Jewelry: Why Vivara Has Become One of Analysts’ Favorite Retail Stocks

The sector proves to be more resilient with a focus on the public less impacted by high-interest rates and inflation, benefiting from lower cost pressure

Brazil's Vivara benefits from momentum in jewelry demand recovery and should improve margins with more silver products, analysts say
December 30, 2022 | 12:15 PM

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Bloomberg Línea — The Brazilian jewelry market lives in a honeymoon climate with the combination of cost stability, protection against logistical bottlenecks, and resilient and heated demand with factors such as the gradual return of weddings, which expand the sales of products such as rings and rings. It is a retail segment that begins 2023 with favorable perspectives for the main players, according to analysts. One of the trends is the diversification of the portfolio with greater space for silver, with better margins.

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In addition to the higher demand for jewelry in shops, jewelers are benefiting from the lower pressure on the purchase of their main input. The price of gold was practically stable in 2022.

In Brazil, Vivara (VIVA3), which imports the precious metal from Italy, the United States, and India, according to a report by Eleven Financial signed by analysts Victoria Minatto and Guilherme Domingues, is the main and only representative of the sector with shares traded on the stock exchange.

In 2022, Brazilian registry offices recorded a 25% rise in the number of marriage certificates compared to 2020, according to the Civil Registry Transparency Portal. There were 910,352 documents issued, up from 899,342 in 2021 and 729,985 in 2020. Despite the increase, the 2022 data did not return to the pre-pandemic level. In 2019, there were 979,608 marriages officiated in the country.


The distribution of goods also tends to have lower costs, even in the context of transport bottlenecks such as container shortages and more expensive freight, which affected the global economy during the pandemic. “Logistics is more simplified than in other retail segments since the products are smaller and lighter, besides not being perishable,” pointed out the analyst duo.

In Brazil, the sector is still very fragmented, which signals the prospect of organic growth through acquisitions.

The market share of Vivara (9.5%) is about four times the second place. The second largest company in the segment is Morana (2.4%), followed by H Stern (2.3%), Cartier (2.1%), and Pandora (2%). “This reinforces the thesis of consolidation of the sector, given the high fragmentation,” pointed out the Eleven report.


The exchange rate also helped the national jewellers. The dollar has depreciated by close to 5% by 2022. About 55% of the raw material used by Vivara comes from abroad.

Even with the positive factors, the company’s shares closed the year down 11.8%, while Ibovespa, the main index of the Brazilian stock exchange, rose 4.7%.

The challenging scenario with rising interest rates, still high inflation, and falling income ended up impacting shares of retail companies in general, explained the analysts.

Although these macroeconomic variables are still subject to uncertainties in 2023, analysts expressed optimism about Vivara’s stock.


Eleven has a buy recommendation with a target price of R$ 33, which implies an upside potential close to 50% in relation to the closing price of the year (R$ 22.43).

Last December 27, Itaú BBA also reiterated its recommendation of outperforming share, with a target price of R$ 27, citing VIVA3 as its main choice among retail companies listed on B3.

In a report, BBA analysts say Vivara has high exposure to the high-income consumer and faces almost no competition, making it a company with resilient profitability in tough economic times.


Silver: higher margins and customer base

Another factor considered favorable to Vivara, again according to market analysts, is the use of silver, which has gained representativeness in its portfolio with the Life brand. According to Eleven’s report, the business line focused on silver contributes to a gain in gross margin in the long term, given that the material presents higher profitability when compared to gold.

“We believe that the good prospects for Life’s expansion plan, resilience in margins, and attractive valuation reinforce our buy recommendation for Vivara’s shares,” explains Eleven.

The Vivara brand is aimed at the A-income consumer, while Life focuses on B/C customers, the analysts noted in explaining the company’s broader target audience.

“A Life shop presents even more attractive returns than a Vivara shop, as we understand that the costs to open the shops are similar, but the Life shop has a higher gross margin. We believe in the opening of between 30 and 40 shops between 2022 and 2023 for the brand, contributing to the increase in the company’s margin,” projected the pair of specialists at Eleven.


Other indicators reinforce the positive diagnosis for the sector.

In the Christmas retail sales, the third highest positive variation in sales was with the category “optics and jewelry stores” (+17%), pointed out an index calculated by Cielo (CIEL3), a card machine company, Brazilian leader in electronic payments. It was behind the categories “tourism and transport” (+26%), cosmetics and personal care (23%), and “bookstores and stationery stores” (22%).

In the segment of the five largest jewelry stores in Brazil, the Danish Pandora seeks another formula and bets on growing in the country through the power of influence of personalities, such as Brazilian singer Luísa Sonza, as well as sales campaigns of its portfolio.


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