And from now on we're going to talk here on our TMC 360 with the businesswoman Luiza Trajano, president of the board of Magazine Luiza. How are you? Everything good?
Good morning.
Hi, good morning, Felipe. Good morning, Dani. How are you guys doing? Everything good?
Everything good. It's a pleasure to have you here for a chat. Let's start then by talking about what you're seeing, what you're perceiving in the country's economic situation, in this transition from 2025 to 2026, with this international context of war, concern with the cost of oil, energy, freight. You depend a lot on the issue of freight, of fuel. Is it a moment of concern or a moment of opportunity?
Well, Felipe and Dani, everyone listening. I've lived through every kind of crisis you can think of. Every kind of crisis. I think I've spent more time living in crisis than not, right? Because globally we have this war that disrupts oil, the cost of oil, and oil interferes not just for us, but for everyone. The cost of oil is very serious, that's not in our hands. On the other hand, for me, the worst thing, on the other hand, we have very good employment. You know that a developing economy lives off employment and credit. So, as long as there's very good employment, the only way for money to enter the economy is through employment. So, we have one of the highest employment rates, we have some very positive things, but there's one thing that I think hinders a lot, a lot, a lot, which is high interest rates. I think what hinders retail the most is high interest rates, and it mainly affects the small and micro entrepreneur, and the big one too, but the small one is, I think, the one that suffers most. And interest rates started to show signs of coming down, which generates a good thing. Then this global crisis comes along that hinders a lot, but Brazil is a country that overcomes crises through a lot of hard work. We overcome crises just as Magalu has overcome them until today.
Luiza, Dani Lima here, again. It's important for those following us to know that Luiza Trajano is one of the most well-known, most important businesswomen in Brazil, and she has been a critic of high interest rates for many years, since they started climbing the ladder after the war in Ukraine, and they haven't started coming down at the speed desirable for those investing in the country, not investing in the financial market, but investing in the country for a long time. So, but you mentioned employment and credit. Credit, we have the issue of high interest rates, which is difficult, and then there's indebtedness. I wanted to ask, Trajano, if you can bring an experience from someone on the front lines dealing with the numbers, especially in retail and with installment sales, which is a tradition at Magazine Luiza. Have you noticed a worsening of the debt issue among your consumers?
Oh Dani, we work very well with credit approval and with collections, because default is a... I say that default is a termite, right, that has already caused so much trouble. So, of course, the default rates haven't decreased, but for us, it also hasn't reached a level much higher than what we expected with a high interest rate crisis. So, for us, but we know the population is indebted, the government is even taking some measures to reduce it, but I think the population, besides being indebted, is in no condition to buy much, because very high interest rates make it difficult to buy, right? And making it difficult to buy hinders credit, which is the other leg I mentioned to you. So, it's not good in any way. And it's a fight I have very strongly to lower interest rates. We have one of the highest interest rates in the world. Regardless of the side, we know the federal government in this election year is already working on some measures to facilitate credit for specific sectors. Just yesterday there was an announcement for taxi drivers, for app-based car drivers and so on. Isn't there a problem there in the medium term, that is, in the transition from 2026 to 2027, an indebtedness that ends up hitting commerce directly or indirectly, which is your area of operation, Luiza? Shouldn't we be thinking about that point too?
Ah, Felipe, all my life the government has made, not just this one, but others, some concessions for certain segments, especially during election time. And when the market is good, employment is good, interest rates are at a manageable level, it's super... we're used to living like that. I don't think that giving a concession to taxis now will hinder things in the future. If it manages to generate more volume, more productivity, that brings more money into the market. The problem is putting more money into the market and having more productivity. But I don't feel it's a segment that will hinder the future. What hinders are much more global things, as you mentioned at the beginning: high interest rates, land, global instability. One day it's one thing, another day it's another. That hinders a lot.
I want to continue talking a bit about the issue of predictability, which I think is a word we can use to summarize a bit of this perception you're bringing us. Given what we're seeing, the signals, despite the preaching from you and even from Luiz Inácio Lula da Silva, I think there's no one, except maybe Gabriel Galipolo, poor guy, defending the level that interest rates are at in Brazil today, right? For quite some time now, but there's no clear signal, and the Central Bank has been very keen on making it clear in its communications that things will change or have a major turnaround in the short term, right? In this scenario, Luiza, talking a bit to those listening to us, especially micro and small entrepreneurs, who we know there's a race in Brazil, many people betting on their own business, many people betting on their small business and who look at your trajectory as it should be looked at, as a kind of model. For this person starting this small business, what is the golden advice for someone who needs to get their own wheel of fortune turning in this scenario of high interest rates, an indebtedness that suggests caution when selling on credit, when selling with installments? What is the golden advice we can give?
Well, first, there's no golden advice, right? If Luiza Trajano doesn't have it, what do we do for the rest of our lives? No, but what I can say is, first, focus on sales. Sales have to be made, and maybe with a smaller profit margin to be able to sell cheaper in a short period of time and for cash. But what's very important at this moment is cash flow. So I tell small businesses this a lot: they have to be very careful with what goes out, because not everything that comes in is profit, not everything that comes in can be spent. So it's like having two rackets in your hand. One you have to sell to survive, and the other you have to sell consciously and also fight to collect. I've lived through many moments like this. I think I'm the person who has lived through the most crises in this country. You saw a time when Collor took all the money out of the economy, only 50 cruzeiros were left. Imagine taking all the money out of the economy, all of it, from small businesses, large businesses, individuals, corporations. So, it's possible to survive in a country that still has a lot of consumption to be done. We need to build 10 million homes in 10 years to have a level of social equality with developed countries. Most people don't have air conditioning, don't have a fully automatic washing machine, and don't have what they'd like. So it's not even consumerism, it's having what some have, it's giving opportunity to others. So in a country where we don't have any crisis... you see we had a natural crisis in the south and how did Brazilians unite? Japan has to have huge stores just for earthquakes, preparing for earthquakes. So, a country with great economic diversity, a country that still has necessary consumption for the next 15, 20 years, there's no point in getting discouraged, you have to keep going if your business is doing well. If it's not, then it's not. And look for cheaper money from places that are offering it. And another thing I tell the financial people a lot is the Credit Score. The Credit Score needs to be more available for small and medium-sized businesses. The CRCOR needs to be more adapted to this. There's a lot of money stuck in some banks that can't be released because the credit score, the file that releases the credit, is from 10, 15 years ago, and we are in a different reality now. So I think everything needs to be cross-referenced.
