Marissa (AMAR3): Restructuring is impacting results that analysts see as weak; Executives talk about “already expected numbers”

Amid the process of restructuring its business, Marissa (AMAR3) released its results for the third quarter of 2023 last Tuesday night (14), and analysts saw the numbers as weak, while group executives stated that the poor performance, so far, was actually expected, due to the changes. which is applied.

“The company has undergone a restructuring process, closing about 88 stores in recent months. Other than that, it is also very difficult to obtain bank credit. Some suppliers end up not trusting the company anymore, so they no longer offer many products. “There is a great difficulty In the capitalization of your operations and, therefore, in your accounting equation,” comments Victor Bueno, Partner and Equity Analyst at Nord Research.

The company’s “pro forma” net revenue reached R$258.8 million between July and September of this year, a decrease of 48.6%. The “pro forma” data assumes that the operational improvement plan has been implemented since January 2023 and excludes extraordinary adjustments amounting to R$15.7 million.

The reason is partly due to the decrease in the number of stores and declining stocks, according to experts.

Marisa Logas reported a net loss of R$196.4 million in the third quarter of 2023, an amount 92.4% higher than the amount recorded in the same period of 2022.

“The company provided numbers that were well below expectations,” says Bueno. “Now, for 2024, they have guidance, which I see with a certain dose of optimism,” he adds, pointing to the company’s plan to increase margins, with the total remaining between 50% and 52% next year, even if that happens. At the expense of total revenues, which should be between R$2.3 billion and R$2.5 billion (in 2022, for comparison purposes, this figure will be higher than R$3.5 billion).

“If you can get to those projected numbers, especially talking about EBITDA [Lucro antes de juros, impostos, depreciação e amortização, na sigla em inglês]“You will also be able to reduce your indicators financially,” explains the Nord specialist. “But there is great difficulty in capitalizing your operations and, therefore, in settling your accounts.”

After having difficulty obtaining bank credit, Marissa also worked to free up capital and redesign her business.

In addition to reducing inventories and closing stores, during the conference call, executives highlighted the renegotiation of debts with suppliers and landlords and the prolongation of liabilities – as well as the R$120 million capitalization undertaken by the controller. According to them, it will be a bitter pill for Marisa to reach “healing” in the future.

“The positive point was the decrease in inventory, which contributed to the release of working capital, but it was this same factor that caused the significant drop in sales – there was not enough inventory,” says Larissa Quaresma, an analyst at Empiricus Research.

“Management claims that this strategy is intentional and is part of the company’s cleaning process, but we believe it will not be easy to change that,” comments the analyst.

For now, after implementing several restructuring steps, Marissa wants to focus on serving customers well and increasing profits per square meter.

“We are now entering the store recovery phase. We know that we have to improve, for example, the experience in the units. This kind of thing is what attracts customers and creates repetition. When we talk about “On expansion, at the moment, we are focusing on improving our existing park.” “Other than that, there are specific moves to integrate our physical stores with our digital platform, for example.”

Marissa also provided further details on the closure of MBank’s operations, which was announced alongside the balance sheet.

“We are developing the plan that should take place until 2024. We are seeing with the Central Bank how this will happen. All operations related to personal credit of individuals will end. We will only carry out specific operations with suppliers,” the CEO commented. “We have a portfolio to manage Until the due date, which will take, on average, the next six months.”

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