Netshoes, the largest sports and lifestyle online retailer in Latin America, has agreed to sell its operations in Mexico to Grupo Sierra Capital, a private equity fund with investments in Mexico, the Caribbean and Central America. Based in Brazil, where it still does most of its business, Netshoes said the divestment is in line with a strategy of focusing and expanding in markets with the greatest potential for the growth of e-commerce.
The company expects that this strategy will lead to more positive results. For the second quarter ended June 30, Netshoes has reported a drop in revenues of 2.5 percent to 449.8 million Brazilian reais (€101.8m-$115.9m) as compared to the year-ago period, with sales in Brazil falling by 1.7 percent to R$400.5 million (€90.7m-$103.2m). In other countries, mostly Argentina and Mexico, sales declined by 8.3 percent to R$49.4 million (€11.2m-$12.7m), with a drop in Mexico, but they were up by 9.5 percent in local currencies.
Netshoes' main business remains its B2C online operation, which grew overall by 6.4 percent on a currency-neutral basis in terms of gross merchandise value, thanks in part to a 14.2 percent increase at its fashion arm, Zattini.
The total number of registered members and active customers went up by 20.0 percent to 23.9 million and by 14.9 percent to 6.8 million, respectively, with orders placed from mobile devices growing by 11.2 percentage points to 54.1 percent of the total. Activity on its marketplace grew from 6.4 to 11.1 percent of the total gross merchandise value of R$630.0 million (€142.6m-$162.3m).
The gross margin slipped by 2.5 percentage points to 30.6 percent, while the adjusted Ebitda margin went up by 1.1 percentage points to 1.0 percent, with a positive margin of 2.0 percent in Brazil partly offset by a negative margin of 12.9 percent abroad. The operating results improved due to a rationalization of operating expenses and the implementation of a new IT platform, which helped improve inventory turns. These actions offset the negative impact of a warmer winter season and the Brazilian truck drivers' strike in May and June, which affected sales as well as the gross margin. The company's net loss increased by 8.4 percent to R$38.1 million (€8.6m-$9.6m).