May 11, 2016 / 12:07 AM / 2 years ago

UPDATE 1-Brazil retailer GPA books 1st-qtr loss, turns cautious on capex

(Adds details of earnings)

SAO PAULO, May 10 (Reuters) - GPA SA, Brazil’s biggest retailer, posted a quarterly loss on Tuesday and pledged to invest more carefully amid a severe economic crisis and writedowns in a troubled online unit.

The retailer controlled by French group Casino booked a first-quarter net loss of 59 million reais ($17 million), compared with a profit of 192 million reais in the quarter a year earlier, according to a securities filing.

“The company is becoming more selective in its organic expansion plan for the year, with a focus on the formats with greater return,” GPA said in the filing, highlighting the profitability of convenience stores and wholesale unit Assai.

GPA said in February that investment in 2016 would fall by about 25 percent to around 1.5 billion reais, with possible revisions coming on a monthly basis.

The more cautious approach to capital spending comes as Brazil’s economy slumps into the second year of its worst recession in decades, devastating consumer confidence and discouraging investment.

GPA’s e-commerce division Cnova NV has also weighed on earnings with writedowns due to inventory mismanagement that is still the subject of an internal investigation. Last month Cnova raised the estimated impact of the scandal by 24 percent to 219 million reais.

The gross profit margin of GPA’s food retail division slipped 1.5 percentage points as nearly double-digit consumer inflation in the past twelve months squeezed profitability.

$1 = 3.47 Brazilian reais Reporting by Brad Haynes and Juliana Schincariol, editing by G Crosse

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