Dona das Casas Bahia announces plan to close up to 100 stores and cut employees

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A strategy announced by Via — which also manages the Ponto stores (formerly Ponto Frio) — provides for a reduction of up to R$ 1 billion in inventories this year. Casas Bahia Press Release/Casas Bahia Via, owner of the brands Casas Bahia and Ponto (formerly Ponto Frio), announced a new business plan this Thursday (10th), which includes closing up to 100 stores in 2023 and cutting 6 thousand employees. According to the company, the forecast is for a reduction of up to R$ 1 billion in inventories this year, in addition to changes in the form of funding to finance the installment plan (a form of payment offered to customers). According to Via’s president, Renato Horta Franklin, the company has already started to reduce the number of stores. The plan is to close 50 to 100 points that are operating at a loss, in addition to cutting employees. Regarding sales channels, the idea is to migrate the sale of products that currently do not generate profit — mainly lower-priced items — to your marketplace (e-commerce space). According to the executive, part of these measures will help reduce the level of inventories by up to R$ 1 billion — one of the main objectives of the new plan. “This adjustment of the 100 stores will bring a release of R$ 200 million in inventories”, stated Franklin. Management change The business transformation follows a change in the company’s top management during the second quarter. Renato Horta Franklin left Movida to assume the presidency of the retailer, and Elcio Mitsuhiro, who had worked at Iochpe-Maxion and BRF, took over as CFO. Franklin explains that the company already had a strategy of growing GMV (gross volume of goods), opening new channels, expanding stores and betting on fintechs. “We understand that all this was done. We built a super platform, and it is already big. So, between investing to grow this platform more or taking and monetizing what I have here, we prefer to make money with what we have here”, he says. Strategy The company will also reduce the level of investments (“capex”), with an estimate of reaching a level of up to 40% lower in relation to 2022. With the implementation of these operational transformations, the company estimates that it will be able to generate R$ 1 billion in net profit before income tax, although there is no prediction of when. The plan has a range of potential pre-tax earnings gains through 2025. Mitsuhiro noted, however, that this “is not a plan that will take until 2025”, without giving details of the timeline. Via’s new management also announced changes to strengthen the company’s capital structure. One of the main changes is related to fundraising. Via currently has 50% of its credit exposure linked to installment plans, Mitsuhiro said. That is, when a customer buys a product in installments, Via advances the amounts to be received from banks and then returns, with interest, when the customer finishes paying. Now, the plan is to place the credit card portfolio on the capital market through a receivables investment fund (FIDC) and assignment of the credit card portfolio to the FIDC. “When I start to transfer this to an FIDC structure, I have a release of credit limits of around 5 billion reais or more. And then I can use this limit for other purposes within the company, and my credit card is being financed via the capital market directly,” he said. In a material fact, the company said that it engaged Banco BTG Pactual and Polígono Capital with a view to structuring a first FIDC, as well as a study of the potential issuance and offer of shares of this FIDC, in the amount of up to R$ 1.5 billion. Via also announced continuity in its tax credit monetization strategy, with a forecast of generating BRL 2.5 billion this year, of which around BRL 1.2 billion has already been monetized, according to the executives. The company still aims to generate another R$ 500 million with monetization of other assets, such as “sale and leaseback” operations with stores, which involves the sale of properties and their subsequent lease, said Mitsuhiro. Second quarter results The plan is launched in the midst of yet another quarterly loss, this time of R$492 million in the period from April to June, after a profit of R$6 million a year earlier, in what was the last accounting quarterly profit of company since then. The balance sheet released this Thursday shows the last line of the result pressured by a negative financial result of R$ 801 million, and falling revenue. In the second quarter, Via had adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of R$469 million, down 32.1% year-on-year. Net revenue fell 2.1% year-on-year, to R$7.49 billion, with a gross margin of 28.5%, down 2.9 percentage points against the same period of the previous year. In sales, total gross GMV was stable at R$ 11 billion, with a 9% increase in the marketplace and a 1.2% drop in direct-to-consumer sales.

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