Brazilian retailer Americanas SA, announced Wednesday that its chief executive officer and chief financial officers resigned following the discovery of approximately 20 billion reais ($3.88 Billion) in accounting irregularities.
Sergio Rial, Lojas Americanas CEO, resigned less than two months after he took the position. He replaced Miguel Gutierrez.
Joao Guerra is an Americanas veteran who has not been involved in financial management or accounting and will assume the role of interim CEO.
Andre Covre, CFO, had also just joined Lojas Americanas. This was a long-held control of three billionaires from Brazil who created 3G Capital.
Americanas stated that the company was aware of inconsistencies in supplier financing operations from previous years, including 2022. The company believes that cash impacts of
It stated that the inconsistencies are not significant.
Americanas stated that independent auditors and internal inquiries will be required to assess the effect of inconsistencies on financial statements.
The retailer stated that the executives had made their decision to leave the company due to this “change in the administration’s priorities” and the “immediate effect”.
Rial wrote to his employees, saying that Americanas had 8 billion reais of cash. He also stated that the company will continue paying its suppliers and other obligations on time. Rial stated that the company would need to improve its net equity situation, and this may necessitate a capital increase, although it is not the only solution.
The bank announced that Rial would discuss his findings during a conference call hosted by Banco BTG Pactual Thursday morning.
Fabricio Goncalvez CEO of Box Asset Management stated that the amount of accounting errors is greater than 15 billion Brazilian reals. Goncalvez stated that this is terrible news for retail, particularly considering the fact it occurred with Americanas. How can $3.9 Billion be evaded auditors?
According to data from Refinitiv, the amount represents almost double Americanas 10.7 billion market capitalization.
Rial, despite his resignation, will still be advising the 3G Capital founders.
In the latter part of 2021, 3G Capital founders, who control beverages makers Anheuser Busch Inbev and Kraft Heinz Co, reduced their stakes in the retailer to facilitate restructuring, but they remain “reference shareholders.”
High borrowing costs are putting pressure on Brazilian retailers. Americanas shares finished 2022 in a slump of 68.7%, but have increased by about 24% since that time.
Accounting problems make it impossible to implement the newly announced plan of migrating the company to the U.S. market. The plan was delayed in the last year.
This story was corrected to clarify that Rial will not advise 3G Capital founders but the company 3G Capital as individual shareholders in paragraph 12.