GPA/Casino - comment

GPA results were released last night with a conference call today at 1 pm. As previously announced, the business is going through a reorganisation, with the closure of their 70 hypermarket stores. This is part of the sale of the remaining Hypermarket stores to Assai (the other LATAM entity Casino holds a c.40% stake in). As a result of this transaction, GPA has received R$1bn in 2021 and will receive a further R$4.2bn by 2024. It should be noted very little of these proceeds are to be used for a special dividend, with taxes and costs using R$1.2-R$1.5bn, a similar amount used for store expansion and refurbishment, and $R1.7-R$2.3bn used to deleverage. Up to R$0.5bn will be set aside for a dividend payment. 

The underlying business had mixed results with strong numbers in their Exito division (separately listed) and the GPA Brazil business flat against a difficult 2020 comparison. 

Overall, all these changes simplify the GPA business (except it still owns 35% of Cnova). The reinvestment and simplifying of the business appear to make the business more saleable but it is likely to require a transaction to remove Cnova from the structure before any sale can take place.