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Companhia Brasileira de Distribuicao or Grupo Pao de Acucar delivered robust fourth-quarter 2020 results, backed by strength in GPA Brazil (or Multivarejo) as well as Grupo Exito. Incidentally, Assai forms part of the company’s discontinued operations owing to the spinoff of the Cash & Carry operations.
Despite the challenges posed by the pandemic in 2020, the company made solid progress on several strategic fronts. Food e-commerce played a significant role in 2020, driven by the expansion of the company’s logistic solutions. This, in turn, benefited from warehouses, last mile option and stores dedicated to e-commerce, and Click & Collect deliveries. E-commerce sales crossed R$1.1 billion in 2020, reflecting threefold growth from the previous year. Supermarket giants like Walmart (WMT - Free Report) are also gaining on robust e-commerce trends.
In the fourth quarter of 2020, Companhia Brasileira’s net income from continuing operations (excluding exceptional items) amounted to R$374 million ($69.3 million), which increased significantly from a net loss of R$86 million ($15.9) in the year-ago period. The upside was backed by solid increases in revenues and adjusted EBITDA.
Results in Detail
Gross revenues in the quarter amounted to R$15,417 million ($2,857.1 million). Gross revenues surged 51.4% year over year in local currency, backed by strength in Multivarejo as well as Grupo Exito. On a pro forma basis, gross revenues rose 12.9%. Same-store sales, excluding gas stations and drugstores, grew 9.7%.
Gross profit soared 60.3% in local currency to R$3,725 million ($690.3 million) and the gross margin expanded 180 basis points (bps) to 26.7%. Adjusted EBITDA increased considerably by 91.1% to R$1,314 million ($243.5 million), with the adjusted EBITDA margin growing 200 bps to 9.4%.
Segment Details
Multivarejo gross revenues advanced 6.6% in local currency to R$8,255 million ($1,529.8 million). Same-store sales, excluding gas stations and drugstores, advanced 11.5%. Sales continued to rise in the food and non-food categories, with home appliances delivering exceptional performance. Further, volume and client trends improved sequentially. Moreover, private-label brands saw elevated share in the food category, mainly due to basic grocery product, butchery and beverage categories, together with new launches in beauty, ready-to-eat and personal care categories.
Apart from these, online sales remained a major growth driver, which more than doubled in the quarter. Notably, the Multivarejo segment continued to benefit from the company’s efforts to solidify the GPA platform, including the launch of Marketplace GPA operations as well as the expansion of delivery models. Talking of delivery models, the company’s Traditional Delivery (next day); Express and Click&Collect (same day) and James Delivery (next hour) continued to expand in the quarter, thereby fueling growth.
Segment gross margin increased 310 bps to 27.1%, on the back of better shrinkage level, reduced impact of store renovations compared with fourth-quarter 2019 and efficient commercial activation-related strategy. SG&A expenses increased 7.2% on account of higher variable expenses, costs related to store remodeling, development of Marketplace GPA platform and adjustment in provisions for labor contingencies. Nonetheless, the adjusted EBITDA margin elevated 270 bps to 9%.
The company had acquired 96.57% of Grupo Exito’s capital stock on Nov 27, 2019. Gross revenues in the Grupo Exito unit increased 21.7% on a pro forma basis to R$7,148 million ($1,324.7 million). Same-store sales, excluding gas stations and drug stores, were up 7.8%, courtesy of benefits from omnichannel strategies in all countries, robust show by Colombia retail operations and gains from innovative formats like Wow and FreshMarket.
Gross margin contracted 90 bps to 26.2% due to reduced contributions from complementary businesses as a result of the pandemic. SG&A expenses as a percentage of sales decreased 90 bps to 16%. Adjusted EBITDA margin fell 20 bps to 10.6%.
Store Update
In the Brazilian operation or Multivrejo, the company converted 41 Extra Super stores into Mercado Extra formats. Further, it opened four stores — one Mini Extra, one Minuto Pao de Acucar and two gas stations. Additionally, the company closed nine Extra Hiper stores, three Pau de Acucar stores, six Extra Super stores, three mini Extra stores and 20 drugstores.
In the Grupo Exito segment, the company introduced 19 stores (conversions and openings), including 17 in Colombia and 2 in Uruguay. Further, Companhia Brasileira closed 24 stores in Colombia and one in Uruguay.
Financial Details
Companhia Brasileira ended the quarter with cash and marketable securities of R$8,711 million ($1,676.4 million) and total shareholders’ equity of R$16,807 million ($3,234.4 million).
Shares of this Zacks Rank #4 (Sell) company have declined 4.8% in the past year against the industry’s growth of 20%.
Target (TGT - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 8.5%.
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Companhia Brasileira (CBD) Q4 Earnings & Revenues Grow Y/Y
Companhia Brasileira de Distribuicao or Grupo Pao de Acucar delivered robust fourth-quarter 2020 results, backed by strength in GPA Brazil (or Multivarejo) as well as Grupo Exito. Incidentally, Assai forms part of the company’s discontinued operations owing to the spinoff of the Cash & Carry operations.
Despite the challenges posed by the pandemic in 2020, the company made solid progress on several strategic fronts. Food e-commerce played a significant role in 2020, driven by the expansion of the company’s logistic solutions. This, in turn, benefited from warehouses, last mile option and stores dedicated to e-commerce, and Click & Collect deliveries. E-commerce sales crossed R$1.1 billion in 2020, reflecting threefold growth from the previous year. Supermarket giants like Walmart (WMT - Free Report) are also gaining on robust e-commerce trends.
In the fourth quarter of 2020, Companhia Brasileira’s net income from continuing operations (excluding exceptional items) amounted to R$374 million ($69.3 million), which increased significantly from a net loss of R$86 million ($15.9) in the year-ago period. The upside was backed by solid increases in revenues and adjusted EBITDA.
Results in Detail
Gross revenues in the quarter amounted to R$15,417 million ($2,857.1 million). Gross revenues surged 51.4% year over year in local currency, backed by strength in Multivarejo as well as Grupo Exito. On a pro forma basis, gross revenues rose 12.9%. Same-store sales, excluding gas stations and drugstores, grew 9.7%.
Gross profit soared 60.3% in local currency to R$3,725 million ($690.3 million) and the gross margin expanded 180 basis points (bps) to 26.7%. Adjusted EBITDA increased considerably by 91.1% to R$1,314 million ($243.5 million), with the adjusted EBITDA margin growing 200 bps to 9.4%.
Segment Details
Multivarejo gross revenues advanced 6.6% in local currency to R$8,255 million ($1,529.8 million). Same-store sales, excluding gas stations and drugstores, advanced 11.5%. Sales continued to rise in the food and non-food categories, with home appliances delivering exceptional performance. Further, volume and client trends improved sequentially. Moreover, private-label brands saw elevated share in the food category, mainly due to basic grocery product, butchery and beverage categories, together with new launches in beauty, ready-to-eat and personal care categories.
Apart from these, online sales remained a major growth driver, which more than doubled in the quarter. Notably, the Multivarejo segment continued to benefit from the company’s efforts to solidify the GPA platform, including the launch of Marketplace GPA operations as well as the expansion of delivery models. Talking of delivery models, the company’s Traditional Delivery (next day); Express and Click&Collect (same day) and James Delivery (next hour) continued to expand in the quarter, thereby fueling growth.
Segment gross margin increased 310 bps to 27.1%, on the back of better shrinkage level, reduced impact of store renovations compared with fourth-quarter 2019 and efficient commercial activation-related strategy. SG&A expenses increased 7.2% on account of higher variable expenses, costs related to store remodeling, development of Marketplace GPA platform and adjustment in provisions for labor contingencies. Nonetheless, the adjusted EBITDA margin elevated 270 bps to 9%.
The company had acquired 96.57% of Grupo Exito’s capital stock on Nov 27, 2019. Gross revenues in the Grupo Exito unit increased 21.7% on a pro forma basis to R$7,148 million ($1,324.7 million). Same-store sales, excluding gas stations and drug stores, were up 7.8%, courtesy of benefits from omnichannel strategies in all countries, robust show by Colombia retail operations and gains from innovative formats like Wow and FreshMarket.
Gross margin contracted 90 bps to 26.2% due to reduced contributions from complementary businesses as a result of the pandemic. SG&A expenses as a percentage of sales decreased 90 bps to 16%. Adjusted EBITDA margin fell 20 bps to 10.6%.
Store Update
In the Brazilian operation or Multivrejo, the company converted 41 Extra Super stores into Mercado Extra formats. Further, it opened four stores — one Mini Extra, one Minuto Pao de Acucar and two gas stations. Additionally, the company closed nine Extra Hiper stores, three Pau de Acucar stores, six Extra Super stores, three mini Extra stores and 20 drugstores.
In the Grupo Exito segment, the company introduced 19 stores (conversions and openings), including 17 in Colombia and 2 in Uruguay. Further, Companhia Brasileira closed 24 stores in Colombia and one in Uruguay.
Financial Details
Companhia Brasileira ended the quarter with cash and marketable securities of R$8,711 million ($1,676.4 million) and total shareholders’ equity of R$16,807 million ($3,234.4 million).
Shares of this Zacks Rank #4 (Sell) company have declined 4.8% in the past year against the industry’s growth of 20%.
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Dollar Tree (DLTR - Free Report) , with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Target (TGT - Free Report) , with a Zacks Rank #2, has a long-term earnings growth rate of 8.5%.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>