(Updates prices in second and last paragraphs.)
Oct. 28 (Bloomberg) -- Lojas Renner SA, Brazil’s biggest publicly traded clothing retailer, dropped the most in more than five weeks after third-quarter results trailed forecasts. Bank of America Merril Lynch lowered its rating on the stock.
Shares fell 7.5 percent to 52.80 reais at the close of trading in Sao Paulo. The benchmark Bovespa index gained 0.4 percent.
Net income dropped to 56.7 million reais ($33.5 million) from 57 million reais a year earlier, the Porto Alegre-based company said in a statement. The results missed the average estimate of 64.5 million reais among seven analysts surveyed by Bloomberg. Sales at stores open at least a year, a measure known as same store sales, rose 3.8 percent.
“Like all its chief rivals, Renner’s same store sales slumped to 3.8 percent, the weakest growth of its main peers,” analysts at Banco BTG Pactual SA including Fabio Monteiro said in a note to clients today. They had forecast an increase of 5.8 percent.
Bank of America Merrill Lynch lowered its rating on the stock to “neutral” from “buy,” citing “expectations of slower sales growth into the holiday selling season, compounded by higher labor and pre-opening expenses,” analysts including Robert Ford said in a note sent to clients today. “We also forecast higher consumer delinquency rates.”
Rival Cia. Hering SA gained 3.6 percent to 38.21 reais, the highest closing price since the company first sold shares in 1997. Same store sales rose 9 percent in the third quarter, Hering said yesterday in a statement.
--With assistance from Jose Sergio Osse in Sao Paulo. Editors: Brendan Walsh, Marie-France Han
To contact the reporter on this story: Katerina Petroff in Sao Paulo, email@example.com
To contact the editor responsible for this story: David Papadopoulos at firstname.lastname@example.org