Brazil’s Magazine Luiza acquires Netshoes for 62 million USD

Brazilian retailer Magazine Luiza has confirmed the acquisition of Netshoes, Latin America’s largest online sports retailer, for approximately 62 million US dollars (2 US dollars a share). The transaction is still pending approval by Netshoes’s shareholders and by Brazil’s competitive regulator, CADE.

Founded in 2000 in Brazil and soon expanded to Argentina and Mexico, Netshoes has over 30 million unique visitors monthly. The company also operates two other online stores in Brazil, Zattini and Shoestock, and provides e-commerce solutions for dozens of sports brands, including Puma, NBA, UFC and NFL.

Netshoes is listed at the New York Stock Exchange but its shares have fallen by 85 percent since its IPO in 2017 because, despite everything, the company still struggles to turn a profit. By Q3 2018, Netshoes accumulated a net loss of 61 million US dollars. Last August, Reuters reported that the company had hired Goldman Sachs to seek an investor to inject cash in the company and restructure its debt.

The news of Netshoes’ acquisition by Magazine Luiza came on the same day that Netshoes also announced the sale of its subsidiary in Argentina to local investment company BT8. The company had already gotten rid of its Mexican operations in August, when the subsidiary was sold to Sierra Capital.

As for Magazine Luiza, the Brazilian retail giant offering electronics and home appliances is looking to compete with Amazon, which launched its Brazilian operations in 2012 selling books only and recently expanded its assortment to include clothes, shoes, accessories and sporting goods. “Magazine Luiza could use the Netshoes opportunity to start selling clothes and shoes to compete with Amazon.com in Brazil”, said analysts at Banco Brasil Plural in a note to clients issued earlier this month, when the company mentioned its interest in Netshoes. Earlier this week, Magazine Luiza also announced it will add books to its assortment, in a clear move to stand against Amazon.