(Adds details of earnings)
By Brad Haynes
SAO PAULO, May 7 (Reuters) - Brazil’s biggest retailer, GPA SA, posted a 21 percent drop in first-quarter profit due to soft demand and increased administrative costs from a new online division.
Net income attributable to shareholders fell to 192 million reais ($63 million), down 21 percent from a year earlier, according to a securities filing on Thursday, missing an average forecast of 246 million reais in a Reuters poll of analysts.
Recently formed e-commerce unit Cnova, which runs online retail globally for GPA’s controlling shareholder Casino , more than doubled revenue from a year earlier but added significant administrative expenses.
GPA said the cost of sales and administration rose 17 percent from a year earlier due to the incorporation of Cnova’s international operations, as well as higher electricity costs in Brazil and new store openings.
Sales from new stores and Cnova helped to lift net revenue 15 percent from a year earlier, but revenue at stores open for at least 12 months showed weakening demand. Same-store sales rose just 4 percent in GPA’s food division and fell 2 percent in appliance and furniture unit Via Varejo SA, despite an 8 percent rise in consumer prices from a year ago.
High inflation and rising unemployment has put Brazilian shoppers on edge this year, dragging consumer confidence to record lows as Latin America’s largest economy verges on recession.
GPA’s earnings before interest, taxes, depreciation and amortization, a measure of operating profit, fell 10 percent to 949 million reais, below a forecast of 1.04 billion reais.
The group also cautioned that Cnova’s explosive growth would moderate over the course of the year as its business matures. Setting aside currency variations, net sales from April to December should grow 19 percent from the same period of 2014, plus or minus 1.5 percentage points, GPA said in the filing.
$1 = 3.03 Brazilian reais Reporting by Brad Haynes; Editing by Leslie Adler and Ken Wills