Retailers will benefit from recent stimulus measures. But it won’t last

The case of Brazilian retail behemoth Magazine Luiza illustrates the challenges facing the country’s retail sector. The government’s electorally-motivated stimulus measures will provide a boost for retailers after a post-pandemic slump, but only in the short term

brazilian retailers
Magazine Luiza share prices have dropped by 92 percent since November 2020. Photo: Joa Souza/Shutterstock

The recent months have been brutal for Brazilian retailers on the São Paulo stock exchange. Double-digit inflation, continuously increasing interest rates, and high indebtment levels curbed consumption and eroded share prices. 

Magazine Luiza, a local behemoth, is perhaps the most glaring example, with a 92 percent slump between November 2020 — when Covid restrictions and stimulus programs boosted e-commerce — and July 1, 2022. 

But Magazine Luiza has seen its share prices go up by 25 percent since, in a movement that was also observed amongst its competitors. Over the month of July, the Icon B3 index —...

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