Mercado Livre Stands Out in Weak Quarter for Retail, Itau BBA points out

The fourth quarter of 2025 (4Q25) presents a challenging scenario for the Brazilian retail sector, with most companies registering revenue growth below inflation.However, the Free Market (MELI34) emerges as a notable exception, driven by the continuous migration of consumption to the online environment and a robust performance in its gross volume of goods (GMV) in Brazil.

E-commerce on the Rise

The Itau BBA report highlights Mercado Livre as the main beneficiary of the structural trend of migration of consumption from physical stores to online stores. The robust growth of GMV in Brazil, coupled with a gradually better perception of competitive risk, support the company's performance. Investors are waiting for signs of stabilization of margins after a period of intensive investments.

Pharmacies Show Resilience

In pharmaceutical retail, the bank projects a strong quarter for companies such as RD Health (RADL3), Pay Less (PGMN3) and Panvel (PNVL3). Accelerating same-store sales and operating gains drive profitability despite a slight pressure on gross margins due to the mix of products such as weight loss drugs.

Challenges in Clothing and Food

On the other hand, the clothing and food retail segments should continue under pressure. In the clothing sector, factors such as unfavorable weather, a more intense promotional environment and competition from imported products have limited the performance of companies such as Lojas Renner (LREN3) and Guararapes (GUAR3). Already in the supermarket sector, the slowdown in food inflation tends to reduce sales growth in the same chain stores as GPA (PCAR3), Assai (ASAI3) and Grupo Mateus (GMAT3).