Retailers tighten credit as early delinquencies rise

Brazil’s largest retail chains have kept a tight rein on credit this year, limiting financing to customers to protect themselves against the risk of consumer defaults. The strategy has helped prevent a rise in provisions for credit losses.

Six retailers with combined annual gross sales of just over R$120 billion had R$40 billion in consumer credit outstanding in the first half, Valor calculations show. In real terms, after adjusting for inflation, their combined loan book shrank 1.2%.

Despite the conservative approach, this year’s figures show that shorter-term delinquencies, of up to 90 days, are rising faster than overall overdue balances—a potential warning sign for retailers.

Credit restraint

The findings are based on a Valor survey of first-half financial statements from publicly traded fashion, electronics and sporting-goods retailers. The analysis covered provisions for doubtful accounts, total overdue balances, delinquencies of more than 90 days and the size of each company’s overall credit portfolio in Brazil.

The companies included home-appliance, electronics and furniture retailer Casas Bahia, omnichannel retailer and marketplace Magazine Luiza, Grupo SBF’s sporting-goods retail chain Centauro, and fashion retailers C&A, Renner and Riachuelo. Valor selected them because they are the publicly traded retail groups with consumer-finance operations. Food retailers and drugstore chains generally do not offer longer-term installment plans.

The six chains had a combined credit portfolio of R$40.95 billion at the end of June, up 3.43% from a year earlier. That was below the 4.64% inflation rate over the same period, as measured by the IPCA consumer price index.

Provisions for doubtful accounts were virtually unchanged at R$3.7 billion. They were stable or lower at Magazine Luiza, Casas Bahia, Renner and Centauro, while increasing at C&A and Riachuelo.

Total overdue balances across the retailers rose 6.7% from a year earlier to R$9.81 billion in the first half.

That increase was faster than the rise in accounts overdue by more than 90 days. In that category, outstanding balances grew 3.5% to R$6 billion, broadly in line with the expansion of the overall credit portfolio.

The figures suggest that more recent delinquencies are putting greater pressure on the overall level of late payments.

Looking at individual companies makes the deterioration in consumers’ ability to keep up with payments more apparent.

Early arrears

At fashion retailer Renner, for example, balances overdue by 31 to 89 days rose 14.8% to R$1.5 billion. By contrast, amounts overdue by up to 30 days fell 7.6% from a year earlier.

“This suggests that consumers start paying for a recent purchase and then, after the first month, begin falling behind on installments,” said a former commercial director at a department-store chain.

At Centauro, balances overdue by 31 to 60 days increased twelvefold to R$4.7 million. In the 61-to-90-day range, the amount quadrupled to R$3.1 million, the company’s so-called aging list shows (the figures are net of provisions for expected credit losses). The figures are net of provisions for expected losses.

For comparison, the total amount more than one day overdue also rose sharply, though at a slower pace. It more than tripled, from R$5.1 million in June 2025 to R$16.8 million in June 2026.

Casas Bahia, which has been under court-supervised restructuring since August, has long relied on installment financing as one of its strengths. The company saw overdue balances on its store-financing plans rise 34.5% in the 61-to-90-day range. Amounts overdue by 31 to 60 days increased 27.1% in the first half of 2026 from a year earlier.

Among all the delinquency periods analyzed, ranging from six to 180 days, those two brackets showed the steepest increases in overdue Casas Bahia installments.

Overall delinquencies in the retailer’s credit portfolio rose at a slower pace, though the increase was still significant. Total overdue balances climbed 24.7% to R$1.7 billion in the second quarter of 2026 from a year earlier.

In its financial statements, Casas Bahia said it continues to monitor conditions cautiously and maintain a conservative approach, “ensuring the strength and sustainability of the portfolio.”

The retailer told Valor that delinquencies had risen more sharply in the early and intermediate stages, but said lower insolvency rates at longer maturities were a positive sign. It also said its delinquency rate increased from 8.4% in the second quarter of 2025 to 8.9% a year later, an increase it views as broadly stable.

Conservative lending

Renato Donatti, a senior director at Fitch Ratings, said Brazilian retailers have tightened lending standards in recent years after higher interest rates drove up the cost of capital. The aim has been to avoid taking on excessive default risk, a strategy that has helped keep the sector’s credit portfolios from becoming unbalanced.

Some retailers operate their own finance companies, while others have partnerships. Renner owns Realize, Riachuelo operates through Midway, and Magazine Luiza holds 50% of Luiza Cred, with Itaú Unibanco owning the other half. Among privately held chains, department-store chain Pernambucanas owns Pefisa.

Still, Donatti said store financing remains one of the few sources of credit available to some consumers.

“There is a consumer who is outside the banks’ radar, and retailers need to provide capital to that person for the sale to happen. The issue is that a more conservative approach became necessary, especially among finance companies linked to retailers,” he said.

Donatti expects these businesses to remain cautious when originating credit, adjusting limits and repricing risk while continuing to prioritize asset quality and profitability.

Riachuelo strategy

At Riachuelo, which Fitch sees as currently having a less restrictive credit policy than its peers, provisions for doubtful accounts rose faster than the average among the six retailers surveyed.

Its 15-to-90-day delinquency rate, however, was stable from April through June at 3.8%, while the rate for balances more than 90 days overdue increased from 26.8% to 28.4%.

Net provisions after recoveries and discounts represented 5.1% of the total portfolio, compared with 5.3% a year earlier. The slight decline in the ratio reflected faster growth in the portfolio.

“This result highlights improved provisioning efficiency as the portfolio expands,” Riachuelo said in a statement to Valor.

Asked whether it would maintain its strategy in the near term despite high interest rates and heavily indebted households, Riachuelo said improvements in its credit models allow it to expand lending. The company pointed to better delinquency indicators at shorter maturities, in contrast with some other chains.

“We intend to maintain this dynamic, while still taking a conservative stance, adjusting supply based on our reading of the market and the performance of new vintages.”

C&A provisions

C&A increased its provisions against credit losses by 22%, from R$52.1 million in June 2025 to R$63.7 million a year later, while its credit portfolio grew 6%. Total overdue balances increased slightly faster, by 7.3%.

Credit-card delinquencies reached 15.4% from April through June, the highest level since the third quarter of 2024 for balances more than 90 days overdue.

Still, the company’s overall delinquency rate fell to 4.4% in the second quarter of 2026 from 4.8% a year earlier. Net credit losses after recoveries also edged down 0.9%.

Asked whether it planned to maintain tighter lending standards, C&A gave no indication of a shift.

“We have internal models that help us forecast future delinquency and, based on that, since last year we have made adjustments to our lending policy in anticipation of this deterioration in the macroeconomic environment,” the company said in a statement to Valor.

C&A added that it seeks the best possible balance between serving customers and protecting profitability. Its figures show net revenue rose 1% in the first half, while gross margin increased 1.5 percentage points to 57%.

Sales trade-off

Retailers could theoretically expand credit to support a stronger sales recovery this year. All major publicly traded fashion chains saw revenue growth slow during the World Cup quarter.

For now, however, the high cost of getting that decision wrong has pushed the option aside.

Renner said in a statement that a more aggressive lending policy could provide some short-term benefit to sales, but that the gain would not compensate for greater vulnerability in a difficult macroeconomic environment. The company said conditions would need to improve consistently before it reconsidered its policy.

The fashion retailer kept its credit assessments cautious this year, helping reduce its portfolio by 1% from a year earlier to R$6.4 billion as of June. Its provisions for doubtful accounts were also stable.

But the more recent portion of its delinquent portfolio deteriorated: balances overdue by 31 to 89 days rose from 20.9% of the relevant portfolio in June 2025 to 24.2% in June 2026.

“We remain conservative in extending credit. Although delinquency is under control and our short-term indicators remain healthy, the macroeconomic environment still calls for caution, particularly among the most financially pressured income groups,” the company said.

Magalu portfolio

Magazine Luiza has taken a broadly similar approach. Its credit portfolio grew just 1.8% from a year earlier to R$20 billion as of June, below inflation, while provisions declined 0.9%.

Total overdue balances also accounted for a smaller share of the portfolio, falling by just over 10% in a year. Unlike at the other retailers, short-term delinquencies of 15 to 90 days declined.

The cautious credit stance has an impact on sales, given the sector’s heavy reliance on financing to support growth. But for Magazine Luiza, that trade-off is consistent with its current strategy of pursuing growth while prioritizing profitability.