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UPDATE 1-Brazil retailer GPA swings to profit as inflation eases
April 28, 2017 / 12:20 AM / 6 months ago

UPDATE 1-Brazil retailer GPA swings to profit as inflation eases

(Adds details of earnings)

SAO PAULO, April 27 (Reuters) - GPA SA, Brazil’s biggest retailer, on Thursday reported a swing to a profit in the first quarter as easing inflation helped the profitability of food sales and ongoing job cuts kept a lid on costs.

Net income was 215 million reais ($68 million) in the first quarter, compared with a net loss of 157 million reais a year ago, according to a securities filing.

Monthly inflation in the quarter averaged about a third of the pace a year earlier, helping GPA boost the gross margin of its Pao de Açucar and Extra supermarkets to 27.3 percent, the highest level since the end of 2015.

About 7,000 job cuts at those chains helped to reduce selling and administrative costs for the so-called Multivarejo division by 1 percent, compared with growth of 7 percent last year.

GPA’s cash-and-carry wholesaler Assai also continued to provide profitable growth, as a dozen new stores and more demand from bargain-hunting families helped boost sales by 29 percent and operating profit by 75 percent.

The group’s earnings before interest, taxes, depreciation and amortization, a gauge of operating profit, rose 39 percent from a year earlier to 515 million reais, beating an average estimate of 353 million reais from analysts surveyed by Reuters. ($1 = 3.18 Brazilian reais) (Reporting by Brad Haynes and Alberto Alerigi Jr; Editing by Andrew Hay and Leslie Adler)

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