Lojas Americanas’ Surprising Profit Growth Sends Stock to Record

Lojas Americanas SA, the biggest publicly traded Brazilian retailer, delivered second-quarter profit growth that exceeded analysts’ estimates, sending shares to a record high.

Earnings before interest, tax, depreciation and amortization surged 28 percent to 453 million reais ($143 million), topping estimates of 390 million reais by Credit Suisse and 377 million reais by Itau. Sales were little changed from a year earlier at 3.94 billion reais, in line with projections.

Lojas Americanas is investing in logistics and private-label brands to improve profitability. And earnings got a boost compared with a year earlier, when the second quarter included the Easter holiday, when retailers seek to lure shoppers with discounts. Still, the profit-margin increase was “astonishing,” and it’s hard to tell if it will be sustainable, Credit Suisse analyst Tobias Stingelin said in a research note.

The diversity of products that Lojas Americanas sells -- from mobile phones to chocolate -- help its profitability, Chief Financial Officer Murilo Correa said on a call with analysts. “This has been contributing to our margins,” he said. “We have a beautiful business in our hands.”

The shares jumped as much as 6.4 percent to 20.43 reais, the biggest intraday gain in almost three months.

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