(Recasts to focus on restructuring, adds conference call
By Ana Mano
SAO PAULO Feb 24 GPA SA posted a
seventh consecutive quarterly loss on Friday as costs from a
broad two-year restructuring continued to hamper results at
Brazil's largest diversified retailer.
São Paulo-based GPA lost a net 29 million reais ($9 million)
in the fourth quarter, compared with average consensus estimates
of a 111 million-real profit compiled by Thomson Reuters. Last
quarter's loss narrowed sharply from a shortfall of 384 million
reais in the year-earlier period.
In a securities filing, GPA said it booked non-recurring
charges worth 260 million reais last quarter, including a hefty
tax provision and 64 million reais in extra costs linked to the
restructuring. GPA shut 60 stores across all formats last year.
GPA, which sells products ranging from food to home
appliances from its supermarkets, hypermarkets and other stores,
said that most of the overhaul was already done, which should
allow the retailer to close fewer stores in 2017.
Still, in a conference call to discuss results, Chief
Financial Officer Christophe Hidalgo said GPA would book a 25
million-real provision to convert up to 20 existing stores into
the Assaí cash-and-carry format this year.
The results pitted Chief Executive Ronaldo Iabrudi against a
number of analysts and investors who have shown skepticism that
GPA's restructuring is wrapping up.
The company's shares plunged as much as 4 percent in Friday
GPA "is not out of the woods yet, but as we look into 2017
and beyond, we expect the gradual recovery in sales, coupled
with no further deterioration of the gross margin, to gradually
translate into operating leverage," said Tobias Stingelin, an
analyst with Credit Suisse Securities.
Together, all the divisions posted a 40 percent drop in
earnings before interest, taxes, depreciation and amortization,
a gauge of operating profit known as EBITDA. The number came in
well below an average estimate of 783 million reais.
As unemployment is forecast to rise in the first half, GPA,
a subsidiary of France's Casino Guichard Perrachon SA,
only sees economic and retail activity picking up from July,
GPA's food retail division, which has struggled the most,
saw gross margins slip 2.1 percentage points to 26.9 percent on
deeper discounts to keep sales growing amid a recession.
Executives said on the call they see margins stable this year.
The cash-and-carry Assaí division also posted a slight dip
in its gross profit margin, but sales grew 36 percent last
quarter due to the chain's rapid expansion.
($1 = 3.06 reais)
(Reporting by Gabriela Mello and Brad Haynes; Editing by W
Simon and Andrew Hay)