* Growing market share, cost-cutting help beat forecasts
* Cash and carry stores expanding as Wal-Mart retreats
By Brad Haynes
SAO PAULO, Oct 16 Grupo Pão de Açúcar
, Brazil's biggest retailer, beat analyst forecasts on
Wednesday with a 70 percent jump in profit due to robust sales
growth and streamlined operations.
Pão de Açúcar reported a third-quarter profit of 357 million
reais ($165 million), up 70 percent from a year earlier,
according to a securities filing. Excluding non-controlling
shareholders, net income rose to 282 million reais, beating an
estimate of 241 million reais in a Reuters poll.
By cutting administrative costs in its supermarket unit and
streamlining distribution of its home furnishing business, the
retailer was able to boost profit margins even though high
inflation has burned rival retailers.
Wal-Mart Stores Inc, the third largest retailer in
the country, said on Tuesday it is closing several unprofitable
stores in Brazil.
Pão de Açúcar is pressing ahead with growth plans, however,
reaffirming on Wednesday that it would invest up to 2 billion
reais in 2013 and expand food sales area by over 6 percent.
Net sales grew 15 percent from a year earlier as the group
opened new stores, led by the expansion of its Assai cash and
carry brand. So far this year Assai opened its first stores in
five new states, where it has achieved "better-than-expected
sales." The brand is set to open five more stores this year.
The larger role of the cash and carry business as well as
the impact of rapidly rising food costs pinched the gross margin
of Pão de Açúcar's food business, but the group offset that
pressure with more efficient distribution in its appliance unit.
Ongoing consolidation of the merger that formed the
appliance and furniture unit, ViaVarejo SA, lifted
its operating profit by 55 percent and raised its contribution
to net income from one third to one half of the group's total.
The group's earnings before interest, taxes, depreciation
and amortization, a gauge of operating profit known as EBITDA,
rose 30 percent to 1.036 billion reais, above an average
forecast of 960 million.