Americanas SA, the Brazilian retailer that counts billionaire Jorge Paulo Lemann among its main backers, sank 77% following the departure of its new chief executive officer after finding billions of dollars of accounting “inconsistencies.”
Banks including Morgan Stanley, Itau BBA and Bradesco BBI rushed to place their forecasts for Rio de Janeiro-based Americanas under review after the news, announced by the company Wednesday evening in a regulatory filing. Among the issues found were debts with banks from supplier financing operations that aren’t adequately reflected in financial statements as of Sept. 30.
“We have limited visibility on the extent of the accounting inconsistencies,” Morgan Stanley analysts led by Andrew Ruben wrote in a note, moving their rating for the stock to not-rated from overweight.
Bonds tumbled 38 cents on the dollar in trading on Thursday, according to Trace pricing data. The crisis spread to other Brazilian retailers, with shares of Via SA declining as much as 16% before paring losses. Magazine Luiza SA fell 11% intraday but ended the session 5.3% higher in Sao Paulo.
The filing, which estimated inconsistencies of 20 billion reais ($3.9 billion), shocked investors who had begun to snap up Americanas shares as a sign of faith in Sergio Rial’s ability to turn the company around. Rial, who ran Banco Santander SA’s Brazilian unit between 2016 to 2021, held a call with investors Thursday morning, saying the firm has more debt than assumed by the market and that it will need capital.
“It’s gut wrenching,” Rial said. “But it’s an opportunity to start having difficult conversations.”
Lemann and his longtime business partners from 3G, Marcel Telles and Carlos Alberto Sicupira, first poured money into the Brazilian retailer in 1982. They currently own a stake of about 31% and told the board they plan to keep supporting the company, according to the filing.
Rial said that he’ll work with the…