Tag Archives: CBD

Pão de Açucar (CBD) Post 6% Sales Growth in Q2. Highlight is Food Sales

Grupo Pão de Açúcar (NYSE:CBD) reported net revenue of R$ 16.1 billion in the second quarter 2015, representing an increase of 6% year over year. The food segment rose 6.4% on the same basis of comparison, to R$ 8.95 billion, and non-food has advanced 5.3% to R$ 7.17 billion.

pao-de-acucarAccording to the company, the quarter sales performance was negatively impacted by the effects of the Football World Cup, which took place in the same period of 2014 and Easter sales, which happened partially in the first quarter of 2015 and in the previous year it had happened all during the second quarter.

CBD also states that the more cautious consumer landscape, due to the macroeconomic environment, affected the performance of the quarter.

Same store sales retreated 2.9% in April, May and June, with a negative highlight to Via Varejo (which includes the brands Casas Bahia and Ponto Frio), and fell by 23.5% in this indicator.

Within the food segment, multivarejo, which includes the brands Extra and Pão de Açucar, had an improvement of 0.7% in revenue in the quarter to R$ 6.51 billion.

Assaí, which is the group’s wholesale chain, was the positive highlight with a high of 25.6% to R$ 2.45 billion, with same store sales above inflation and market share gain.

The food segment opened 141 stores in the last 12 months, being 120 proximity (small) stores, seven Pão de Açucar four Extra, nine Assaí and one drugstore.

Within the non-food segment, Via Varejo’s sales fell 21.7% in the quarter to R$ 4.32 billion.

The sale of televisions retreated 56.6% over the previous year, with an impact of 10 percentage points in the total fall. The main factor for this performance was the strong TV sales performance during the Soccer World Cup last year.

The company claims that a number of additional measures have been implemented to adjust its expense structure, covering all operational and administrative areas, in order to mitigate the effects of inflation on fixed costs and the lower dilution of expenses.

Pão de Açúcar and Casino Create a Giant Global E-Commerce Company: Cnova

Grupo Pão de Açúcar (aka Companhia Brasileira de Distribuição – CBD), Via Varejo (VVAR11:BR) and French group Casino Casino Guichard-Perrachon (OTC:CGUIF) (OTCPK:CGUSY) have announced a joint venture to create a giant new e-commerce company: Cnova.

CBD and Via Varejo will own 53.5% of the new company, while the remaining 46.5% will belong to Grupo Casino. The French group has already filled for an IPO of the new company in the US.

Cnova is born as one of the largest e-commerce companies in the world, with a volume of goods  nearly US$5 billion, based on data from 2013. The company will have a large presence in France, Colombia, Thailand and Vietnam through the Cdiscount websites, besides Brazil, with Extra.com, CasasBahia.com and Pontofrio.com, sites operated by Nova Pontocom, a company owned mainly by CBD and Via Varejo.

According to the companies’ release, the success of Cnova will be based on a business model of low cost operations, attractive prices, a wide variety of products and delivery solutions and highly differentiated payment.

Cnova will have two co-presidents, and one will probably be the current president of the Nova Pontocom, Germán Quiroga Pasquale, while the other will be the president of Cdiscount.

Moreover, the company’s board will consist of 9 members, 3 appointed by Casino, including Jean-Charles Naouri – president of Casino and who will be the chairman -, 2 members shall be appointed by Pão de Açúcar, 1 by Via Varejo, while the other two members will be independent. Finally, the two co-presidents will switch in the position that remains on the board.

While the news is positive in general, Via Varejo, the brick-and-mortar side of CBD, may end up with the worst part of it. If Cnova gets the same buying power that Via Varejo has and transfer this benefit to the end consumer, there may be serious cannibalization of the physical stores from Via Varejo. Casino has reportedly always wanted to do an IPO of its global operation with the intent of extracting value from Nova.com, the online arm of CBD, which Casino partly owns.

In 2013, Nova.com had a revenue of BRL 4.8 Billion (approximately US$ 2 Bi) versus BRL 25 Billion from Via Varejo. This number could change drastically in the mid to long term, which would be neutral for Casino and CBD but negative for Via Varejo.

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