Without Fernando Haddad in the Ministry of Finance as a shield, and with the need to improve President Luiz Inácio Lula da Silva's popularity ratings on the eve of the election period, the Planalto Palace is moving forward with discussions to end the " blouse tax " - the import tax on products costing up to US$50.
The idea at the time was to ensure a more level playing field in the face of the advance of Asian platforms in relation to Brazilian companies, which considered the fashion market unbalanced, especially in relation to small purchases and lower costs. If the Remessa Conforme program, the official name of the government initiative, is revised, C&A , Renner , and Riachuelo should be impacted. And Shein should benefit.
According to BTG Pactual, any change to the measure will impact the revenue of major Brazilian fashion retailers, even though it may represent some relief for consumers who make their international purchases online.
"On the one hand, the reduction in import tariffs aims to improve the population's perception of income by reducing the prices of low-value imported items; on the other hand, the measure would represent a threat to the competitive environment for domestic retailers," says the bank's report.
According to Luiz Guanais, Yan Cesquim, and Beatriz Cendom, the revision of the blouse tax will be negative for Brazilian retailers because it is expected to put pressure on prices, albeit less than the scenario observed in the past, before the measure came into effect.
With the tariff in effect, the volume of international remittances fell significantly, with an initial reduction of 11%. Before the measure, there were approximately 18 million packages per month. In December 2024, already under the federal government's rule, this amount dropped to 11 million per month.
The point is that, in recent months, the platforms have recovered and now import volumes are very close to pre-tax levels, with monthly shipments between 15 million and 17 million packages.
"Despite the challenges faced by foreign players in Brazil over the past few decades (including the introduction of import taxes), we still see most companies exposed to middle/low-income consumers facing more intense competition from international platforms and with limited pricing power."
According to analysts at BTG Pactual, this dynamic directly affects the businesses of Renner, C&A, and Guararapes, the parent company of Riachuelo. The fact is that even with the tax on blouses, the prices charged by Asian companies are still lower.
Research conducted by the financial institution shows that, when comparing a basket of eight products between national retailers and Shein, the Chinese platform is 6% cheaper than Riachuelo, 10% cheaper than Renner, and 13% cheaper than C&A. In any case, the gap has narrowed compared to BTG's last survey, but it is still quite significant.
In this regard, the bank sees three factors that could impact the revenue of fast fashion companies in Brazil going forward. Firstly, the magnitude of the price pressure will depend on whether the repeal is partial or total and, in a more extreme scenario, would also include the ICMS tax levied on these products.
The second point is that local players have become more competitive and more agile in responding to competition, with significant investments aimed at improving the effectiveness of their products.
The third point is that, on the other hand, the positioning of the platforms has not remained static either, reflecting a greater number of domestic sellers and investments in local logistics infrastructure.
From this perspective, BTG understands that high-income earners remain more protected from this macroeconomic scenario. Meanwhile, competition from e-commerce and international players continues to limit the operational leverage of established companies in the sector.
“High interest rates continue to erode disposable income, while the still high level of household debt restricts purchasing power. This scenario is aggravated by the inflation accumulated in recent years, which has structurally increased price levels and reduced real affordability.”
With this, the bank is pricing in a more pessimistic scenario for consumption in Brazil in the short term, especially in the first half of this year.
In the year to date, Renner's shares on the B3 stock exchange have appreciated by 8.7%. During the same period, C&A has fallen by 5.6%, and Guararapes has depreciated by 4.2%.
Renner's market value is R$ 14.7 billion. Guararapes is worth R$ 4.6 billion, and C&A, R$ 3.7 billion.
