Cia. Hering, Brazil’s second-biggest apparel retailer, fell the most in two months after analysts at investment bank Itau BBA cut the stock to hold from buy, citing weaker sales.
Shares dropped 5 percent to 42.66 reais at the close of trading in Sao Paulo, the steepest decline since June 26. The benchmark Bovespa index slid 1.5 percent.
Sales at stores open at least a year fell 3.9 percent in the second quarter from a year earlier, after a 4 percent increase in the first quarter, because of slowing economic growth, a decrease in consumers’ available income, bad weather and a less appealing line of clothes for sale, Hering said in a regulatory filing July 19.
“We just do not find enough upside potential to sustain our long-standing outperform recommendation,” Juliana Rozenbaum, an analyst at Itau, wrote in a note to clients dated yesterday.
The investment bank also cut Arezzo Industria e Comercio SA, a shoemaker and retailer, to hold from buy as the company’s spending to open more stores and bolster its presence at other shops may “drag down margins,” the analysts wrote.
Arezzo shares declined 4.9 percent to 32.80 reais, the lowest since July 31.