Magazine Luiza: online sales as a percentage of total sales revenue 2016-2020

The outbreak of COVID-19 seems to have accelerated a trend in the business model of Magazine Luiza, a retailer founded in 1957 in Franca, Brazil. In 2020, online sales generated almost two thirds (65.6 percent) of the company’s total sales revenue. The share is around 2.7 times bigger than that of 24.2 percent reported four years earlier, in 2016.

The magic of MagaLu

In May 2020, Frederico Trajano, CEO of Magazine Luiza and son of chairwoman Luiza Helena Trajano, said the holding could endure two more years with its physical stores closed – a measure the company had taken earlier that year in response to the pandemic. The retailer generated 391.7 million Brazilian reals in net income throughout 2020, around 57.5 percent less than in the previous year. Concurrently, third-party online sales are becoming increasingly important for the digital revenue of MagaLu, as the holding is often referred to.

E-commerce competitors are ready

Magazine Luiza might be on the top of its game in the online retail segment, but there is serious competition. In terms of online gross revenue, it ranked first in 2019, closely followed by B2W Companhia Digital. The net revenue of this Rio de Janeiro-based e-tailer grew by about 52 percent in 2020, surpassing 10 billion reals. Similarly, online marketplace Mercado Libre (known in the Portuguese-speaking country as Mercado Livre) saw its net revenue in Brazil increase by 50 percent that year.