Business

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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