Brazilian Retailers: Revisiting Estimates in Food Retail; Stay Cautious

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Brazilian Retailers: Revisiting Estimates in Food Retail; Stay Cautious

Global Research

23 June 2026ab

Brazilian Retailers Equities

Latin AmericaRevisiting Estimates in Food Retail; Stay

Cautious Consumer, Cyclical

Vinicius Strano, CFA

Analyst

vinicius.strano@ubs.com

No ST relief in top-line, expense risks: Neutral on ASAI and GMAT, Sell on PCAR +55-11-2767 6688

We revisit our estimates for food retailers, maintaining a cautious stance on the Lucca Biasi

sector. Despite factors that could support higher food inflation, we do not expect a Associate Analyst

meaningful improvement in SSS trends, given elevated consumer leverage leading lucca.biasi@ubs.com

to brand and category trade down, coupled with ongoing competitive intensity. +55-11-2767 6173

Nielsen data, for instance, points to average food retail SSS of -0.2% in April-May. We Isabella Lamas

also view food retail as one of the sectors most exposed to a labor reform, which Associate Analyst

could reduce working hours by 10%, at a time when labor market conditions remain isabella.lamas@ubs.com

tight and real minimum wages continue to grow. Given thin margins, intense +55-11-2767 6836

competition, and a pressured consumer backdrop, we see limited ability to pass Pedro Perone

through higher costs via price increases, creating risks to profitability. To the Associate Analyst

upside, companies remain generally focused on productivity and cost-control pedro.perone@ubs.com

initiatives, which could help mitigate part of the margin pressure from potential +55-11-2767 6007

macro headwinds. We maintain our Neutral ratings on ASAI and GMAT and reiterate

our Sell rating on PCAR. While we would generally avoid exposure to the sector for

now, structurally, we prefer ASAI on a relative basis.