December 11, 2019 / 10:04 PM / 2 months ago

Brazil's GPA sees wholesale chain Assaí sales hitting $12 billion by 2022

SAO PAULO (Reuters) - Brazil’s GPA (PCAR4.SA) sees its wholesale unit Assaí reaching 50 billion reais ($11.91 billion) in gross sales by the end of 2022 from expected 30 billion reais this year, as the food retailer continues to organically expand its operations, its chief executive said on Wednesday.

FILE PHOTO: The logo of Assai, cash-and-carry division of Brazilian retailer GPA SA, is pictured next to the Brazilian national flag in Sao Paulo, Brazil January 11, 2017. REUTERS/Paulo Whitaker/File Photo

The local subsidiary of France’s Casino Guichard Perrachon SA (CASP.PA) plans to open 20 new Assaí stores per year in Brazil until 2021 and to bring the wholesale chain to Colombia as early as next year.

“It will be our first Assaí store outside Brazil,” CEO Peter Estermann told journalists in a press conference before a meeting with investors in Sao Paulo.

He added Colombia’s first Assaí store will have around 5,000 square meters (54,000 square feet) and will be well positioned to compete with other hard-discount players in that market.

The move comes after GPA successfully concluded a tender offer to acquire shares of Colombian retailer Almacenes Exito SA IMI.CN, as part of broader efforts by parent company Casino to simplify its shareholding structure in Latin America.

Estermann noted GPA will incorporate Exito’s results into its own earnings as early as next year, which should boost the company’s net income, gross sales and Ebitda in 2020. “We will become a company with over 70 billion reais in gross revenue and 150,000 employees in South America,” he said.

In Brazil, GPA should keep the pace of Assaí’s organic expansion, while resuming conversions of Extra hypermarkets into this wholesale format. The group currently has over 100 hypermarkets in the country, out of which 25 have potential to become Assaí stores between 2020 and 2021, the CEO added.

Estermann said GPA will also resume the expansion of its Pão de Açúcar chain, opening 10 new supermarkets and 50 new convenience stores under the brand Minuto Pão de Açúcar.

“In the last five years we have accelerated the expansion of Assaí while keeping a more defensive position in other brands to adjust our store portfolio and improve profitability... Now we are ready to expand Pão de Açúcar again,” he explained.

GPA still expects to conclude a two-year conversion of 178 Extra supermarkets into Mercado Extra and Compre Bem stores by the end of June 2020. “Then, we may start considering ways to organically expand Compre Bem as of the second half,” Estermann said.

For its e-commerce, the company expects sales to double in 2020, helped by the addition of third-party sellers to the platform in the first half, surpassing a growth of over 40% in 2019, according to GPA’s Chief Digital Officer Jorge Faiçal.

Reporting by Gabriela Mello; Editing by Marguerita Choy

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