Imminent sale Via Retail highlights risks in consumer electronics market in Brazil

SAO PAULO, Feb 9 (Reuters)-French retailer Casino Guichard Perrachon the CASP.PA plans to start selling your participation on the control electronics Via Retail in March, although the prospects for a buyer are far from certain, given the myriad of problems in the industry.
Other electronics retailers Brazilians that try to sell face similar obstacles, with some investors saying that the traditional manual of physical stores with ample space and slow turnover seems increasingly untenable.
The Casino held preliminary negotiations and not binding with about half a dozen potential competitors, since Via retailers put formally on sale in November, said two sources familiar with the plans.
Chile''s SACI Falabella and the brazilian American stores are among the companies that participated in the talks and have higher chances to make proposals, said the sources.
Whatever the outcome, old problems could await the new owner Via retail, since the first eletroletrônicos chain of Brazil struggle with the burden of large stores, tight credit and an aged business model during the worst recession in the country.
Casino, Falabella and Americans refused to comment.
No change in this business model, the Casino could have trouble finding a buyer for the participation of 43% in Via retail, and the efforts of other chains to find buyers after reaching excessive levels of debt and facing corporate conflicts could also be fruitless, say executives of banks and industry participants.
Besides the Via retail, other potential acquisition targets include the second-largest home appliance chain of Brazil, the vending machine, based in São Paulo, which failed to attract minority partners in the last two years, said another source with knowledge of the matter. The Eletrosom, a smaller competitor, filed for bankruptcy in September and is also looking for a buyer, said a fourth source.
The vending machine and the Eletrosom refused to comment on the speculation.
All three retailers, some of whom also sell furniture, are facing the consequences of the strong expansion of the levels of debt, which was based on expectations of stable and rapid economic growth based on the promises of the past Government.
When a record budget deficit and falling commodity prices caught the brazilian economy, his plans have collapsed, plunging profit margins and increased costs. The major chains have reacted laying off staff and closing stores.
"There is an urgent need to renew the business model of the industry," said retail consultant Eugene Foganholo, pointing to persistent high costs and the lack of integration between the online and physical operations as major problems.
The revenue of the two main chains of appliances of Brazil fell more than 20% last year, and Via Retail comes losing money two years ago.
The vending machine, which is not listed, quit 30% of its employees and closed 15% of its stores as part of a broader debt restructuring. Via Retail cut about of 15000 jobs, or 20% of your workforce, and closed 9% of its stores across the country over the past two years.
"A new restructuring, closing more stores and layoffs of employees can be required to make these companies attractive to potential buyers," said a third source, who requested anonymity because of the sensitivity of the process.
Casino Product strategy of merger in 2009 of the main chains of appliances from Brazil, Via Retail suffered the frequent reorganization of administration, with partners and with the accounting scandals.
For the Casino, the sale of the chain would help reassure investors about the plan of the Chief Executive Officer Jean-Charles Naouri to concentrate on supermarket retailer Grupo Pão de Açúcar, through which controls Via retail.
To attract greater interest from global retailers or purchasing, Casino companies know to demonstrate improvements in Via Retail when disclosing fourth-quarter results on February 23, claimed two of the sources heard by Reuters.
According to one of the sources, who knows the process of sale Via retail, the Casino also held talks with the American retailer Best Buy, the French Groupe Fnac and the Chinese Alibaba Group Holding.
Acquisition of shares firms Carlyle Group, Cambuhy investments and Advent International have also been addressed, added the source.
The companies wouldn''t comment.