São Paulo, Brazil, May 7, 2015 - GPA [BM&FBOVESPA: PCAR4 (PN); NYSE: CBD] announces its results for the first quarter of 2015 (1Q15). The comments refer to the consolidated results of the Group or of its business units. All comparisons are with the same period in 2014, except where stated otherwise.

(1) The international operations of Cnova have been consolidated in GPA since 3Q14, and are not reflected in 1Q14 figures. Therefore, for comparison purposes, Cnova consolidated results (Cnova Brasil and International operations)  were excluded from 1Q14 and 1Q15.

(2) Includes the results of Cnova (Cnova Brasil + Cdiscount Group); (3) Totals and percentages may not add up due to rounding; All margins were calculated as a percentage of net sales; (4) Includes revenue from lease of commercial centers; Prior periods were reclassified for comparison purposes; (5) Earnings before interest, tax, depreciation and amortization; (6) EBITDA adjusted by the total of “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses; (7) Net Income adjusted by the total of “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses, as well as the respective effects of associated income tax. Also excluded are the effects of nonrecurring direct income tax.        

(1) Excludes revenue from intercompany transactions; (2) Extra and Pão de Açúcar banners. Includes revenue from the leasing of commercial centers, prior periods were reclassified for comparability purposes; (3) Cnova: Cnova Brasil + Cdiscount Group. Includes revenue from commissions in the marketplace, not considering merchandise volume; (4) It includes revenues from intercompany operations. Apart from the closure of 42 stores between 2Q14 and 1Q15, in compliance with CADE, the growth was 0.1% in the quarter.

Sales Performance - Consolidated

Consolidated net sales in the quarter amounted to R$17.2 billion, increasing 14.8%, reflecting the opening of 211 new stores in the last 12 months and same-store sales growth of 4.0%. Excluding the effects from the Cdiscount consolidation, net sales grew 5.9% in the period.

In the food segment (Multivarejo + Assaí), net sales grew 8.0%, while in the non-food segment (Via Varejo + Cnova) net sales grew 23.5% (3.6% excluding Cdiscount), reflecting the more cautious behavior of consumers due to the macroeconomic environment.

Same-store sales increased 4.0%, with the highlights for Cnova (19.5%) and the Food segment (3.7% vs. 1.0% in 4Q14), which has accelerated driven by the performance of Assaí and the sequential improvement in the Extra banner. The Company's strategy focus on price competitiveness and the success of the commercial dynamics implemented in recent months drove same-store sales growth in the food category, which supported a recovery in market share, primarily at hypermarkets.

The quarter was marked by the opening of 20 new stores, of which 14 were opened by Multivarejo, 3 by Assaí and 3 by Via Varejo.

Food Business (Multivarejo + Assaí)

§  Net sales in the Food segment grew 8.0% to R$8.9 billion in the quarter. This performance is mainly explained by the opening of 128 new stores opened in the last 12 months, with 105 convenience stores (86 Minimercado Extra and 19 Minuto Pão de Açúcar), 10 Assaí, 8 Pão de Açúcar, 3 Extra Super and 2 drugstores. On a same-store basis, net sales grew 3.7%.

§    Multivarejo posted an important recovery in sales in the quarter, with a return to positive same-store sales growth. The initiatives to improve price competitiveness and commercial dynamics have supported sequential improvement in the Extra banner since July 2014, with an important recovery in same-store sales in 1Q15, reversing the trend to achieve positive growth. This improvement was due to the new level of sales performance in food categories at hypermarkets, with recoveries in both sales volume and customer traffic at stores.

§    The strategy's success and Assaí's positioning translated into a continuation of the strong growth rates of recent quarters, indicating the format's excellent resilience. In 1Q15, net sales grew 26.3%, driven by strong same-store sales growth and the opening of 10 stores in the last 12 months. During the quarter, 3 stores were opened, 2 of which in the Northeast, a region that already accounts for 18 of the banner's 87 stores. These store openings are part of the acceleration of the expansion plan for 2015.

Via Varejo

§     In 1Q15, net sales amounted to R$5.4 billion, stable in relation to 1Q14 after excluding the effects of the closure of 42 stores between 2Q14 and 1Q15 to comply with Brazil’s antitrust authority CADE. Including store closures, net sales decreased 1.0%. On a same-store basis, net sales decreased by 2.3%.

§     According to the Monthly Trade Survey (PMC) conducted by IBGE in January and February, the furniture, electronics and home appliance markets registered market share expansion in both specialty and overall markets (which includes online sales).

§    Considering the more challenging macroeconomic scenario, market share expansion continues to be the Company’s main focus, which should leverage its position as the dominant market player, its strong cash position, its solid partnership with suppliers and leadership in media as the largest advertiser in Brazil, according to IBOPE.

§    Based on the successful results of pilot initiatives under the “Crescer Mais” Project, Via Varejo’s growth strategy is to start rolling out these initiatives, which include:

i)              Complete revamp of the furniture category, with improved design, improved store ambience and offering of customized furniture at competitive prices;

ii)             Mobile Project, which involves a comprehensive renovation of the telephone category, with post-paid plan offerings from Brazil’s leading mobile operators;

iii)            Accelerated organic expansion in higher-growth regions;

iv)            Repositioning of the Ponto Frio banner.

The highlights in the quarter were the smartphone and white line categories, while the television category contracted the most during the period, mainly as a result of the strong comparison base for this category created by the World Cup in the first half of 2014;

§    Via Varejo closed 1Q15 with 1,037 stores. Three new Casas Bahia stores were opened in the quarter.

CNOVA

The following comments are part of the Cnova sales release published on April 10, 2015. The amounts are expressed in Euros, the entity's functional currency, and refer to the consolidated results of Cnova N.V which are on a comparable basis (Cnova’s international operations are  reflected in 1Q14).

§    Cnova net sales grew 17.8%, from € 777.4 million in 1Q14 to € 915.5 million in 1Q15, despite the challenging macroeconomic scenario in Brazil;

§    Cnova announced yet another quarter of strong growth in the marketplace platforms, with increased market share in both regions;

§    Cnova intensified investments in 1Q15 to stimulate future growth through: (i) rapid expansion of the click-and-collect network in Brazil and increase in the number of collection points in France for large products; (ii) consolidation of the infrastructure required for a more effective supply chain and customer service; (iii) investments in strategic IT systems, both in Brazil (launch of a new recommendation tool, migration to a new ERP together with a new inventory management system and new customer service system), and in France (launch of new warehouse management system and a new search engine).

 Cdiscount

§    Cdiscount net sales once again registered double-digit growth of 16.4% in 1Q15 compared to 1Q14, increasing from € 358.1 million to € 416.8 million;

§    The share of marketplaces in Cdiscount sales reached 24.7% of GMV in 1Q15;

§    Cnova intensified investments stimulate future growth.

Cnova Brasil

§    The effectiveness of the strategic model implemented by Cnova Brasil resulted in an 18.3% sales growth in 1Q15 compared to 1Q14, from R$1.359 billion to R$1.608 billion;

§    Cnova Brasil intensified strategic investments to improve customer service and accelerate growth:

o    Doubling of collection points in relation to the end of 4Q14, totaling 210 at the end of 1Q15, including immediate availability of products in select Casas Bahia and Pontofrio stores.

o    In Greater São Paulo, centralization of operations of two light product distribution centers in a single distribution center shared with Via Varejo in Jundiaí⁽³⁾ and preparations for opening two warehouses in Midwest and South regions.

o    Selective investments in marketing initiatives to attract new customers.

o    Selective investments in human resources to strengthen strategic areas such as the marketplace platforms, collection points, logistics and IT.

o    Successful launch of three new marketplaces (Casas Bahia, Pontofrio and Cdiscount) in 1Q15, further strengthening the brand portfolios.

o    Growth in share of marketplace in Cnova Brasil sales, from 2.1% of GMV in 1Q14 to 6.3% of GMV in 1Q15, for an increase of 295% in the period.

Operating Performance

(1) As of 2014, includes revenue from lease of commercial centers. Prior periods were reclassified for comparability purposes; (2) EBITDA adjusted by the line “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses.

GPA started to consolidate Cnova’s international operations in 3Q14. Therefore, for the purpose of comparison with 1Q15, note that the results of these operations were not included in the 1Q14 figures. 

All business segments registered gross margin expansion in the quarter. However, the 100 bps margin decline was due to the Cnova and Assaí mix effect.  On comparable basis,  which excludes Cnova Consolidated results (Cnova Brasil and International operation) from 1Q14 and 1Q15, gross margin improved by 50 basis points, from 26.6% to 27.1%.

Selling, general and administrative expenses increased 16.8% compared to 1Q14, due to the following factors:

(i)   consolidation of Cnova’s international operations (which were not consolidated into the Company in 1Q14);

(ii)  increase in electricity costs and higher expenses with health plan benefits, which outpaced inflation in all Group companies;

(iii)  higher expenses with store expansion (211 stores opened in the last 12 months).

On comparable basis, selling, general and administrative expenses grew 8.6% this quarter.

EBITDA adjusted by Other Operating Income and Expenses, on comparable basis, grew 2.1% from 1Q14, with EBITDA margin of 7.6%, virtually in line with the same period in the previous year (7.7%). Adjusted EBITDA including the Cnova operation came to R$1.017 billion, with adjusted margin of 5.9%.

   (1) Includes revenue from lease of commercial centers. Prior periods were reclassified for comparison purposes; (2) EBITDA adjusted by the line “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses.

In 1Q15, the Company strengthened its competitiveness strategy, chiefly in the Extra banner. The multi-format structure, which includes the Pão de Açúcar, Extra Super and convenience banners, enabled the Company to compensate the efforts aimed at driving competitiveness, resulting in the maintenance of Multivarejo’s gross margin. The 20 bps gross margin expansion in the quarter was due to the increase in revenue from lease of commercial centers. Sales of seasonal items during Easter had no impact on gross margin this quarter.

Selling, general and administrative expenses increased by 9.4% from 1Q14, reflecting the impacts of wage increases at the end of 2014 and higher expenses with health plan benefits, which outpaced inflation, as well as electricity costs; and higher expenses with store expansion (118 stores opened in the last 12 months); in addition to reinforced operational structures at stores to drive revenue growth. This quarter, the Company was successful in keeping general and administrative expenses under strict control.

EBITDA adjusted by Other Operating Income and Expenses came to R$468 million, with margin of 7.1%.

Assaí continued to post strong growth, which, coupled with higher same-store sales growth compared to inflation, resulted in net sales of R$2.3 billion in the quarter, up 26.2% from 1Q14. In the last 12 months, the banner opened 10 stores, three of which were in the quarter.

Gross margin expanded 30 basis points, from 13.3% in 1Q14 to 13.6% in 1Q15, mainly due to the maturation of stores. Operating expenses as a percentage of net sales increased 20 basis points, primarily due to new store openings in the last 12 months.

EBITDA amounted to R$69 million, growing 30.4%, with EBITDA margin expanding 10 basis points, despite the impact of intensive store expansion (10 stores opened in the last 12 months). Assaí’s consistent performance in the quarter demonstrates the resilience of the format and appropriate positioning.

(1) Some figures in this earnings release differ from those presented in the Via Varejo release due to the effects of intercompany transactions; (2) EBITDA adjusted by the line “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses.

EBITDA totaled R$546 million in 1Q15, growing 10.3% from 1Q14. EBITDA margin expanded 110 bps in the quarter to 10.2%.

EBITDA growth is explained by the 230 bps gross margin expansion, driven by: i) effects of new sources of revenue from delivery and assembly, as well as synergies with other Group companies; ii) initiatives to drive efficiency in logistics and assembly activities throughout 2014, with maturation and full impact in 2015; iii) sales mix, especially in the smartphone category, with growth above the company average; iv) the gains resulting efficiency and new revenues, which enabled Via Varejo to bolster its competitiveness strategy;  

The impact of inflation on fixed costs was partially mitigated by initiatives to improve operational efficiency, which resulted in total operating expenses increasing by 4.6%, well below the inflation (as per IPCA) of 8.1% in the period.

The following comments are part of the Cnova earnings release published on April 29, 2015. The amounts are expressed in Euros, the entity's functional currency, and refer to the consolidated results of Cnova N.V which are on a comparable basis (Cnova’s international operations are  reflected in 1Q14).

(1) Comprised of our product sales, other revenues and marketplaces business volumes, after returns, including taxes; (2) Total number of orders placed before cancellation due to fraud detection or lack of payment by customers. (3) Customers who have made at least one purchase through our sites during the relevant 12-month measurement period; provided that, because we operate multiple sites, each with unique systems of identifying users, we calculate active customers on a website-by-website basis, which may result in an individual being counted more than once; (4) Share of traffic on mobile devices excluding specialty and international websites; (5) Calculated as net sales less cost of sales, excluding impact from expansion to new countries; (6) Calculated as Operating Profit (Loss) Before Other Expenses and before depreciation and amortization expense and share-based payments, excluding impact from expansion to new countries; (7) Calculated as Adjusted Net Profit divided by the weighted average number of ordinary shares outstanding during the applicable period; (8) Calculated as Net cash from operating activities less financial expenses paid in relation to factoring activities and less purchase of property and equipment and intangibles assets; (9) Calculated as the sum of (i) cash and cash equivalents and (ii) cash pool balances held in arrangements with Casino Group and presented in other current assets, less financial debt.

Business highlights:

§  Strong commercial dynamics: net sales growth of 17.8% and GMV growth of 28.2%

§  Improving quality of main commercial indicators:

o    Increase in the number of items per Unique Customer by 4.2% in 1Q15 for Cnova 

o    Increase in the number of orders per Unique Customer by 11.9% in France and 5.4% in Brazil in 1Q15.

o    Increase in the mobile share of traffic to 45% at Cdiscount and 25% at Cnova Brazil.

§  Improvement in Gross Margin excluding expansion to New Countries by 18 bps as a percentage of net sales.

§  Increased investment in logistics and IT for future growth, impacting operating expenses.

§  Improvement in net financial expense.

§  Good Free Cash Flow generation of €27.6 million over the last twelve months vs -€47.1 million at the end of 1Q14, leading to a positive Net Cash position of €71 million at the end of 1Q15. On a constant currency

basis, over the last twelve months, Free Cash Flow generation improved by €92 million (+€25.4 million in 2015 vs -€66.8 million in 2014).

Guidance:

§  For the next nine months this year (April 2015 to December 2015), Cnova Net Sales are expected to grow by 19% compared with the same period in 2014, within a plus or minus 150 bps deviation, assuming constant currency. 

Strong growth of net sales and GMV, improving quality of main commercial indicators, Gross Margin improvement excluding New Countries and impact on SG&A from increased investments for future growth.

§  Cnova reported strong growth of net sales (+17.8%) and GMV (+28.2%).

o    Cdiscount achieved +16.4% growth in net sales and Cnova Brazil +18.3% in local currency.

o    Total marketplace share grew to 15.4% of GMV in 1Q15 from 8.5% in 1Q14, representing an increase in marketplace GMV of 132%.

§  Cnova's strong commercial dynamics are sustained by improving quality of main commercial indicators:

o    Number of items per Unique Customer increased by 4.2% year-over-year for Cnova.

o    Number of orders per Unique Customer increased by 11.9% in France and 5.4% in Brazil.

o    Share of traffic from mobile devices grew to 34.0% in 1Q15, compared to 22.0% in 1Q14.

§  Gross Margin excluding expansion to New Countries expanded by 18 bps as a percentage of net sales, reflecting:

o    Stable price positioning both in Brazil since the end of 3Q14 and in France since the end of 1Q14.

o    Increased contribution from marketplaces.

§  Selling, general and administrative expenses (SG&A) went up as a result of increased investments to drive future growth:

o    Cnova accelerated the roll out of the click-and-collect network in Brazil by doubling the number of pick-up points at the end of 1Q15 compared to the end of 4Q14. In France, Cnova increased the number of pick-up points for large items which grew from 444 at the end of 1Q14 to 593 at the end of 1Q15.

o    Cnova strengthened its logistics infrastructure.  In France, the opening of the Paris warehouse combined with the ongoing extension of the Lyon distribution center have added 35% in capacity. These actions will enable the acceleration of express pick-up and same day delivery in Paris and Lyon for heavy products as well as manage the expanded product assortment. In Brazil, warehouse capacity is expected to increase by 23% by the end of 2015, in order to enhance product availability and to reduce by three days the delivery time for the Mid-West, South and Northeast regions.

o    Cnova accelerated the conversions to new IT systems both in France and in Brazil:

§  In France, launch of a new warehouse management system (Manhattan), providing central visibility on inventories across multiple warehouses, enabling same day delivery.

§  Implementation of a new search engine (Solr) at Cdiscount providing customers improved navigation tools across an expanded product offering.

§  Implementation of a new mobile "responsive design" software at Cdiscount, which adapts online content and lay-out for mobile devices.

§  In Brazil, acceleration of new IT system conversions including the transition to a new ERP and customer service system, as well as the launch of a new recommendation tool.

§  Higher SG&A expenses also reflect increased investments to develop new specialty sites and to enter into new geographies:

o    Development of four new specialty sites to be launched in 2Q15, including MonCornerKids and MonCornerJardin, both already live.

o    Acceleration of international expansion with eight additional New Countries to be launched by year-end 2015, partly driven by expanded delivery areas of existing sites.

§  Cnova has reduced its net financial expense from €15.0 million to €5.4 million. Excluding a €7.1 million positive non-recurring item, Cnova has reduced its net financial expense by 17% through active management of its cash balance and a stronger balance sheet.

Cnova has accelerated its cash generation with Free Cash Flow over the last twelve months of €27.6 million at the end of 1Q15 vs. -€47.1 million at the end of 1Q14.  Excluding the negative impact of exchange rate variation, Free Cash Flow over the last twelve months amounted to €25.4 million at the end of 1Q15 vs. -€66.8 million at the end of 1Q14, representing an improvement of €92 million.

(1)EBITDA in the last 12 months.

Net debt, including payment book operations, came to R$ 3.217 billion at the end of March 2015, for a decrease in the Net Debt from payment books/EBITDA ratio from 0.85 times in 1Q14 to 0.67 times in 1Q15, reflecting the lower debt level.

The higher cash flow and improved working capital enabled the Company to close the quarter with a balance of cash and financial investments of R$ 6.145 billion, or R$ 771 million higher than in the year-ago period.

The Company adopted the strategy of reducing the frequency of anticipation of receivables and, consequently, anticipated a lower volume of receivables in 1Q15 to close the quarter with receivables of R$ 1.5 billion.

Net financial result decreased 17.0% in the quarter to R$ 281 million, despite the hike in interest rate (average CDI rate), which increased 17.0% between 1Q14 and 1Q15. As a ratio of net revenue, net financial result decreased from 2.3% in 1Q14 to 1.6% in 1Q15.

This quarter, the Company registered a R$58 million improvement in its net financial result compared to 1Q14. The main factors in this increase were:

·         R$ 92 million reduction in the cost of sale of credit card receivables compared to the previous year, resulting from the Company’s strategy to reduce the frequency of anticipation of receivables and, consequently, the volume in Via Varejo and Multivarejo;

·         R$ 39 million increase in net bank debt charges, mainly due to the impact of the reduction in anticipation of receivables on the cash balance;

Net Income

(1) Net Income adjusted by the line “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses, as well as the respective effects of associated income tax. Also excluded are the effects of nonrecurring direct income tax.

GPA started to consolidate Cnova’s international operations in 3Q14. Therefore, for the purpose of comparison with 1Q15, note that the results of these operations were not reflected in the 1Q14 figures.

The Company’s net income on comparable basis, which excludes Cnova Consolidated results (Cnova Brasil and International Operations) from 1Q14 and 1Q15, came to R$387 million, growing 7.3% from 1Q14, for net margin of 2.7%, higher than in the same period of the previous year. Including Cnova, net income totaled R$252 million, for net margin of 1.5%. Adjusted by Other Operating Income and Expenses, net income reached R$311 million, with net margin of 1.8%, led by improved profitability of Via Varejo and Assaí.  

The cash balance at the close of 1Q15 was R$6.145 billion, up R$795 million from 1Q14. It is worth highlighting the continuous improvement in working capital management, by 13 days⁽¹⁾ in the difference between inventory and trade accounts payable. Working capital was also impacted by R$1.5 billion from receivables that were not advanced in the period, due to the Company’s strategy to reduce the frequency of anticipation of receivables. As a result, accounts receivable increased 15 days⁽¹⁾ between 1Q14 and 1Q15.

⁽¹⁾In COGS days

The Group’s investments totaled R$516 million in 1Q15, up 87% from 1Q14, of which 71% was invested in the Food segment and 15% in Via Varejo.

In the Food segment, in line with the strategy to foster organic growth, 17 new stores were opened in the quarter, of which nine were Minimercado Extra, five were Minuto Pão de Açúcar and three were Assaí stores. Investments also reflected the initiatives to renovate stores in order to make them more attractive. This year, the Group plans to renovate a significant number of stores, especially in the Extra banner.

At Via Varejo, investments in the period were mainly related to implementation of new logistics management systems, as well as tools for credit analysis and management, and for increasing productivity at the stores and back office and stores renovation. In 1Q15, three Casas Bahia stores were opened in the Northeast, Southeast and South regions.

Note that efforts were maintained to optimize capex per m², to intensify store renovations and to continue capturing synergies, in order to make the Group more modern and efficient.

Dividends

Dividends 1Q15

In a meeting held on May 7, 2015, the Board of Directors approved the payment of interim dividends for 2015. Interim dividends for the first quarter of 2015 will amount to R$38.5 million, equivalent to R$ 0.15 per preferred share and R$ 0.136365 per common share. The interim earnings per share in 2015 will be 7.1% higher than in the previous year (R$0.14 per preferred share and R$0.127270 per common share in 2014).

All outstanding shares on May 18, 2015 will be entitled to dividends. As of May 19, 2015, the shares will be traded ex-dividends. The dividends will be paid by May 28, 2015.

Dividends 2014

At the Annual and Extraordinary Shareholders Meeting held on April 24, 2015, shareholders approved the amount of R$ 194 million relating to the balance unpaid dividends for the year 2014, equivalent to R$0.6889912644 per common share and R$0.7578903909 per preferred share. The Company will pay these dividends within 60 days from the date of the Annual and Extraordinary Shareholders Meeting. Shareholders of record on April 24, 2014 will be entitled to dividends. As of April 25, 2015, the shares will be traded ex-dividends until the date of payment of dividends, which will be informed at an appropriate moment.

The amount of dividends for the year 2014 totaled R$302 million, corresponding to R$ 1.070505415 per common share and R$ 1.177555957 per preferred share.

Appendix I - Definitions used in this document

Company’s Business Units: The Company’s business is divided into four units - Retail, Cash & Carry, Electro (sale of electronics and home appliances in brick-and-mortar stores) and E-commerce – grouped as follows:

Same-store sales: The basis for calculating same-store sales is defined by the sales registered in stores open for at least 12 consecutive months. Acquisitions in their first 12 months of operation are not included in the same-store calculation base.

Growth and changes: The growth and changes presented in this document refer to variations from the same period of the previous year, except where stated otherwise.

EBITDA: The EBITDA calculation is performed in accordance with Instruction No. 527 of the Securities Commission of 10/04/12.

Adjusted EBITDA: Measure of profitability calculated by excluding Other Operating Income and Expenses from EBITDA. Management uses this measure because it believes it eliminates nonrecurring expenses and revenues and other nonrecurring items that could compromise the comparability and analysis of results. 

Adjusted net income: Measure of profitability calculated as Net Income excluding Other Operating Income and Expenses and excluding the effects on Income and Social Contribution Taxes. Also excluded are the effects of nonrecurring direct income tax. Management uses this metric given its understanding that it eliminates any nonrecurring expenses and revenues and other nonrecurring items that could compromise the comparability and analysis of results.