Companhia Brasileira de Distribuicao
) commonly known as Grupo Pão de Açúcar (GPA) is set to report
its first quarter 2014 results on Apr 29 after the market closes.
Last quarter, Pão de Açúcar delivered profits of R$864 million
($403 million) compared with R$503 million ($259 million) in the
year-ago quarter. Consolidated gross sales increased 14.9% year
over year, while net sales climbed 16.2% during the fourth
quarter. Let's see how things are shaping up for this
Factors to Consider this Quarter
Pão de Açúcar is on an expansion spree and has been cutting
down on costs in the face of a tough retail environment to boost
sales and retain market share. We expect this strategy to enhance
sales and thereby earnings in the upcoming quarter.
Recently, Pão de Açúcar posted its first quarter sales
results, where consolidated gross sales increased 10.8% year over
year (in local currency), benefiting from comparable store sales
growth of 6.3%. However, sales growth suffered a negative impact
of 130 basis points (bps) due to the calendar effect. Pão de
Açúcar opened 21 new stores in the first quarter, which also
fueled sales growth. Net sales increased 11.9%, owing to
comparable store sales growth of 7.5% in the first quarter.
The company also expects to open 400 new food stores by 2016,
which includes 360 new convenience stores in its Mini Mercado
format. The company also has expansion plans for its wholesaler,
Assai, which has been posting solid results in the last few
quarters. The company is expected to open 12 to 15 stores per
year through 2016 under the Assai banner, particularly in the
fast-growing Northeast region. In addition, Pão de Açúcar plans
to open 210 stores by 2016 in the ViaVarejo unit.
However, currency translation headwinds and tough economic
conditions will remain a threat in the second quarter as well. We
expect slow recovery in the U.S. and therefore consumer sentiment
will recover at a mild pace.
Our proven model does not conclusively show that Pão de Açúcar
is likely to beat earnings this quarter. A stock needs to have
both a positive
and a Zacks Rank #1, 2 or 3 to surpass earnings estimate.
However, that is not the case here due to the following
Pão de Açúcar's Earnings ESP is 0.00%.
Zacks Rank #2 (Buy):
Pão de Açúcar's Zacks Rank #2 (Buy) when combined with an ESP of
0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell
rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions
Other Stocks to Consider
Here are some other companies in the retail/apparel sector you
may want to consider as our model shows they have the right
combination of elements to post an earnings beat this
Skechers USA Inc.
) with Earnings ESP of +12.20% and a Zacks Rank #1 (Strong
) with Earnings ESP of +1.32% and a Zacks Rank #3 (Hold).
Citi Trends Inc.
) with Earnings ESP of +4.00% and a Zacks Rank #3.
COMPANHIA BRASL (CBD): Free Stock Analysis
CITI TRENDS INC (CTRN): Free Stock Analysis
NIKE INC-B (NKE): Free Stock Analysis Report
SKECHERS USA-A (SKX): Free Stock Analysis
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