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Despite the difficult phase faced by retailers of durable and semidurable goods since last year, there are signs that April and May may have been better than the first quarter, which has made asset managers and executives more hopeful about a change in the consumer environment after the second half of the year.
This started to become clearer with the release of results from the companies this month. Although the sales data from January to March show what was already expected – sales volume in decline and costs on the rise – companies such as Via, Centauro, Carrefour and GPA say they saw better figures in April than in March, and May sees demand and foot traffic levels in line with April.
Via, the owner of Casas Bahia and Ponto chains, reported the best Mother’s Day since 2018. Americanas, which sells everything from food to laptops and linens, said that brick-and-mortar stores have been expanding foot traffic and show resilience.
The partial authorization to withdraw money from Workers’ Severance Fund (FGTS) accounts, the stabilization of unemployment rates (the quarter ended in February saw the lowest rate since 2016) and early payment of 13th salaries (a year-end bonus) of pensioners may have driven results, economists say.
The companies also cited the effect of Auxílio Brasil, a social program with larger monthly cash transfers than its predecessor Bolsa Família, as well as the higher number of consumers in the streets.
Another aspect that drew the market’s attention was the fashion retailers’ ability to pass on price adjustments to consumers in the first months of the year without any reduction in the volume sold.
In a way, according to analysts’ reports, this can also be understood as a sign of a greater possibility of improvement in the retailers’ margins.
Renner’s management team mentioned last week that it has been passing on higher costs to products without noting negative reactions from buyers. Centauro’s management team said it has partly passed on higher costs from input and freight without losing sales.
Despite being companies more focused on middle-class consumers, any recovery in consumer spending typically starts with this segment. As a result, consumer spending specialists expect that a little more consistent recovery may gain strength later among low-income consumers.
Despite the sharpest drop in foot traffic in January, Marisa, a fashion retailer focused on the middle class, cited an “expressive recovery” of same-store sales in February and March compared to the same months in 2019, a phenomenon noted in April and May as well.
Market analysts will monitor in the following months the higher portion of payments in arrears in point-of-sale loans. They see a slight pickup in demand in the second half as a possible outcome, despite the fact that many consumers are still paying for previous purchases.
In Marisa, Via and Carrefour first-quarter results, net losses in customer portfolios or payments in arrears (up to 90 days) drew the attention of analysts. They are already adjusting the release of POS loans, but say that the situation is under control.
Source: Valor International