Since Wednesday, the Casas Bahia Group has been trading its shares on the Stock Exchange under a new ticker (code) – BHIA3. The exchange marks the beginning of a new phase, with the rescue of the brand of the group’s best-known store chain and the adoption of a plan to bring in more than R$3 billion in new revenue, also involving the sale of assets and cost cutting. .
Two years ago, Via Varejo (with ticker VVAR3) had already been renamed Via (VIIA3) to indicate that it was moving beyond the retail business. Now, it returns to its origins with the resumption of the Casas Bahia name. Which implies the recovery of slogans, market positioning, visual identity and even the group’s former poster boy.
The change of route also comes at a time of turbulence in share prices, shaken by the market’s negative view of the group’s debt and its ability to operate in a financially healthy manner. In August 2020, during the pandemic, still under the Via Varejo brand, the group’s shares – which brings together the Casas Bahia, Ponto Frio and Bartira chains – were priced above R$20.85.
Cents
This Thursday, the 21st, the company’s shares closed the session trading at around R$0.74, transforming the stock, one of the most traded on the Stock Exchange, into a “penny stock” – when the share is traded at the cent mark. . The loss of more than 96% has consumed R$32 billion in the company’s market value since then – or the equivalent of a Cemig.
The decline was accentuated in the last month, when shares fell by around 60%, especially after the follow-on (new issue of shares) carried out on the 14th. The group sought to raise R$1.1 billion, but only managed to raise R$623. million, with a 28% discount.
To make matters worse, on the eve of the operation the company’s debt was downgraded by the Standard & Poor’s agency, leading to fears that holders of the group’s Real Estate Receivables Certificates (CRIs) would request early redemption of the bonds.
In this scenario, the attention of the CEO, Renato Franklin, in office since April, coming from the car rental company Movida, is now turning to trying to reassure the market. He insists that the company’s debt is not worrying, despite the scenario of high interest rates and scarce credit after the Americanas case. He also denies that the company is heading towards judicial recovery. “There is a mistaken perception of the company’s risk,” he says.
Debt
The group’s gross debt recorded in the second quarter’s balance sheet was R$3.7 billion, with an additional R$1.5 billion in “drawn risk”, which are bank loans that advance receivables to be paid to the retailer’s suppliers – and who are at the center of the Americanas crisis. Furthermore, the company recorded loans of R$8.7 billion in June.
These numbers may seem worrying given a cash balance of R$2.7 billion and the subsequent losses. In the second quarter, the group had a loss of R$492 million.
But there are some mitigating factors. Of the debts, only R$1.8 billion is due by 2024, and R$1.2 billion is already being renegotiated with the banks. And the perception in the market is that banks must facilitate negotiations, as they continue to have tough conversations to reduce losses with Americanas and, in this scenario, they do not want another big problem.
Furthermore, the CEO notes that R$5 billion of the R$8.7 billion in loans are secured by the company’s future revenues. A person close to the operation says that “for every R$1 of this, there is another almost guaranteed R$1 that the company has to receive.” She also states that, historically, default on Casas Bahia credit is low. “Our net loss is less than 5%. Casas Bahia has always known how to give credit”, says Franklin.
New phase brings back the poster boy
The reformulation of the Casas Bahia brand should be the showcase of a R$3 billion plan that the company wants to put into practice to overcome its debt. The strategy is divided into three fronts of around R$1 billion each, involving new revenue and cost cutting, sale of assets and reduction of inventories, according to the company’s CEO, Renato Franklin.
The company is once again using the slogan “Total dedication to you” in its advertising campaigns, and even has new ads featuring actor Fabiano Augusto, the poster boy who became known for hundreds of network films in which he repeated the catchphrase “Quer pay how much?”
For the change in communication, the company left – in exchange for lower-cost contracts – a years-long relationship with the advertising agency VMLY&R. The account had been renewed since 2002. At the time, the agreement was with the Newcomm group, owned by businessman Roberto Justus, which was later integrated into the global agency Young & Rubicam. Now, the service provider will be Grupo Dreamers, owned by Roberto Medina, previously called Artplan.
Actions on the internet and on TV should be more focused, with regional advertisements, avoiding paying for national broadcasting. The goal: to save R$200 million per year in communication. The company intends to monetize its windows and create sales kiosks, sponsored by suppliers, in its stores. Even promotions on the website will be paid for by industries interested in increasing the exposure of their brands.
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The post Casas Bahia reorganizes itself amid the sharp drop in shares appeared first in Jornal de Brasília.
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