July 25, 2019 / 7:09 PM / 10 months ago

Brazilian retailer GPA expects higher margins, stimulus package effect on third quarter

SAO PAULO (Reuters) - Brazilian retailer GPA SA (PCAR4.SA) expects higher profit margins over the next few months, as sales seem to be reacting on the second half, group executives told journalists on Thursday.

GPA, owned by France’s Casino Guichard Perrachon SA (CASP.PA) topped analyst forecasts and announced late on Wednesday that it plans to convert all its preferred shares into common shares, to list in Brazilian stock exchange segment Novo Mercado. Preferred shares were up 5.9% in mid-afternoon trading in Sao Paulo, whereas benchmark index Bovespa was down 1.4%.

The stimulus package announced this week with the release of workers’ funds may “improve the macroeconomic environment”, GPA Chief Executive Officer Peter Estermann told analysts.

GPA’s gross margin fell to 21.6% on the second quarter from 23% a year earlier. Estermann expects gross margins to react, as the economy starts to improve, so the retailer decided not to change guidance for the year.

Reporting by Alberto Alerigi; Writing by Tatiana Bautzer; Editing by Lisa Shumaker

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