Companhia Brasileira de Distribuicao (CBD) posted robust second quarter fiscal 2010 sales results for the three months period ending on June 30, 2010.

Consolidated Revenue and Same-Store Sales

Companhia Brasileira de Distribuicao, the largest retailer in Latin America based on sales, posted quarterly gross sales growth of 38.5% over second-quarter 2009 to R$7,815.4 million ($4,424.0 million). The company’s quarterly net sales jumped 39.4% year over year to R$6,977.9 million ($3,967.1 million). Excluding the effect of the recent Ponto Frio acquisition, gross and net sales grew 11.4% and 12.7%, respectively.

Year to date, CBD’s gross and net revenue grew 42.7% and 44.6% to R$15,601.1 million ($8,869.6 million) and R$13,951.4 million ($7,931.7 million), respectively, compared with the prior-year period.

In the reported quarter, the company’s Extra Supermercados, Extra Eletro and Assaí stores registered above-average sales growth.

After increasing 15% in first-quarter 2010, gross same-store sales grew 9.9% in the quarter under review compared with 13.2% in the year-ago quarter. The decelerating growth rate indicates high borrowing costs prevailing in Brazil and consumers’ unwillingness to spend on durable goods. Net same store sales grew 11.3% in second quarter.

Year to date, gross same-store sales soared 12.4% and net same store sales surged 14.6%.

Segment Discussion

Gross food sales for the stores opened more than one year rose 7.9% in the quarter, attributed to higher beverages and perishables sales. Non-food same store sales advanced 16.2% in the quarter supported by above-average sales escalation in Electronics/Household Appliance, Drugstore and Textile business.

Based on same store basis, gross sales of food and non-food products grew 10.6% and 17.8%, respectively, in the first half of fiscal 2010.

In the quarter, Globex’s gross sales, including e-commerce operations, shot up 55.8% year over year to R$1,528.2 million ($868.9 million), while net sales soared 71.6% to R$1,336.0 million ($759.5 million). Globex’s gross same store sales grew 54.6% in the quarter, fueled by Mother’s Day and the World Cup.

Year to date, Globex’s gross and net sales flew 52.8%, and 69.5% to R$2,970.9 million ($1,689.0 million) and R$2,593.5 million ($1,474.5 million), respectively, compared with the same period in the prior year. Globex’s gross same store sales grew 51.5% in the first half of fiscal 2010.

In the quarter, CBD’s e-commerce gross sales, which include Extra.com.br, Pontofrio.com.br and wholesale, delivered a jump of 45.4% over second quarter 2009. In the first half of fiscal 2010, e-commerce gross sales grew 57.4% year over year.

During the quarter, Sao Paulo-based CBD commenced 13 new stores bringing the total number of stores to 1,080. The new stores comprise one Assaí store in Ceará, one Ponto Frio store in Santa Catarina, one Ponto Frio store in the Federal District and one Pão de Açúcar store, one Extra Hipermercado and eight Extra Fácil stores in São Paulo. In addition, the company re-images two CompreBem stores into the Extra Supermercado store in São Paulo.

The quarterly results was boosted by the sale of home appliances, especially TV sets ahead of the World Cup, but was likely pulled down by unsatisfactory Easter sales. However, to encounter the shooting inflation, the Central Bank of Brazil increased lending rates in the quarter, thereby reducing the demand for cars, furniture, refrigerators and other durable goods.

CBD, one of the biggest Brazilian companies, is engaged in the retailing of food, general merchandise, electronic goods, home appliances and other products through its supermarkets, hypermarkets and home appliance stores. The company faces stiff competition in Brazil from retail giant Wal-Mart Stores Inc. (WMT) and France’s Carrefour SA.
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