(Adds other retailers closing stores, background, analyst comments)
By Gabriela Mello
SAO PAULO, March 23 (Reuters) - Brazilian retailers and mall operators are closing doors and redirecting efforts to e-commerce, as the private sector adjusts to help slow spread of the coronavirus that has infected over 1,500 people and killed 25 across the South American country.
The move comes after federal and state governments enacted state of emergency rules allowing only essential services to remain open.
In Sao Paulo state, which is home to some 46 million people and accounts for around a third of the nation’s economic output, state Governor Joao Doria on Saturday issued a quarantine order starting on Tuesday through April 7.
Many retailers immediately followed Doria’s order and closed brick-and-mortar stores, including electronics and home appliances retailer Via Varejo SA and fashion chains C&A Modas SA, Cia Hering, Guararapes Confeccoes SA and Marisa Lojas SA.
Some, such as Lojas Renner SA, acted before the official orders, suspending activities indefinitely in Brazil, Uruguay and Argentina as of March 20.
Magazine Luiza SA also joined the move, shuttering all physical stores indefinitely as of March 23, adding it would boost its e-commerce. “We’re certain that our e-commerce infrastructure will make a difference,” the company said in a securities filing.
Likewise, BR Malls said on Monday it would close all of its malls, proceeding only with delivery services in locations where authorities have not yet banned such activity.
Upscale rival Iguatemi Empresa de Shopping Centers SA closed all but essential services in four malls in Sao Paulo.
“The next step is to monitor whether the government will announce any new incentive (fiscal, labor etc) to support retailers,” UBS analysts wrote in a report published on Monday, citing Cia Hering as the apparel retailer most exposed to fallout from the highly contagious respiratory illness COVID-19 caused by the new coronavirus.
“Hering has 42% of its stores in the state of Sao Paulo, Lojas Renner has 30% and C&A 31%,” they added.
Apparel retailers were among the biggest losers on the Sao Paulo stock exchange on Monday, with shares in Marisa Lojas down over 20%, Lojas Renner falling more than 10% and Cia Hering declining 9.5%.
Retailers with a stronger balance sheet should have more flexibility to keep investing in the business and mitigate the effect of the major hit on sales in 2020, according to investment bank BTG Pactual. “In the short term, e-commerce/multichannel names should suffer less,” BTG said in a recent report. (Reporting by Gabriela Mello; Editing by Toby Chopra and Bill Berkrot)