January 20, 2014 / 11:16 PM / in 4 years

UPDATE 1-Brazil's GPA appoints Iabrudi as CEO to replace Pestana

By Guillermo Parra-Bernal

SAO PAULO, Jan 20 (Reuters) - GPA SA, Brazil’s largest diversified retailer, on Monday tapped Ronaldo Iabrudi as chief executive officer, in the latest step by controlling shareholder Casino Guichard Perrachon & Cie to reassert its influence at the company.

Iabrudi, a former banker at private-equity firm GP Investments Ltd, was Casino’s top executive in Brazil. Iabrudi’s appointment comes as Casino spearheaded a management shake-up after winning control of the company in 2012 and the exit of former partner Abilio Diniz last September.

A fluent French speaker renowned for his ability to streamline costs and turn around sluggish companies, Iabrudi will replace Enéas Pestana, who had run the São Paulo-based company since March 2010. Pestana, also a former GP Investments executive who worked with GPA for 11 years, tendered his resignation early on Monday, according to a securities filing.

“The valuable experience of Ronaldo, coupled with his great professional talent, will strongly contribute to the development and success of GPA,” Jean-Charles Naouri, who serves as Casino’s CEO as well as the chairman of GPA, said in the filing.

Iabrudi is taking over GPA as the 66-year-old retailer gears up for an aggressive price war in its food business, where it aims to maintain profitability by cutting costs. Executives expect the push for more competitive prices in all GPA’s supermarket formats to win over more customers, a sign GPA is girding for a tougher competitive landscape.

In a December presentation to unveil its three-year business outlook, GPA said lower prices could be possible by running more efficient stores, cutting corporate overhead and wringing cost savings by working more closely with Casino.

GPA wants to lower general, administrative and sales expenses to 17 percent of net revenue by 2016, from 19.6 percent currently. The company expects to open 400 new food stores in the next three years, while appliance unit Via Varejo SA may open 210 stores during the same period.

The business plan takes stock of weaker growth and higher inflation forecasts in Brazil in the coming years - a scenario that will force retailers to fight for market share if they want to keep up robust recent growth.


Under Pestana, preferred shares of GPA surged 58 percent, compared with a 28 percent tumble in Brazil’s benchmark Bovespa stock index. He helped oversee the integration of home appliance retailers Globex Utilidades Ltda and Casas Bahia SA into GPA, while steering the company through a bitter feud between Casino and Diniz after the latter sought a merger with Carrefour SA - Casino’s arch-rival in France.

“GPA is grateful to Enéas for all that he represented to the company in the past eleven years,” Naouri was quoted as saying in the filing. “His outstanding performance and loyalty to the company’s interest, even in the most difficult moments, deserve all due respect.”

According to Radar, a column on business and political gossip by weekly magazine Veja, GPA will pay Pestana about 50 million reais ($21 million) for his departure. The amount includes an indemnification for his early exit, plus a non-competing clause and other retention expenses.

Efforts to reach Pestana were unsuccessful. Calls to GPA’s press office after working hours to confirm the Radar report went unanswered.

GPA’s aggressive pricing strategy reflects the strategic influence of Naouri and the possibility that Carrefour lists a business unit on the country’s stock exchange to help pay for more ambitious expansion.

Iabrudi, a psychologist by training who owns a gourmet coffee farm in the hills of Minas Gerais state in southeast Brazil, has had highs and lows in a career marked by his involvement in various sectors - from steel and mining to telecommunications and, now, retail.

Between 2002 and 2006, Iabrudi was named by GP and other partners as CEO of Telemar Norte Leste Participações SA, which in 2008 merged with a rival to form Grupo Oi SA, Brazil’s No. 4 wireless carrier. His stint at the company was mixed - with success in the cost control front but failure to spark growth, a source with knowledge of the situation told Reuters.

After being fired from Telemar, Iabrudi was tapped again by GP Investments to run Magnesita, a producer of refractory material for steel mills. Under Iabrudi, Magnesita leapfrogged half a dozen rivals to become the world’s No. 3 in the sector through acquisitions and a strategy to improve productivity at the company’s mines. He ran Magnesita between 2008 and 2012.

Iabrudi also worked for Brazilian steelmaker Gerdau SA , the world’s No.2 producer of long steel products.

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