian online retailer controlled by Lojas Americanas SA, retreated to the lowest level in a month after reporting a fifth consecutive quarterly loss.

Shares declined 4.9 percent to 10.01 reais at 1:01 p.m in Sao Paulo, the lowest intraday price since Jan. 27. Lojas Americanas fell 4.7 percent, while the benchmark Bovespa index rose 0.9 percent.

B2W’s fourth-quarter loss widened to 28.8 million reais ($16.7 million), according to a statement on the company’s website today. The online retailer’s results were in line with the average estimate for a net loss of 29 million reais among 10 analysts surveyed by Bloomberg.

“The company is working to turn around and go back to being efficient,” Priscila Tambelli, an analyst at Banco do Brasil SA, said by phone from Sao Paulo today. A more “aggressive” price policy and longer product delivery deadlines ended up harming profitability and driving away consumers, she said.

If B2W doesn’t regain market share and profitability, it would have to shut down, Tambelli said.

B2W’s consolidated sales rose 2 percent to 1.18 billion reais in the quarter, while B2W alone posted a 0.8 percent drop in sales from a year earlier, according to the statement.

The company said in a statement it “has been investing constantly in the optimization of its logistics services and supply chain.” B2W invested 351.6 million reais in 2011 and opened a distribution center in the northeast of Brazil, while signing an accord for a new site in the state of Minas Gerais.

Americanas Profits

Lojas Americanas, Brazil’s second-largest retailer by market value, posted a 14 percent increase in fourth-quarter profit yesterday, beating analysts’ estimates as sales growth outpaced an increase in costs. Lojas Americanas’s quarterly net income was 180.2 million reais, above the average estimate of nine analysts surveyed by Bloomberg for a profit of 170 million reais after extraordinary items.

The results “confirm Lojas Americanas’ impressive ability to work its mix into very high gross margins and good expense control,” Juliana Rozenbaum, an analyst at Banco Itau BBA SA, wrote in a report to clients today.

B2W showed “sustained weakness” that overshadows the “strength” of Lojas Americanas, said Rozenbaum, who has a “market perform” recommendation for both Lojas Americanas and B2W.

Americanas’s consolidated net sales rose 7 percent to 3.14 billion reais. The Rio de Janeiro-based company opened 90 stores in 2011, below the target of 101 new stores. The company plans to open 400 stores in Brazil through 2013.

B2W Questioned

B2W’s earnings raise questions about its ability to turn around without further help from the controlling company, Rozenbaum said.

B2W had logistics problems in 2011 that led to delays in deliveries. Local regulators temporarily banned the company from selling goods in Rio de Janeiro and Sao Paulo states, after receiving about 20,000 consumers’ complaints, and Brazil’s Justice Ministry is also investigating the delays.

Lojas Americanas jumped 28 percent this year before today, compared with B2W’s 17 percent gain and an 18 percent rise in the Bovespa benchmark index.

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