The financial crisis of Marisa (AMAR3), underway since the first half of last year, leads the clothing retailer to resort to a private capital increase of around R$ 550 million to stabilize its finances, according to information published on Monday by the newspaper Valor Econômico ( 13 ).
This means that the company will abandon the plan to carry out a subsequent share offering (follow-on) immediately after starting negotiations with banks for this purpose. According to information obtained from sources close to the negotiations, the Goldfarb family, which controls Marisa, should be the main financier of this capital increase.
A significant portion of these resources, according to Valor, will be allocated to the payment of promissory notes issued by the company, which, apparently, were acquired by the family itself to ensure the continuity of operations.
In addition to the difficulties imposed by a volatile market, which made raising funds difficult, another factor that contributed to the company’s decision, according to the newspaper, was the opinion of the auditors on the latest financial statements, as revealed by a source close to the company. Marisa (LOVE3) has already set the general meeting to ratify the capital increase, scheduled for the beginning of June.
The company had appointed BTG Pactual and Itaú BBA to explore alternatives for a subsequent primary-only public offering on March 18. However, given the lack of demand and the challenges presented by the auditors’ report, the company has had to reformulate its plans, a source close to the negotiations told Valor.
Marisa in crisis: understand what led the retailer to close stores and accumulate millions of dollars in debt
The trajectory of Marisa Lojasone of the main women’s fashion and lingerie chains in Brazil, is characterized by financial challenges that began in the early 2000s aimed mainly at the middle class, with more than half of its consumers in the income range between R$3,000 and R$5,000 . According to financial analysts, the company adopted a narrow margin strategy to keep prices affordable, but left innovation aside.
This approach resulted in a decline in product quality and a loss of purchasing power among its consumer base. Marisa’s difficulties begin to accumulate, but it is only in 2016 that the Goldfarb family, founders of the chain, entrusts the management of the company to a market manager.
The recessions of 2015 and 2016, combined with the Covid-19 pandemic, severely impacted the finances of the general public and limited the growth of retail businesses, including Marisa. In 2020, the company recorded a net loss of more than R$400 million, followed by further losses of more than R$70 million in 2021 and more than R$200 million in 2022.
These negative results and the lack of prospects for a turnaround have resulted Marisa’s actions plummeting from around R$27 in 2013 to less than R$1.49 this Monday (13)
In an attempt to turn around its financial situation and recover its ability to generate liquidity, Marisa announced the closure of stores and the resignation of five high-ranking executives, the hiring of external consultants, the issuance of bonds and the sale of rights of credit. Additionally, from 2023 the company seeks to renegotiate deadlines and debts with suppliers, creditors and property owners, reduce inventories and cut operating expenses.
This year, the company says it is focused on reviving sales growth and improving its operational efficiency, although it acknowledges challenges. In its management report the company admits that it did not achieve its desired operational and capital structure results last year.
There was a reduction in cash flow generated from operations and financing activities resulted in lower loan proceeds in 2023 compared to 2022, which led the company’s controllers to Marisa look for other sources of capital.
Source: Terra
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