(Recasts to add details on plans, company comments, share performance)
SAO PAULO, July 28 (Reuters) - Via Varejo SA, Brazil’s largest appliance retailer, could use acquisitions as a way to counter weak domestic sales of consumer electronics, refrigerators and furniture, Chief Executive Office Libano Barroso said on Tuesday.
Barroso told investors at an earnings conference call that Via Varejo’s financial structure allows the company to make any acquisition, without elaborating on potential targets, market segments or regions.
“We have the option to look at a non-organic way of growing, any acquisition opportunity in the market given our financial structure,” Barroso noted.
Via Varejo, which was born from GPA SA’s acquisition of Brazil’s top-two appliance retailers, is treading carefully on future store openings after a 22 percent slump in revenue and higher costs triggered a net loss in the second quarter. The firm shut down 15 stores this month as Brazil’s steepest downturn in 25 years weighed down sales.
Shares dropped as much as 5 percent on Tuesday after it reported a loss of 13 million reais ($5.4 million) in the quarter. Earnings before interest, tax, depreciation and amortization, a gauge of operational profits known as EBITDA, sank 51 percent to 240 million reais last quarter.
The company’s woes reflect years of stagnation in Latin America’s largest economy that only began to translate into slower sales activity and rising unemployment this year. Via Varejo also announced several measures to cut costs including the elimination of nearly 5,000 job positions, a renegotiation of rent contracts and a revision of marketing expenses.
The outlook for sales in July remains “quite challenging,” Barroso added. Yet, executives said that gross margins will remain stable in the coming quarters.
“We feel that despite the sluggish macro environment profitability touched bottom,” Tobias Stingelin, an analyst with Credit Suisse Securities, said in a client note. (Reporting by Alberto Alerigi Jr; Writing by Guillermo Parra-Bernal; Editing by Andrew Hay)