GPA touches Carrefour Brazil in 1st Qtr, but analysts see continuing pressure on margins ahead

SAO PAULO (Reuters)-Grupo Pão de Açúcar (GPA) threatened the leadership of Carrefour Brazil Brazilian supermarket sector, achieving a growth in gross sales slightly bigger than rival in the first quarter, despite the continuous deflation weight the food on the operations of retailers in the country.
The company controlled by French Casino had against the Carrefour Brazil in the last quarter of 2017, when they were tied with a gross sales of 13.6 billion reais, supported mainly in the atacarejo operations.
Between January and March, the GPA was discharged from 7,6% in gross revenue compared to the previous year, to 12.3 billion dollars, surpassing the expansion of acute 6% by Carrefour Brazil, which won 12.289 billion reais.
The difference between the results of the first quarter is more pronounced when comparing only atacarejo activities in the same store concept, with gross sales of Assam, the GPA flag, 10,7% growing year by year, including the calendar, and the effect of Atacadão, Carrefour, climbing 1,4% this comparison.
In General, the same store revenue of the GPA in the first three months of this year increased by 4,4% over a year before, considering the calendar effect (Easter Saturday), and 2,4% without the same. At Carrefour, the high were 2.3 and 0,4%, respectively.
But the figures presented by the two retailers this week surprised analysts, serving not only to confirm the positive Easter effect on consolidated performance from January to March, the focus of both the atacarejo and the trend of a more vigorous expansion of e-commerce.
The expectation of analysts, by the way, is of continuing pressure on margins in the months to come, given the negative impact of deflation of the foods and the potential intensification of more aggressive promotional campaigns amid the dispute more fierce in the sector Brazilian supermarket.
BTG Pactual team led by Fabio Monteiro, the numbers both of the GPA as Carrefour "are still weak in General," according to report released on Friday. In their evaluation, the Board of food deflation should only revert in the second half and the competition among the major retailers and, especially, with regional participants should prevent faster growth of revenue and margins of the companies in the sector in the coming quarters.
Analysts at JPMorgan have cited "limited price triggers" on the basis of the operational trends and reduced prices-targets of the GPA (94 to 90 reais) and Carrefour Brazil (18.50 for 17 dollars) by the end of this year.
"In our opinion, the main triggers for such actions are mergers and acquisitions or sale of assets, which, in this context, leads us to prefer the GPA to Carrefour Brazil given the potential divestment of the Retail Route," wrote JPMorgan's team led by Joseph Giordano in report. Analysts highlighted that the GPA is more diverse in the multivarejo segment, with greater penetration in supermarkets, including premium flag.
At 15:37 (Eastern time), the roles of the GPA rose 2,9%, to 71.20 reais, leading the list of higher gains of the Ibovespa, which ceded 1,3%. Meanwhile, the roles of the Carrefour Brazil, which debuted on B3 in July last year, climbed about of 1,85%, traded to 14.33 dollars.