SAO PAULO Sales in the Assaí cash-and-carry division of Brazilian retailer GPA SA (PCAR4.SA) rose about 50 percent last year as consumers spurned traditional supermarkets in search of lower prices in a harsh recession, a senior executive said in an interview.
"We expect sales of around 15 or 16 billion reais," Assai Chief Executive Belmiro Gomes said on Tuesday. The division's sales rose 26 percent to 10.45 billion reais ($3.25 billion) in 2015.
GPA opened 13 Assaí stores last year for a total of 107 in the cash-and-carry segment, and the division's revenue climbed almost 40 percent in the first nine months of 2016.
The company, a unit of France's Casino Guichard Perrachon SA (CASP.PA), plans to open six Assaí outlets this year and convert at least 15 Extra hypermarket stores to the cash-and-carry format, Gomes said, adding that much of the expansion would take place in lower-income cities of northeastern Brazil.
Investments in the Assaí chain will amount to roughly 500 million reais in 2017, in line with last year, according to Gomes. The division will tap its own reserves to open stores, he said.
"Assaí is autonomous in terms of cash generation even after investing a lot in the last three years," Gomes said.
GPA, Brazil's largest retailer, will release sales figures for all divisions on Friday.
Soaring inflation and a weak labor market pushed some 2.5 million Brazilian families to switch from supermarkets to cash-and-carry stores in 2015, Gomes said, citing Nielsen data. He added that the trend had probably gained steam since then.
(Reporting by Paula Arend Laier; Writing by Ana Mano; Editing by Brad Haynes and Lisa Von Ahn)