UPDATE 1-Retailer GPA sees progress on rent, renovations in Brazil slump
(Adds details of earnings, executives' comments)
By Luciana Bruno
SAO PAULO, July 29 (Reuters) - Brazil's biggest retailer, GPA SA, reported progress renovating stores, bringing down rents and finding new real estate in the midst of a sharp economic downturn, as investors looked past its first quarterly loss in almost a decade.
Chief Executive Ronaldo Iabrudi told analysts on Wednesday that the company expected results in the months ahead from its cost cutting program, as the company adjusted to weak demand, high interest rates and the worst inflation in 11 years.
"The macroeconomic outlook remains challenging, but you can already see sales and traffic recovering as a result of store renovations and increased competitiveness," said Marcos Batista, the head of GPA's Extra supermarket chain, on the earnings call.
GPA shares fell 2 percent in opening trading, but rebounded to a 2 percent gain following the comments from executives.
Late on Tuesday the group reported a net loss of 30 million reais ($9 million) in the second quarter as its appliance unit closed stores and laid off employees in response to a 22 percent drop in sales.
GPA's last net loss was in the third quarter of 2006 because of a provision for a tax settlement related to soybean trading. Since then the group that started with a supermarket has added electronics chains, convenience stores and an e-commerce division to become Brazil's biggest retailer by sales.
GPA plans to invest 100 million reais this year in overhauling its Extra supermarkets with more profitable layouts, reducing sales areas for electronics and adding more room for fresh fruits, vegetables and meats. Continuación...