Lojas Quero-Quero (BSP:LJQQ3) reported resilient growth and strategic expansion during its Q2 2026 earnings call, navigating a challenging macroeconomic landscape through disciplined cost management, a focus on small-market dominance, and a conservative credit approach.
Market Share and World Cup Impact
Despite the global attention on the World Cup, the impact on Lojas Quero-Quero’s sales was marginal. While television sales saw a slight uptick, the overall effect on the company’s performance was not significant. Management confirmed that the company successfully gained market share during the period and intends to maintain this momentum despite broader market volatility.
Margins, Sales Growth, and Outlook
The CFO addressed concerns regarding gross margin variations, noting that the second quarter performed differently than the first due to seasonal factors. While same-store sales growth is expected to remain positive, management acknowledges inherent volatility. The third quarter is historically softer, but the company maintains its current guidance and anticipates a stronger sales performance as the year progresses.
Path to Profitability and Cash Flow
Lojas Quero-Quero consumed cash during the first half of the year, a trend attributed to typical seasonality. However, the company projects a return to cash generation by the fourth quarter. If sales trends continue to improve throughout the second half, the company remains optimistic about returning to positive net income, provided that working capital remains under strict control and leverage stays within improved historical levels.
Credit Portfolio and Risk Management
In a cautious economic climate, the company’s credit portfolio grew by 3% in Q2, with a primary focus on quality over aggressive expansion. Demand for credit remains stable, and delinquency rates are well-controlled. By maintaining a conservative credit policy, Lojas Quero-Quero aims to ensure long-term sustainability and is prepared to scale its financial services as the macroeconomic environment stabilizes.
Expansion Strategy and Operational Efficiency
A cornerstone of the company’s growth remains its expansion into smaller municipalities. In the first half of the year, Lojas Quero-Quero opened 6 new stores in cities with populations between 20,000 and 50,000. This strategy solidifies its leadership in the interior of Brazil. Simultaneously, the company has kept operating expenses stable, with nominal growth virtually unchanged compared to the previous year, demonstrating high efficiency in cost structure management.
Driving Performance: Categories and Initiatives
Same-store sales have shown consistent growth of approximately 8%, with the construction materials segment standing out as a primary driver. Initiatives such as the new store format and the “Mais” program have significantly improved customer experience, contributing to positive results across most product categories. Moving forward, the company’s priorities remain anchored in disciplined operational growth, rigorous cash flow management, and the maintenance of a high-quality credit portfolio to maximize shareholder value.
