UPDATE 1-Brazil's GPA sees stable capex, food margins despite headwinds

viernes 14 de febrero de 2014 12:43 GYT

By Brad Haynes and Marcela Ayres

SAO PAULO Feb 14 (Reuters) - GPA , Brazil's biggest retailer, expects to keep up the pace of investments and maintain profitability at its supermarkets this year despite tough economic headwinds, executives said on Friday.

Administrative cost cutting has let GPA bring down prices and accelerate sales while smaller rivals struggle, driving a stronger-than-expected jump in quarterly profit and lifting its share price by the most in three weeks.

"2013 was a tricky year, a very challenging one, but also a successful one for us," said Chief Executive Officer Ronaldo Iabrudi on a call to discuss earnings released late Thursday.

If GPA can keep up an aggressive strategy adopted under the control of French group Casino, the retail giant is likely to keep growing at the expense of its rivals, grabbing market share as Brazilian retail slows to its weakest in a decade.

Iabrudi said more appealing prices had already paid off with busier stores. Foot traffic fell in early 2013 but grew in the second half of the year, he said, defying Brazil's first economic contraction since 2009 during the third quarter.

The leaner administration that allowed such aggressive pricing can be sustained going forward, said Chief Financial Officer Christophe Hidalgo.

He said a majority of cost savings in the food retail unit will be used to push down prices, while pricing for e-commerce and appliance unit Via Varejo SA will depend more on the competitive environment.   Continuación...