Brazil’s biggest retailer is a bargain. Why hasn’t anyone bought it yet?

The Brazilian retail sector has shown some life in 2018, growing by 2.3 percent—its best result in five years. Even so, the country’s biggest retailer, Via Varejo, posted a net loss of BRL 267 million.

As a matter of fact, Via Varejo has been in trouble for a while now. In 2015, the company saw its profits shrink by 99 percent—followed by a BRL 95 million net loss in 2016. The company appeared to bounce back in the following year, but 2018 results show that the problems run deep.

For many, including its controlling shareholders, there is only way out of this hole: selling the company to a foreign player. However, bidders are nowhere to be found. According to analysts, Via Varejo’s frailties and problems go some way toward explaining the scarcity of offers. But the case also reveals a lot about foreign companies’ unwillingness to enter the Brazilian market—after many giants have failed to thrive in Latin America’s largest economy.

Via Varejo is an umbrella company which controls Casas Bahia and Ponto Frio (two of Brazil’s main household retailers), furniture store Bartira, e-commerce website Extra.com.br (a marketplace for supermarket chain Extra, which is in turn owned by GPA), and e-commerce portal Barateiro, which sells discounted goods which have small defects and damages.

The saga to sell off Via Varejo started back in 2016, when GPA (a Brazilian company controlled by French group Casino) announced its intention to focus on the more profitable food sector. Not only was Via Varejo recording steep losses, but the recession had lowered consumption, the government was withdrawing tax exemptions on home appliances, and interest rates and inflation were peaking.

Last year, GPA established the end of 2019 as its deadline to sell Via Varejo—already getting rid of a 6-percent share in the stock market. The rest would preferably be sold to a “strategic investor.”

It seemed a feasible plan. The economy was showing signs of a steady (albeit slow) recovery, expectations around the newly-elected government were high, and the company’s potential was there: despite the net losses, Via Varejo...