Brazil's Renner misses profit estimates as expenses jump

Lojas Renner SA, Brazil's No. 1 apparel retailer, missed first-quarter profit estimates on Tuesday, as surging expenses linked to store openings offset the impact of higher sales volumes.

In a statement, Porto Alegre, Brazil-based Renner said net income totaled 67 million reais ($21 million) last quarter, compared with 65.5 million reais a year earlier. Analysts projected profit of 70.3 million reais in the period, according to consensus estimates compiled by Thomson Reuters.

In November 2016, Lojas Renner's Chief Financial Officer Laurence Gomes said the apparel chain will keep its ambitious expansion targets for 2021, despite consumer spending in the country shows no signs of recovery. The retailer maintained it will grow its number of stores to 450 by 2021 from 290 currently. That would imply opening roughly 30 stores per year starting in 2017, a pace faster than in both 2015 and 2016.

The company originally estimated it would reach 408 stores by 2021 but revised that figure in May 2016, seeking to reap the benefits of its efforts to boost operating efficiency amid Brazil's recession.

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It's a tough 12 months for Brazilian retailers, especially apparel stores. Retail sales fell 6.2 percent in 2016, their worst year in the IBGE series dating back to 2001, as Brazil weathered the second year of a recession that has left more than 12 million people unemployed.