Lojas Quero-Quero (BSP: LJQQ3) reported resilient growth and strategic market share expansion during its Q2 2026 earnings call, despite navigating a challenging macroeconomic environment in Brazil.
Market Dynamics and Sales Performance
Management noted that the World Cup had a limited impact on overall sales, providing only a marginal boost to television categories without altering the company’s broader trajectory. Despite a difficult retail climate, the company successfully expanded its market share. Same-store sales have shown consistent growth of approximately 8%, with the construction materials segment standing out as a primary driver of performance. Initiatives like the new store format and the “Mais” program are credited with significantly improving the customer experience.
Financial Health and Margin Outlook
Addressing gross margin variations, the CFO explained that the second quarter—historically smaller than the first—reflected typical fluctuations. While same-store sales growth is expected to remain positive but volatile, the company maintains its guidance for a stronger third quarter. Operating expenses remain tightly controlled, with nominal growth held stable compared to the first half of the previous year, demonstrating operational efficiency.
Cash Flow and Profitability Targets
Although the company experienced cash consumption in the first half of the year—a trend attributed to seasonal factors—management anticipates a return to cash generation by the fourth quarter. The company’s ability to return to positive net income remains contingent on continued sales momentum in the second half of the year. A core focus remains on disciplined working capital management and maintaining leverage levels consistent with historical standards.
Credit Portfolio and Risk Management
The company maintains a conservative and cautious approach to its credit portfolio, which grew by 3% in the second quarter. Demand for credit remains stable, and delinquency rates are currently under control. By prioritizing quality over aggressive expansion in financial services, Lojas Quero-Quero aims to ensure long-term portfolio sustainability while preparing to resume growth in upcoming quarters.
Strategic Expansion into Smaller Markets
Lojas Quero-Quero continues to execute a disciplined expansion strategy, having opened 6 new stores during the first half of the year. The focus remains on cities with populations between 20,000 and 50,000 inhabitants. This targeted approach solidifies the company’s leadership position in the interior of Brazil, ensuring that growth is balanced with profitability and a strong, localized presence.
Priorities for the Remainder of the Year
Looking ahead, the company’s leadership emphasized three primary pillars for the remainder of 2026: aggressive cash generation, strict maintenance of credit portfolio quality, and disciplined operational scaling. Management remains committed to its long-term strategy, focusing on initiatives designed to create sustained value for shareholders despite persistent economic headwinds.