Casas Bahia on Track for Profitability with Restructuring Plan and Favorable Market Conditions

According to a recent report by Bloomberg, Brazilian retail giant Grupo Casas Bahia expects to regain profitability by the end of 2024, thanks to a restructuring plan agreed upon with its major creditors. CEO Renato Franklin expressed optimism that the company may even exceed its current forecast for profits in 2025 due to favorable market conditions. In the first quarter of this year, Casas Bahia reported a smaller net loss than predicted by analysts, despite a challenging environment for brick-and-mortar retailers facing fierce competition from online giants like MercadoLibre and Shein Group. Shares in the company rose by 4.5% following the announcement. The restructuring deal, finalized in late April, provides Casas Bahia with a two-year grace period for interest repayments and 30 months for settling principal debts. Despite a generally pessimistic outlook from analysts, who predict continuing losses for Casas Bahia through 2027, Franklin pointed to encouraging indicators such as strengthening furniture sales, improved credit card issuance, and promising results for Mother’s Day, as well as progress in cutting costs and negotiating with lenders. He noted that the company had successfully closed stores and carried out extensive inventory sales, which boosted margins during the first quarter. Furthermore, Franklin stated that the company would remain profitable regardless of economic circumstances, working with a benchmark Selic rate of 10% over a twelve-month period.