Tags: CBD | Brazilian | grocer | demand

Brazilian Grocer CBD Tackles Strong Demand

By    |   Tuesday, 20 Dec 2011 09:19 AM

Rising wages are driving more consumption in Latin America. Middle class per capita income grew to $11,900 this year versus $7,600 ten years ago. Brazil, the largest economy in Latin America, has been booming. Not surprisingly, companies prosper by tackling strong Brazilian demand for products.

Enter Companhia Brasileira de Distribuicao (CBD), Brazil’s largest supermarket chain. It also owns other stores in varying footprints, such as hypermarkets, drug stores and appliance stores. Its stores have traditionally averaged 7 percent annual growth.

CBD is playing into Brazil’s growth by expanding its reach. Two years ago, it snapped up Globex, which owns household retailers. After focusing on its integration, organic growth will pick up again in 2012, says CBD Vice President Hugo Bethlehem.

There are dark clouds. Brazil’s economy is slowing. CBD is also battling giants Wal-Mart (WMT) and Carrefour (CRERF) for market share in Brazil, the world’s seventh-largest economy.

For now, CBD is ringing up sales though. In the third quarter, gross sales rose 10 percent over a year ago. Same store sales climbed 8.5 percent, with non-good sales rising 9.3 percent.

More growth

Of the four analysts followed by Thomson/First Call, two have strong buy recommendations and one has a buy, with one underperform. Raymond James analysts have a strong buy rating for CBD, citing its significant quarterly earnings growth.

The company reports next on Feb. 3.

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Rising wages are driving more consumption in Latin America. Middle class per capita income grew to $11,900 this year versus $7,600 ten years ago. Brazil, the largest economy in Latin America, has been booming. Not surprisingly, companies prosper by tackling strong Brazilian...
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2011-19-20
Tuesday, 20 Dec 2011 09:19 AM
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