November 3, 2016 / 10:56 PM / 3 years ago

UPDATE 1-Brazil's GPA mulls alternatives for Via Varejo stake

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SAO PAULO, Nov 3 (Reuters) - Brazilian retailer GPA SA is considering strategic alternatives for its stake in appliance retailing unit Via Varejo SA in an effort to concentrate on food retail amid a severe recession, the company said on Thursday.

GPA has no timeline for its decision, Brazil’s biggest retailer said in a securities filing, adding that the decision had been unanimously approved by the company’s board.

The news follows a larger-than-expected third-quarter loss reported earlier this week by GPA due in part to a sharp drop in non-food sales at the group. While Via Varejo’s net revenues were virtually unchanged at 4.1 billion reais, e-commerce division Cnova Brasil, now its wholly-owned subsidiary, posted a 38 percent drop in sales.

Via Varejo’s Chief Executive Peter Estermann was forthright with analysts last week about the challenges facing the credit-dependent appliance unit, which has struggled as unemployment and interest rates climbed in the current downturn.

“Client traffic is still not growing from a year earlier,” Estermann said on an earnings call. “Things won’t improve next year as quickly as some expect.” (Reporting by Ana Mano and Guillermo Parra-Bernal; Editing by Bernard Orr; editing by Grant McCool)

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