Jewelry retailer Vivara plunges as CEO change rattles investors

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Investors are fleeing Vivara Participações SA after a management change abruptly erased nearly a year’s worth of gains in the span of two days.

One of Brazil’s largest jewelry stores, the company’s stock fell as high as 9.5% on Tuesday, following a 14% drop the day before on the heels of news that founder Nelson Kaufman was returning to his position as CEO.

The intentions for foreign expansion and planned strategy improvements to have more hands-on management at the physical locations were underlined by Kaufman during a call with investors and analysts on Monday.

Priscila Araujo, a portfolio manager at O3 Capital, a Brazilian asset manager, expressed concern about the company’s globalization aspirations and governance plans now that Nelson is back. In the local market, the company was performing well and still has a long way to go. Along with being dubious, this globalization has the potential to divert attention.

On Tuesday, shares hit an intraday low of 23.91 reais ($4.7) per, its lowest level since May 2023.

The foreign expansion plan of Vivara would not risk more than 5% of its earnings before interest, taxes, depreciation and amortization, according to Kaufman, who made this announcement on the call. Bloomberg data shows that for the last three quarters in a row, the company’s Ebitda has been below expectations. Results for the final quarter of 2023 will be released on Wednesday.

Investors were smitten with Vivara shares; by the end of last week, 11 of 12 analysts surveyed by Bloomberg had given the company their stamp of approval, driving the consensus price target to an all-time high.

According to a note sent to clients by JPMorgan analyst Joseph Giordano on Tuesday, the company’s efforts to restore trust among market participants will require some time.

“The market feedback around governance and execution risks amid potential high turnover outweighed the positives,” he said, as they departed the call with poor visibility on the following chapters.

 


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Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

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