According to Reuters,
Companhia Brasileira de Distribuicao
) has announced plans to open 100 new Minimercado Extra stores by
2013 to expand its supermarket business.
The company has been focusing on its food business, instead of
other categories of appliances and electronics, as consumers find
difficult to purchase these items in these uncertain economic
times. Further, the company is targeting northeast and
center-west regions for expansion. This Brazilian retailer is
expected to invest nearly $860 million in 2012 and meet all the
financial goals set for the year.
Companhia Brasileira de Distribuicao reported its third
quarter 2012 results in October with earnings of 69 cents, up
from 31 cents reported in the third quarter of 2011. The
year-over-year increase reflected the continuing operational
improvements in the two business segments, namely GPA Food and
Consolidated gross sales, comprising GPA Food and Viavarejo,
increased 8.7% (in local currency) driven by same store sales
growth owing to improved product mix and addition of new stores.
Consolidated net sales climbed 9.7% during the quarter. Though
gross profit climbed 3.9%, gross margin contracted 140 basis
points to 26.4% from the prior-year quarter, pressured by
increased logistics costs in the electronic segment.
The company has acquired many supermarket chains since 1981 in
order to increase its market share. The acquisitions include
Coopercitrus, Lourenção, Barateiro, Peralta, Paes Mendonça, ABC
Supermercados, Sé Supermercados, Sendas, São Luiz, Nagumo and
We are optimistic about the company's position in the retail
sector. Companhia Brasileira de Distribuicao is a leading player
in the global food retail sector based on both gross sales and
number of stores. The company carries a Zacks #3 Rank (a
short-term Hold rating), just like its peer
Wal-Mart Stores, Inc.
). On a long-term basis, we have a Neutral recommendation on the
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