Brazilian retail giant Casas Bahia reported a second-quarter net loss of 10.1 billion reais after closing 298 stores as part of an operational restructuring.
The quarterly deficit expanded 18-fold compared with the 555 million reais loss recorded in the same period last year, driven by non-cash accounting charges of 9.1 billion reais from its ongoing turnaround plan. On an adjusted basis, the net loss for the period stood at 978 million reais.
Management did not rule out filing for a new out-of-court or judicial recovery process as it seeks to stabilize its finances. In explanatory notes accompanying its financial statements released on Sunday, August 16, 2026, the company stated that it continues to evaluate additional restructuring alternatives, including a formal reorganization of its liabilities and obligations.
Casas Bahia is one of Brazil's largest department store retailers, operating a network of physical shops and digital platforms selling home appliances, electronics, and furniture nationwide. The retailer previously went through an out-of-court recovery process in 2024 to restructure its debt under Brazilian corporate bankruptcy frameworks.
Financial Performance and Operating Costs
Despite the widening net deficit, net revenue grew 1.6 percent during the second quarter to reach nearly 7 billion reais. However, operating expenses rose sharply across several categories, undercutting top-line gains.
Selling, general, and administrative expenses increased by 17 percent to 1.8 billion reais. Meanwhile, the line item for other expenses surged to 3.5 billion reais, up from 49 million reais in the second quarter of the previous year.
Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, shrank 9.4 percent to 518 million reais. Consequently, the company's adjusted EBITDA margin fell from 8.3 percent a year ago to 7.4 percent.
At the end of June, the company held 2.9 billion reais in total cash, including un-discounted receivables. Financial leverage, measured by the ratio of net debt to last 12 months adjusted EBITDA, dropped to 0.5 times, down from 2.2 times in the second quarter of last year and matching the 0.5 times reported in the first quarter of 2026.
Phase Two Transformation and Store Closures
Casas Bahia originally launched its transformation plan in 2023 to implement financial and operational measures aimed at enhancing efficiency, profitability, and cash generation. In 2025, the company executed debt reduction initiatives that helped lengthen its debt maturity profile.
Executive leadership stated in the financial report that evolving operating and market conditions required management to accelerate and deepen the restructuring. The company confirmed it has now entered phase two of the program to adjust its scale to current market realities and capital costs.
Management noted that a combination of tighter credit conditions, an unfulfilled international fundraising effort, and sluggish consumer demand accelerated the need to resize its physical store footprint. Closing 298 loss-making stores is expected to boost contribution margins and increase store-credit financing across remaining locations.
According to company forecasts, shuttering deficit stores will increase the average contribution margin of remaining stores by 1.4 percentage points. Additionally, the average share of carnê credit sales in remaining stores is projected to increase by 5.0 to 6.0 percentage points. Carnês are traditional monthly installment payment books widely used by Brazilian retailers to extend credit to lower-income shoppers purchasing home goods.
The second stage of the transformation plan encompasses digital channel reorientation, inventory and working capital adjustments, structural cost reductions, and liquidity management. Management stated that phase two aims to prioritize higher-margin categories and channels, reduce capital employed, and lower financing costs to ensure a self-financing operation.
Failed International Fundraising and Market Pressures
Between late 2025 and the first half of 2026, Casas Bahia management and its financial advisors actively evaluated debt and equity options to bolster liquidity. The company held meetings and investor roadshows across Brazil, the United States, and Europe to explore funding avenues, including a potential follow-on share offering.
Although Casas Bahia completed select funding transactions in the Brazilian domestic market, a major international fundraising deal collapsed. The transaction was considered vital to the company's second-quarter financial planning, but negotiations ended when the anchor investor withdrew.
Parallel efforts to secure short-term liquidity through bridge loans also failed to materialize within the planned timeline and financial parameters. Management cited worsening global financial market conditions, heightened economic and geopolitical uncertainties, and high interest rates and tight credit selectivity in Brazil as primary drivers of the disruption.
The financial report was compiled by Reuters journalists Paula Arend Laier and Isabel Teles and published on Sunday afternoon.
