October 24, 2019 / 9:24 PM / 25 days ago

Brazil's Lojas Renner posts lower third-quarter profit, led by non-recurring effects

SAO PAULO (Reuters) - Brazilian fast-fashion retailer Lojas Renner SA (LREN3.SA) reported on Thursday a 2.6% drop in its third-quarter net profit, as tax issues that the company said were non-recurring overshadowed strong revenues.

In a securities filing, the company said its quarterly net profit fell to 189.3 million reais ($46.84 million) from 194.2 million reais a year ago, when a court decision had reduced the tax rate for the retailer during that period.

“Even so, we’ve had a positive third-quarter with healthy same-store sales,” Chief Financial Officer Laurence Gomes told Reuters in an interview on Thursday, adding the company also expects a warm welcome to its summer collection in the fourth-quarter.

Lojas Renner’ same store sales growth came at 8.3% in the third-quarter compared to 6.9% a year ago. Its net revenue climbed by 12.9% to 1.93 billion reais, while its operational expenses declined 2.3% to 668.3 million reais.

Considering both retail and financial operations, adjusted earnings before interest, taxes, depreciation and amortization (EBIDTA) hit 360.4 million reais, 3.9% up from the third-quarter of 2018.

Based in the southern city of Porto Alegre, Lojas Renner has transitioned from a traditional department store to a leaner, fast-fashion retailer.

The company does not disclose e-commerce sales figures, but Gomes said the integration with its brick-and-mortar stores is evolving rapidly. “Almost 30% of all online sales are retrieved in our stores, which also helps us increase the customer flow,” he added.

Lojas Renner’ shares closed 3.56% down on Thursday at 49.27 reais, before the quarterly results were released.

Reporting by Gabriela Mello; Editing by Leslie Adler and Sandra Maler

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