By
Bloomberg
Published
Mar 19, 2024
A sudden change in management is scaring off investors in Vivara Participações SA, wiping out almost a year of gains in just two days.
The company, one of Brazil’s biggest jewelry retailers, saw shares plunge as much as 9.5% Tuesday, adding to a 14% slump the previous session after news that founder Nelson Kaufman was stepping back into the chief executive officer role.
During a call with investors and analysts on Monday, Kaufman highlighted his international expansion plans, as well as intended changes in strategies to have more hands-on management at the physical stores.
“With Nelson’s return, concerns with the company’s governance and internationalization plans arise,” said Priscila Araujo, a portfolio manager at Brazilian asset manager O3 Capital. “The company was doing well and has a lot to deliver and achieve in the local market. This internationalization, in addition to being questionable, could take away focus.”
Shares fell to as low as 23.91 reais ($4.7) apiece Tuesday, the lowest intraday level since May 2023.
Kaufman said on the call that he would not put at risk more than 5% of Vivara’s earnings before interest, taxes, depreciation and amortization on its international expansion plan. The company has missed Ebitda estimates for the past three quarters, according to data compiled by Bloomberg. It reports results of the last three months of 2023 on Wednesday.
Vivara shares had become a favorite among investors — as of the end of last week, 11 out of 12 analysts tracked by Bloomberg recommended buying the stock, sending its consensus price target to the highest on record.
The company will take time to rebuild confidence among market players, JPMorgan analyst Joseph Giordano wrote in a note to clients Tuesday.
“We left the call with low visibility on this next chapters while the market feedback around governance, and execution risks amid potential high turnover outweighed the positives,” he wrote.