Iguatemi, Brazil’s leading luxury retailer, is set to continue its growth trajectory in 2023, according to CEO Cristina Betts. Despite the challenges faced by Brazil in 2022, such as the ongoing impacts of the COVID-19 pandemic, a tense presidential election, and declining global stock markets, Iguatemi managed to achieve low double-digit growth. It currently operates 16 prestigious malls, strategically located in São Paulo and Brasilia, where renowned Western brands like Louis Vuitton and Dolce & Gabbana have a strong presence.
With a total rental space of 700,000 square meters, Iguatemi is a dominant player in the Brazilian market. When Betts assumed the role of CEO in 2021, she became the most influential luxury executive in Latin America. Her appointment was part of a larger restructuring that resulted in the consolidation of the parent company into the operating company, with the founding Jereissati family retaining control. Former CEO Carlos Jereissati now serves as the chairman of the new company.
In an interview, Betts outlined Iguatemi’s future plans, which include a focus on mergers and acquisitions (M&A). She emphasized the growth potential in the Brazilian luxury market, as the top 10 players currently control less than 50% of the revenue pool. Betts pointed out the fragmented ownership structure of many malls in Brazil, with multiple partners involved, presenting opportunities for Iguatemi to acquire individual stakes.
To facilitate these acquisitions, the company underwent a corporate restructuring in 2021. While the Jereissati family remains the majority shareholder, a new governance structure was implemented, granting certain veto rights to minority shareholders. This transition to professional management ensures continuity while allowing the family to maintain control. Betts believes this structure is highly valuable, as the family possesses a deep understanding and passion for the business.
Despite facing challenges in the stock market, including a decline of over 50% in market capitalization, Iguatemi has consistently been a profitable company. In its most recent financial year, it achieved an EBITDA of 750 million reals ($141 million) on annual sales of 1.2 billion euros ($1.3 billion). Betts expressed confidence in the company’s value and urged investors to consider it as a promising investment opportunity.
As a full-service mall company, Iguatemi handles the design, construction, and management of its own malls. It caters to the middle to high-end market in Brazil, with a focus on the south and southeast regions. The company oversees leases, contracts, and day-to-day operations, often incorporating additional facilities such as residential units, offices, and hotels within its malls.
Betts emphasized the importance of brand coordination within Iguatemi malls. Unlike luxury stores located on city streets, the company takes great care in selecting neighboring brands to ensure a cohesive and high-end shopping experience. She mentioned the strong performance of luxury marques like Tiffany and Cartier in Iguatemi malls.
While Brazil poses challenges for foreign luxury brands, including taxation and security concerns, Iguatemi has established a small retail business incubator called iRetail to encourage brands to enter the Brazilian market. The company’s relationships with brands can range from franchisee arrangements to joint ventures and, potentially, culminate in the brand establishing its own business.
Reflecting on her time at Iguatemi, Betts acknowledged the significant growth the company has achieved. Under her leadership, the number of malls has increased from eight to 16, and the number of luxury stores has grown from a handful to over 140. She expressed gratitude to Carlos Jereissati for his guidance and passion for the business, which have been instrumental in Iguatemi’s success.
Useful Links:
1. Iguatemi Official Website
2. Forbes Article on Iguatemi
