Brazilian retailers to curb investments amid high rates: Fitch

Brazilian retailers’ investment plans are likely to remain restrained until at least 2026, given a challenging macroeconomic backdrop of prolonged high interest rates, above-target inflation, and softer demand, Fitch Ratings has said.

Competition remains intense in e-commerce and cash-and-carry channels, while easing in apparel retail due to higher import taxes. Foreign players are also expanding their presence as local incumbents prioritise profitability over aggressive growth.

Fitch projects median capex-to-revenue ratios at 3–3.5 per cent in 2026–2027, down from 3.8 per cent in 2024 and over 6 per cent during 2019–2022. Companies with higher leverage are prioritising deleveraging and integration of acquisitions over expansion.

Fitch forecasts median revenue growth to slow to around 10 per cent in 2025–2026, with EBITDAR margins improving by 40 basis points from 2024 levels, driven by expense rationalisation and profitability focus.

However, high interest costs — consuming about 33 per cent of cash generation — and negative free cash flows through 2026 will limit deleveraging. Net debt/EBITDAR is projected to stay at 2.8x in 2026 and 2.6x in 2027, with interest-and-rent coverage below 2x.

ALCHEMPro News Desk (HU)