Americanas Case: Retailers improve transparency – 05/27/2023 – Market

After the Americanas billionaire scandal at the beginning of this year, most retail companies increased the transparency of their balance sheets, specifying better the expenses they have with the so-called withdrawn risk. However, companies continue to report this data within operating results, without recognizing this mechanism as a debt.

Withdrawal risk is a type of operation in which the retailer manages to anticipate payment to suppliers through a loan from banks. The financial institution, therefore, advances the direct payment to the supplier and the retailer pays the bank. Interest on the loan can be charged to either the supplier or the retailer, depending on how the transaction is structured.

This type of payment to suppliers is at the center of the crisis at Americanas, which reported a BRL 20 billion hole in January, and later went into judicial recovery declaring even greater debts. After the case, companies in the sector changed the way they report the data in their quarterly results.

According to a survey by the American business consultancy FTI Consulting obtained exclusively by Sheetof the 10 retail companies listed on the São Paulo Stock Exchange that have a profile similar to that of Americanas, 7 improved the way they report their expenses with the risk withdrawn after the scandal.

The 3 companies that did not make changes to this part of the balance sheet is because they already had more transparent ways of presenting the data.

The study compared the financial results for the third quarter of 2022, i.e., released before the outbreak of the Americanas crisis, with the balance sheets for the first quarter of this year, therefore, after the scandal, of the following companies: Magazine Luiza, Via, Natura, Lojas Renner, C&A, Guararapes, Marisa Lojas, Grupo Soma, Arezzo and Alpargatas.

Of these, Guararapes, Arezzo and Alpargatas were the ones that did not change the way of reporting the drawn risk in their balance sheets.

Americanas was left out of the survey because it has not reported its financial results since the crisis.

The study also showed that, although companies have made improvements to be more transparent about the risk drawn down, this expense is still reported in the operational part of the balance sheets, and not in the financial part, within the debts.

According to the senior executive director of FTI Consulting, Luciano Lindemann, CVM (Securities and Exchange Commission) guidelines are for companies to include the drawn risk as a debt, within the financial data. In practice, the drawee risk is an operation that involves banks and that, therefore, have higher fees and risks than a simple expense with suppliers.

It turns out that, by reporting risk taken as a supplier expense, the company is able to reduce its indebtedness.

RISK WITHDRAWN AND AMERICAN CASES

The drawn risk was in the eye of the hurricane that devastated Americanas and shook the shares of other retailers at the beginning of the year.

On January 11, the company’s CEO at the time, Sergio Rial, disclosed accounting “inconsistencies” in the amount of R$ 20 billion in the company’s balance sheets. After the complaint, Rial resigned from his position.

These inconsistencies were precisely in the way of reporting expenses with the drawn risk.

Investment analyst Fernando Ferrer, from Empiricus Research, states that the withdrawn risk is an important instrument for the retail sector, through which companies gain access to lower rates with banks in order to be able to anticipate payment to suppliers. In the case of Americanas, however, there was an “improper accounting practice”, according to Ferrer.

Although investigations into the case are still ongoing, there is already some information about these “inconsistencies” that affected the company’s financial health.

According to some experts consulted by the SheetAmericanas, in the triangulation with banks, asked for an increase in the term for the payment of these loans, but this was not duly reported.

Instead of entering as a debt, due to the interest incurred for a longer period, the data would simply be extracted from the balance sheet with the increase in the term, inflating the company’s profitability. That is, Americanas would end up capitalizing its debts.

MARKET CHANGES

With the Americanas crisis, there was a reduction in the balances of risk-taking operations reported by some companies, as highlighted by accounting specialist Ítalo Borges, from BHub.

According to Borges, this happened because, with the outbreak of the scandal, there was an increase in the cost of this line of credit, with banks drastically reducing their exposure to the product, which generated a chain effect on other companies in the sector.

“As highlights, Ultrapar, controller of the Ipiranga service station network, reported in its earnings release for the first quarter of 2023 a reduction of almost BRL 1 billion in risk balances withdrawn. Following this trend, Via, owner of Casas Bahia , also reported a reduction of R$ 1.1 billion in the same period”, quotes the expert.

The expectation is that, little by little, the market will return to normal. Even so, Ferrer sees a change in the medium and long term, with analysts and investors now more attentive to this data, demanding more information from companies related to the drawn risk.

In addition, Ferrer draws attention to the fact that the banks that were on the list of Americanas’ creditors were harmed after the retailer went into judicial recovery due to the crisis. According to the analyst, financial institutions are now less complacent with nebulous data on drawn risk.

“Certainty that a crisis like this will never happen again is a strong word. It’s difficult to be sure. But, looking on the positive side, people have become more attentive. So, there is greater difficulty for this type of scandal to be repeated ’ says Ferrer.