Pão de Açúcar sees tense market and will get more aggressive price

Against a backdrop of loss of vigor of the economy, the Grupo Pão de Açúcar puts greater focus on actions to make the company more competitive. Is a setting in the tone of the speech, which in recent times revolved around the need to defend the profitability, with the company admitting last year to give up sales in some businesses to protect profit margin. Yesterday, the network reported that command is already increasing efforts to operate in a more combative, with consumer prices more aggressive. And to avoid that this affects profitability, will seek further reductions in operating expenses on food and electronics operations.
"In more challenging scenario, what counts is competitiveness and profitability," said Aeneas Pestana, President of the GPA, to highlight the company's search for increases in traffic and sales volume, which leads to increases in market share, without that shrink the margin. In periods of slower consumption rate, retailers move to protect market slices, enlarging volume sold. "Competitiveness has always been important, but we are putting more light, more focus on that. We are living in a tense market [...]. Customer care more about the price of Coca-Cola or rice than before. And at these times one WINS with work of Ant, with greatest attention in each store, "said Christophe Hidalgo, Director to vice President of finance.
Consulting research show that the consumer, more indebted and fearful in expanding spending, has sought to buy lower-priced brands and cut from the shopping list certain categories of products. Two ears yesterday analysts hoped that in this scenario, the GPA has already overhauled the projections for the year, but the company kept estimates.
The gross margin of the GPA fell 0.3 percentage point in the second quarter, reflecting the price repositioning in supermarkets and hypermarkets. In the first quarter, to wholesale flag Assaí had already positioned itself with more combative in new stores.
A more combative posture is adopted by the company in good time for the retailer, with growth indicators. The second-quarter numbers of food were within the area designed by analysts and, vis-à-vis the consumer electronics operation, in Via retail, above the forecast. This by discounting the negative effects of a strong increase in expenses from April to June, something not expected. The GPA decided to r $ 350 million provision, with r $ 163 million in tax risks. Is one of the largest recent provisions made by the company, and at a time of better operating results. If the "low" was made in a bad period, would have spotted the balance sheet.
This "low" affected more the Food than GPA Via retail. In the food area, to consider these costs (which in the area of food reached r $ 261 million), the net income was R $ 142 million from April to June 2012 to a loss of r $ 18 million in 2013. The net profit of r $ 5 million increased Retail for $ 95 million-extraordinary expenses totaled r $ 90 million). According to the explanatory notes, calculations of compensation for Cofins and Finsocial, PIS have been reviewed by the company and led "the legal advisers to change the estimate of possible to probable loss in the amount of r $ 187,974 [million]".
According to Hidalgo, the company (which was controlled by the Casino about a year ago) wanted to "move on to the actual value of the market risk that ran," he said. "We are not comfortable with this, but there is a concern with the theme. Is a non-cash effect ".
Figures published yesterday show 12.1% increase in net revenues of the GPA from April to June, and the gross profit rose by 13.5%. Operating expenses rose by 20.9% to $ 2.96 billion. The value set, which deducts expenses, shows an improvement of indicators such as Ebitda, which rose 37.6%. Via Retail found greater reduction of operating costs (increased from 23.1% to 22.9% of revenue) and gross margin rose from 27% to 28.7%.
"We point out that the company's adjusted result was well above the market's expectation, with margin gain positive, against a backdrop of instability of the macroeconomic indicators, highlighting positive performance in the electronics segment," says report from CGD Securities broker.