By Rogerio Jelmayer
SAO PAULO--Companhia Brasileira de Distribuicao (CBD, PCAR4.BR), one of Brazil's largest retailers by revenue, said its board approved the sales process of its nonfood division.
The company, which is controlled by French retail group Casino Guichard-Perrachon SA (CGUSY, CO.FR), said in a statement that it is in line with its strategy to concentrate on its food division.
Earlier this month, CBD had said that it was evaluating strategic alternatives for its nonfood division.
"At this stage it is impossible to affirm that a transaction will effectively close, as it depends on multiple scenarios and a de-facto willing buyer," Credit Suisse equity analysts team wrote in a research report.
"We believe, however, that the outlook for PCAR4 is ultimately positive as the company is working to streamline its corporate structure; might raise some important cash and, we are of the opinion that Casino will be very careful in crafting a solution that ultimately benefits all shareholders, which if confirmed would help in dissipating outstanding corporate governance risks," it added.
CBD plans to focus on its food business, which reported a 14% increase in sales in the latest quarter. Sales at the company's nonfood businesses, such as home appliances and electronic goods, dropped 10% during the period, while overall net revenue rose 4.4% to 15.09 billion reals ($4.45 billion).
The company's nonfood division is called Via Varejo and operates under brand names Casas Bahia and Pontofrio.
Brazil's poor economic activity and high inflation and interest rates are discouraging buyers from making big-ticket purchases like home appliances and electronic goods, according to economists.
Write to Rogerio Jelmayer at email@example.com
(END) Dow Jones Newswires
November 24, 2016 05:45 ET (10:45 GMT)
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