Business
O Magazine Luiza (MGLU3) released its results for the fourth quarter of 2023 (4Q23) with an adjusted net profit of R$101.5 million. For Santander, the results were in line with expectations, but with revenue still under pressure. Today, Magazine Luiza’s shares plummeted on the Stock Exchange, quoted at R$ 1.97 (-6.64%).
Magazine Luiza (MGLU3). Photo: iStock
“The results of the 4T23 do Magazine Luiza they show an improvement in expected profitability, for which we expect a neutral reaction from the market”, explains Santander.
Total gross merchandise value (GMV) was practically stable compared to the previous year, at around R$18 billion, with revenue falling 5.5% compared to the previous year. A Magazine Luiza gross margin reached 30.3%, 38 basis points above the bank’s estimate and 46 basis points ahead of consensus.
“The company’s consumer financing division, Luizacred, presented positive results in relation to our negative estimate. The overcoming of the bottom line was due to a better than expected EBITDA, in addition to the positive impact of investment subsidy benefits”, explain Santander analysts.
Over the Ebitda do Magalu, the value was slightly above the consensus estimate, supported by the improvement in gross margins and controlled management expenses. “These results support management’s plan to achieve a balance between growth and profitability,” says the bank.
During the trimestre do Magaluaccording to Santander, the company faced some unique events such as R$374 million in provisions related to a decision on past DIFAL payments (ICMS rate differential) and R$202 million in non-monetary financial income related to a revaluation of the payment by acquired companies.
Santander has a neutral recommendation for Magazine Luiza’s actions (MGLU3), with a target price of R$2.30.
Magazine Luiza reverses losses and profits R$ 101.5 million
In line with the most profitable Black Friday in its history, Magazine Luiza released its results for the fourth quarter of 2023 with an adjusted net profit of R$101.5 million between October and December.
O adjusted net profit of Magazine Luiza reverses the loss of R$ 15.2 million from the same period last year. The result of Magalu no 4T23 was supported by the growth in sales profitability, even with the stability of the traded volume (R$ 18 billion).
Management considered the last three months of 2023 as “the trimestre da virada para o Magalu“, highlighting the operational improvements that the company reported in all its sales channels (physical stores, e-commerce and marketplace).
The EBITDA of Magazine Luiza no 4T23 (earnings before interest, taxes, depreciation and amortization) increased by 12.3% compared to the same period of the previous year, to R$756.5 million. The Ebitda margin increased by 1.2 percentage points — the best result in three years, at 7.2%.
In the quarter, operating cash generation was R$1.5 billion, leading Balanço do Magalu ending the year with net cash of R$1.7 billion.
Without non-recurring adjustments, Magazine Luiza’s net profit was R$212.2 million, a reversal of a net loss of R$35.9 million a year earlier. The company explains that among non-recurring revenues and expenses are provisions for the 2022 ICMS rate differential (Difal) and the accounting for the sale of shares in Luizaseg, among others.
Gross margin was 30.3%, growth of 2.5 pp compared to the third quarter of 2022 and practically stable compared to the immediately previous period. According to the company, this is due to the completion of the transfer of the difal, in addition to commercial campaigns including the most profitable Black Friday in Magalu’s history. Product margin increased by 1.1 pp in the period, while service revenue contributed 1.4 pp to the total gross margin.
In the consolidated for the year, Magazine Luiza’s total sales (including the marketplace) grew 4.8% — to R$63.056 billion —, but other lines of the balance sheet showed lower performance than seen in 2022.
Net revenue fell 1.4%, to R$36.768 billion. Ebitda fell by 55% (R$870 million) in 2023 and the net loss increased from R$372 million to R$550 million.
Featured e-commerce
In the release released with the Magazine Luiza balance sheetthe company’s management drew attention to the growth of its marketplace — there are more than 360 thousand partner sellers who helped the retailer sell R$5.1 billion on its platform, surpassing the mark registered by its physical stores (R$5 bi in the last quarter of 2023, an increase of 4% in annual comparison.).
Sales in marketplace recorded growth of 10% compared to the same period in 2022. In 2023, with sales of R$18 billion (an increase of 17% compared to 2022), the channel consolidated itself as the company’s second largest after physical stores.
In aggregate, online sales of Magazine Luiza and remained practically stable in the quarter — at R$13 billion. In the year, volume grew 5% — to R$46 billion.
Annual performance of Magazine Luiza shares
MGLU3 Quote
Graph generated on: 03/19/2024
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