Brazil retail Better than feared

Research evidence excerpt

Brazil retail Better than feared

24 June 2026

Equities

Retail Brazil retail

Better than feared Brazil

◆ We revisit the Brazil retail sector post Q1 and against a Joe Thomas*

backdrop of high interest rates and weak share prices SeniorHSBC Mexico,Analyst,S.A.,HeadInstitucionof EquitydeResearchBanca Multiple,MexicoGrupo

Financiero HSBC

◆ The fundamentals are not as bad as might be expected and joe.thomas@hsbc.com.mx

+52 55 8551 5172

forecast cuts mainly reflect higher interest costs Guilherme Domingues*

Analyst, US Consumer Staples

◆ We remain supportive of companies with a defensive profile; Banco HSBC S.A.

guilherme.domingues@hsbc.com

Retain Buys on Raia (BRL28), Assai (BRL13), Vivara (BRL32) +55 11 2802 2474

Saket .*

Associate

Share prices weak, but performances modest. Brazilian retail shares have Bangalore

performed extremely poorly owing to macro conditions. High interest rates, indebted

households, and political uncertainty are putting off investors in the sector, we think. * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

However, the fundamentals are not so bad; lower unemployment and real wage not registered/ qualified pursuant to FINRA regulations

growth are supporting consumer confidence, and retail sales are typically growing. At

the company level, we note steady SSS across most of our coverage.

Forecast changes reflect higher-for-longer interest rates. We adjust some

forecasts in this note. While these changes are typically negative at net income, it

tends to be because of interest rate assumptions on financing costs. EBITDA

forecasts are changing much less (Azzas unchanged, Magazine Luiza/Vivara small

decline, Lojas Renner small increase). Given our new interest rate assumptions, we

think the cuts to net earnings should be over.