UPDATE 1-Brazil's Magazine Luiza swings to profit, hits highest margin in four years

(Recasts with details, quotes from CFO and context)

SAO PAULO, May 9 (Reuters) - Brazilian retailer Magazine Luiza logged a net profit in the first quarter, it reported on Thursday, reversing a year-ago loss as its financial expenses shrank and core margins came up to a four-year high.

Magazine Luiza, one of the largest retailers in Brazil, brought in a net profit of 27.9 million reais ($5.4 million) in the first quarter, in line with analysts' expectations, as financial expenses came down around 40%.

The gains compare to a loss of 391.2 million reais in the year-ago quarter.

Magazine Luiza reported net revenues up 1.9% year-on-year to 9.24 billion reais, slightly below the LSEG-compiled estimate of 9.48 billion reais, as sales rose at both brick-and-mortar stores and on its marketplace platform.

Meanwhile, online sales of goods from its own stock fell 2%, the third straight quarter of declines in the segment.

However, CFO Roberto Bellissimo told Reuters the segment turned back to growth in April, also adding the month "was the best in 2024" in terms of total sales for the company. According to Magazine Luiza, overall sales rose by a "high-single digit" in April.

Its core earnings, or adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), rose 53.5% to 687.8 million reais, against the analyst estimate of 700 million reais.

Adjusted EBITDA margins hit 7.4%, up 2.5 percentage points year-on-year to the highest in four years, according to the firm, partially helped by a pass-through during last year of a tax related to interstate purchases within Brazil.

Magazine Luiza has focused on turning a profit over the past two years as interest rates in the country went up.

But now as the central bank has started a rate-cutting cycle, the firm has start to deliver more profitable results, and sees an opportunity to boost sales through investments in the customer experience, Bellissimo said.

The firm added that it has temporarily closed six stores of the 107 it owns in the state of Rio Grande do Sul, which has faced deadly floods in the past few days. ($1 = 5.1426 reais) (Reporting by Andre Romani; Editing by Steven Grattan and Kylie Madry)