Growth in physical store sales and protection of profitability marked the results for retailer Magazine Luiza in the first three months of the year, during a challenging period mainly marked by the impact of rising interest rates.
During this period, revenue from sales in physical stores reached R$ 5.2 billion, a growth of 6.9% compared to the same period of the previous year. When comparing the results of the same stores, the increase in the quarter was 6.4%.
On the other hand, e-commerce registered an 11% drop compared to the period from January to March 2025. Magalu 's online revenue was R$ 10 billion, with R$ 6 billion from 1P (characterized by its own inventory) and R$ 4 billion from 3P (essentially the marketplace).
The strength of physical sales was also reflected in sales through digital channels, since 70% of all products that pass through the stores originate online.
In consolidated terms, the company's net revenue for the quarter was R$ 9.2 billion, a 2% decrease compared to the result of the first quarter of 2026. Adjusted EBITDA reached R$ 717.6 million, a 5.4% reduction. The EBITDA margin was 7.8%, 0.3 percentage points lower.
The decline in the marketplace was directly related to strong competition from players like Mercado Libre and Shopee, who began adopting free shipping practices for low-order items, directly impacting profitability. To protect its cash flow, the company did not enter this competition war.
In the case of channel 1P, the result was affected by the global increase in memory chip costs, impacting the price of smartphones and televisions. As a result, the company had to pass on some of this increase to prices.
But since this cost affected the entire market, especially the company's core products, market share was preserved during that period. In practice, this impact on chip prices was bad for the entire retail sector.
Despite this impact, the company managed to improve its profitability. The gross margin reported in the first quarter was 30.8%, an increase of 0.2 percentage points over the result for the same period of the previous year.
However, the strong impact of financial expenses, stemming from the high level of the Selic rate, currently at 14.50% per year, affected the bottom line. Magalu closed the quarter with a loss of R$ 33.9 million, reversing a net profit of R$ 12.8 million from the first quarter of 2025.
In the quarter, financial expenses totaled R$ 568.7 million, equivalent to 6.2% of net revenue. Compared to the same period in 2025, the company's expenses increased by 16.5%.
The main factor explaining this evolution was the rise in interest rates. In the first quarter of 2025, the Selic rate was at 12.25% per year, compared to 15% in the first quarter, an average increase of 14%. In April, the Monetary Policy Committee (Copom) reduced it by 0.25 percentage points and it remained at the same level in May.
The company's outlook is that, with the downward trend continuing, this volume of expenses tied to the CDI (Brazilian interbank deposit rate), and directly impacted by interest rates, will register a decrease as early as the next quarter.
Other businesses
MagaluPay reached R$ 25.3 billion in total transaction volume (TPV). The credit card base reached 5.6 million. At LuizaCred, card revenue grew 2%, reaching 14.7% in the quarter. The net profit of the credit unit was R$ 75.1 million.
The group's four companies – Netshoes, Kabum!, Época Cosméticos, and Estante Virtual – all registered growth in the quarter. During this period, the video game and computer company delivered a net profit of R$ 17 million, with growth of 8% in hardware and 20% in video games.
The sporting goods store was the best performing company in the group during the period, with 12% growth in the quarter and a net profit of R$ 17 million.
The company has benefited from the increased demand for products related to wellness and running, mainly due to the behavioral change resulting from the increased use of slimming pens.
Época Cosméticos, a cosmetics company, reported a 12% increase in marketplace sales. The bookstore also saw growth.
In practice, these companies within the group were better preserved and less impacted by the challenging macroeconomic scenario during that period. Furthermore, this result follows the trend implemented by CEO Frederico Trajano of reducing the weight of Magalu in the group's overall results and instead functioning as a large sales ecosystem, both physical and digital.
The company's expectation now, regarding the third quarter, is to recover some of the sales losses due to the proximity of the World Cup, which will be held between June 11 and July 19 in North America.
On the WhatsApp channel of the virtual assistant Lu, which maintained a sales conversion rate three times higher than that recorded in the official app, the best-selling product last month was precisely the World Cup sticker album.
At Galeria Magalu, a concept store showcasing all the group's brands, which opened in December and is located in Conjunto Nacional, São Paulo, soccer balls were among the best-selling products for Netshoes.
In the accumulated period of 2026, MGLU3 shares registered a 10% drop on the B3 stock exchange. Magazine Luiza's market capitalization is R$ 6.2 billion.
