December 5, 2017 / 8:57 PM / a year ago

UPDATE 1-Brazil's GPA aims for stable capex in 2018, focused on new Assai stores

(Adds quote, details on Via Varejo sale, context, byline)

By Alberto Alerigi

SAO PAULO, Dec 5 (Reuters) - Brazilian retailer GPA SA is planning to invest 1.3 billion reais ($400 million) in 2018, in line with capital spending this year, an executive told journalists on Tuesday, as the company continues an expansion drive.

Chief Executive Officer Ronaldo Iabrudi said GPA, owned by France’s Casino Guichard Perranchon SA, plans to focus investments in its most profitable formats and open about 20 stores per year in its Assai cash-and-carry format between 2018 and 2020.

“We’re calibrating (capital spending) with cash generation,” he told journalists at the beginning of an investors’ day in Sao Paulo. “We’re putting money where it provides the most return.”

GPA, like archrival Carrefour Brasil, has been investing heavily in cash-and-carry stores, which offer a wholesale experience to final customers. The expansion of the format, which has been particularly pronounced in Brazil’s northeastern regions, is seen as a way to counteract a sluggish economy, by cutting both operating costs and final prices.

Regarding Via Varejo SA, an electronics and appliance retailer that GPA is trying to sell, Iabrudi said it is still on the block despite rumors to the contrary. Still, he noted, the value of the company has increased in recent months, as consumer demand picks up in Brazil and Via Varejo shifts away from large physical formats.

“We don’t want to leave money on the table,” he said. “Brazil is going to grow more next year than this year. ...Via Varejo is for sale, but we’re not in a rush.”

$1 = 3.24 Brazilian reais Reporting by Alberto Alerigi Jr.; Writing by Gram Slattery and Brad Haynes; editing by Diane Craft

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