May 14, 2020 / 6:51 PM / 3 months ago

UPDATE 1-Brazil's GPA sees COVID-19 delaying store conversions, openings

(Adds details, analysts’ comments and share price)

By Gabriela Mello

SAO PAULO, May 14 (Reuters) - Brazilian food retailer GPA SA expects most store conversions, renovations and openings to take place in the second half of 2020, as the coronavirus pandemic halts construction work in some Brazilian cities, executives said on Thursday.

“Our long-term strategy has not changed but we had to make some adjustments to operate in a scenario more challenging than ever before,” Chief Executive Officer Peter Estermann told analysts in a call to discuss quarterly results.

The local subsidiary of France’s Casino Guichard Perrachon SA saw a 56.5% jump in first-quarter gross sales, but costs related to the acquisition of Colombia’s Almacenes Exito SA led to a quarterly loss of 130 million reais.

GPA shares were down more than 5% in early afternoon trading at 60.40 reais, among the worst performers of Brazil’s benchmark index Bovespa.

“Despite the weaker bottom-line figure due to the consolidation of Exito, we see a positive trend for the company in the next quarters,” analysts at Banco BTG Pactual SA wrote in a report.

They added the company is set to benefit from increasing traffic in stores in the short-term due to the pandemic, as well as store conversions and renovations and non-core assets in coming months.

GPA has kept its capital expenditure plan of 1.8 billion reais ($305.15 million) for 2020, including 20 new Assaí wholesale stores and 50 new convenience stores, Estermann said.

The retailer has also scheduled renovations in up to 15 stores under the premium brand Pao de Acucar, as well as the conversion of 50 supermarkets into Mercado Extra and 10 hypermarkets into the wholesale format, he added.

Divestment efforts are evolving too, according to Chief Financial Officer Christophe Hidalgo, and the company sees potential to raise over 3 billion reais with the sale of gas stations, real estate assets and even operations in Argentina and Uruguay.

“Of course the COVID-19 situation makes investors more cautions, but talks continue,” Hidalgo said, adding the GPA has a solid cash position and has no rush to sell assets at any price.

Estermann said the pandemic has also encouraged the company to accelerate some digital initiatives, after seeing e-commerce jump 82% in the first-quarter.

“E-commerce growth continued in April and May and we expect customer’s preference for online shopping to remain even after social distancing measures end,” the CEO said, citing plans to launch a marketplace in the third-quarter.

$1 = 5.8987 reais Reporting by Gabriela Mello; Editing by Chris Reese and Aurora Ellis

Nuestros Estándares:Los principios Thomson Reuters
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