Americanas (AMER3): Why did Sergio Real's move to lead the retailer send the stock up 22.5%?

Americanas (AMER3): Why did Sergio Real’s move to lead the retailer send the stock up 22.5%?

Last Friday (19), after the market closed, Americana (AMER3) announced that Sergio Real (former head of Santander) would replace Miguel Gutierrez as CEO of the company, effective January 1, 2023, which was considered positive by analysts.

With this news, the company’s shares rose 22.94%, reaching R$15.96, which is the biggest jump for the Ibovespa index in Monday’s session (22), as the index fell by 0.89%. But why has the news excited investors?

Real has “a management history focused on cost control and will be motivating and inspiring leadership, characteristics that will be key to supporting Americana’s continued transformation, as well as bringing structural changes to the company’s cultural transformation process,” XP Investments commented, in the report.

For Itaú BBA, the market will see this change as a step in the right direction, and an attempt to bring new ideas to one of the most successful stories in Brazilian retail.

In Levante Ideias de Investimento’s assessment, this is an important move in Americana history, as it breaks the company’s dominant leadership model, which has always been against the entry of senior executives from outside the company into executive positions. “Furthermore, the change in leadership must be positive in terms of the organization’s relationship to the market, for which a lack of communication has always been a problem,” he points out.

Real has solid experience in the financial sector, having led Santander Brasil for seven years. He is currently the Chairman of Santander, Vibra Energia (VBBR3) – an Americanas partner in the convenience store joint venture – and BRF (BRFS3).

Levante notes that since the approval of the restructuring of Americana at the end of last year, the exchange of
The executives were discussed. “Real, with its expertise in the financial sector, is expected to contribute significantly to the development of Ame, the Americanas financial platform, and to more efficient digital integration into the company’s operations, something the company has struggled to achieve.” We refer to home research analysts.

Goldman Sachs acknowledges that it is too early to assess any changes in strategy and execution, but says he is confident of Rial’s relevant experience in various management roles in companies in the financial and consumer (though not specifically retail) sectors.

JPMorgan also does not expect any material disruption to the company’s strategy in the near term because it is a planned transition. However, the bank’s analysis team believes that the market should “welcome the CEO transition as 1) the riyal has a proven track record of returns in industries facing digital disruption, such as banking, 2) digital love (the company’s fintech initiative and super apps) should It continues to gain relevance and their banking experience should aid their growth, and 3) a senior external official should bring some fresh air to the company despite his limited retail experience.”

“Like other giants, it has faced significant challenges to build profitable, high-growth online operations in a rapidly changing environment,” said JP analysts.

As for Broadcast, Eugênio Foganholo, partner at consultancy specializing in retail Mixxer, noted that the choice probably came down to executive leadership skills. “He should be a great leader and he should have great management skills, but what Americana has lost, which is not new, is someone with a strong footprint in retail, and probably shouldn’t have that,” he said.

In a report, Citi wrote that the succession process is critical, especially for Americana’s next growth phase. The company is becoming more digital, and more focused on the market, with the development of new initiatives. Therefore, the bank believes that the market may welcome a new face to lead this new chapter.

Thus, Citi reiterates its buy Americanas recommendation, with a target price of R$26, which indicates a potential upside of 99.5% against Friday’s closing price of R$19.

XP Investimentos, on the other hand, lowered its target price to R$20.0 from R$21.0, but maintained a neutral recommendation, as it says it prefers exposure to other retailers with a more balanced risk/reward ratio and levels of evaluation similar.

Goldman Sachs maintains a neutral rating with a target price of R$19 and JPMorgan Americana as neutral, with a target price of R$17.

Challenges on the radar

Americana, as of Friday (19), had accumulated a decline of almost 60% in the year, as well as the main players in the sector, which
Since the end of last year, they have suffered severely from a deteriorating macroeconomic scenario, with interest rates rising and inflation remaining at high levels, according to Levante.

“Under this scenario, the challenge of achieving profitable growth becomes more difficult. In the case of Americanas, its gross margin grew 0.4 percentage point (pp), to 30.9% in the first half of the year, more than its main competitors in Brazil, such as Magalu and Via , but with less growth,” an assessment.

For home analysts, with the change in leadership of Americanas, expectations are rising about the company accelerating its digital transformation and balancing the plates: greater growth in gross merchandise volume (GMV) and profitability. Thus, despite the significant challenge that the riyal will face, a positive reaction from AMER3 stocks was already expected in the short term.

“The market has reacted positively to changes in the board of directors made by some companies after the disclosure of second-quarter budgets, as well as to what happened recently with changes to the board of directors of the Matthews Group (GMAT3), which raised expectations about the role of Assets,” assesses Levante.

However, in the medium term, with inflation remaining at high levels, incomes of the population very compliant with discretionary terms and increasing fierce competition, it is difficult to define a scenario for significant improvement, house analysts concluded.

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