São Paulo, Brazil, July 25, 2011 – Grupo Pão de Açúcar (BM&FBOVESPA: PCAR4; NYSE: CBD) announces its results for the 2^nd quarter of 2011 (2Q11). The Company’s operating and financial information was prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), the accounting practices adopted in Brazil (BRGAAP) and Brazilian Corporate Law, and is presented in Brazilian Reais and nominal values, as follows: (i) on a “GPA Food” basis, which entirely excludes the operating and financial results of “Globex” Utilidades S.A. (including Nova Casas Bahia and Nova Pontocom, (ii) on a “GPA consolidated” basis (CBD), which includes the full operating and financial results of Globex Utilidades S.A., and, as of November 2010, Nova Casas Bahia. All comparisons are with the same periods in 2010 (2Q10), except where stated otherwise.

Sales Performance

GPA Food’s gross same-store sales

increased by 9.1% in 2Q11.

GPA FOOD

In the second quarter of 2011, GPA Food posted gross sales of R$6,928.3 million, 10.2% up on 2Q10, while net sales came to R$6,228.7 million, up by 10.4%.

Excluding 2010 sales by Extra Eletro and Extra.com.br (transferred to Globex), GPA Food’s gross and net sales would grow by 12.5% and 12.8% year-on-year, respectively.

On a same store basis, gross sales moved up by 9.1% and net sales by 9.3%.  In real terms, i.e. deflated by the IPCA consumer price⁽²⁾, gross sales climbed by 2.3%.

Also on a same-store basis, gross food sales increased by 10.0% over 2Q10, with grocery and perishables recording similar performances, while non-food sales grew by 5.9%, led by general merchandise and fuels. In addition, this improvement took place despite the exceptionally strong comparative base provided by 2Q10, when sales grew by 16.2% over 2Q10, fueled by the World Cup.

The Group’s best-performing formats were Extra Supermercado and Assaí, which posted gross same-store sales growth above the Group’s average.

It is worth noting that GPA Food’s second-quarter sales were positively impacted by the seasonal effect of Easter. In 2011, Easter fell at the end of April (April 24), benefiting sales in the latter month, while in 2010, it fell at the beginning of the month (April 4), thereby benefiting March sales.

In the first half, gross and net sales stood at R$13,568.5 million and R$12,213.1 million, respectively.

Excluding Extra Eletro and Extra.com.br, as mentioned above, gross and net sales increased by 9.6% and 9.8% year-on-year, respectively.

⁽²⁾ Like ABRAS (the Brazilian Supermarket Association), the Company has adopted the IPCA consumer price index as its inflation indicator, since it gives a more accurate reflection of the Company’s product and brand mix. The 12-month IPCA used was 6.7%.

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In same-store terms, gross sales climbed by 7.4%, while net sales moved up by 7.5%. In real terms, i.e. deflated by the IPCA consumer index, gross sales increased by 1.0%.

Still in same-store terms, gross food sales increased by 7.4%, while non-food sales climbed by 7.3%.

The 7.4% improvement in first-half same-store gross sales maintained the growth trend shown in 2H10, as can be seen in the graph below:

GPA CONSOLIDATED

In GPA Consolidated, all comparisons were impacted by the consolidation of Casas Bahia in the second quarter and first half of 2011, which was not included in the same periods in 2010.

In the second quarter, GPA Consolidated’s gross sales, comprising all the Group’s formats and businesses, increased by 61.3% over the same period last year to R$12,604.5 million, while net sales climbed by 61.5% to R$11,269.8 million. Excluding Casas Bahia, gross and net sales totaled R$8,933.7 million and R$8,056.2 million, respectively, 14.3% and 15.5% up on 2Q10.

In same-store terms, gross sales moved up by 10.1% and net sales by 11.0% over 1H10. 

In the first half, GPA Consolidated recorded gross sales of R$24,977.7 million and net sales of R$22,138.6 million, representing respective growth of 60.1% and 58.7% over 1H10.

In same-store terms, gross sales climbed by 8.5% year-on-year, while net sales increased  by 8.9%.

Still in same-store terms, gross non-food sales moved up by 10.2% and food sales by 7.4%.

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Gross Profit

GPA Food’s gross margin widened by 40 bps over 2Q10,

reaching 25.2%

GPA FOOD

In the second quarter, GPA Food’s gross profit totaled R$1,569.1 million, 12.3% up year-on-year, accompanied by a gross margin of 25.2%, 40 bps more than in 2Q10. The main factors contributing to the year-on-year improvement was the increased number of higher-margin items in the sales mix, such as perishables and general merchandise. This increase was also associated with conversions from CompreBem and Sendas to group’s formats.

In the first half, gross profit totaled R$3,105.9 million, 10.8% up on the same period last year, accompanied by a gross margin of 25.4%, an increase of 70 bps over 1H10 (24.7%).

GPA CONSOLIDATED

In GPA Consolidated, all comparisons were impacted by the consolidation of Casas Bahia in the second quarter and first half of 2011, which was not included in the same periods in 2010.

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In the second quarter, GPA consolidated gross profit came to R$2,987.5 million, with a gross margin of 26.5%, 310 bps more than the 23.4% recorded in 2Q10. In addition to the above-mentioned gains by GPA Food, this result was positively impacted by Globex, whose 2Q11 gross margin stood at 28.1%, 190 bps up on the 26.2% recorded in 1Q11, chiefly due to commercial efficiency gains fueled by more advantageous prices and sales conditions as well as greater product availability and assortment. The reduction in logistics expenses from the consolidation of the Casas Bahia and Ponto Frio into the same structure also helped increase gross profit.

In the first half, GPA consolidated gross profit totaled R$5,835.9 million, a 76.6% improvement over the first six months of 2010, with a gross margin of 26.4%, 270 bps more than the 23.7% posted in 1H10.

Total Operating Expenses

Total GPA Food operating expenses 

represented 18.5% of net sales

GPA FOOD

To comply with the new financial reporting standards (IFRS), 2Q11 expenses from “employees’ profit sharing”, previously recognized after “operating income before income tax”, are now recognized under “selling expenses” and “general and administrative expenses”. For comparative purposes, the previous period was also adjusted.

In the second quarter, total operating expenses amounted to R$1,149.9 million, equivalent to 18.5% of net sales, 10 bps less than the 18.6% recorded in 2Q10.

In the first half, these expenses totaled R$2,264.6 million, 10.0% more than in 1H10, corresponding to 18.5% of net sales.

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GPA CONSOLIDATED

It is worth noting that EBITDA was adjusted to meet the reclassification of the “employees’ profit sharing” line, as mentioned in the Operating Expenses section. Under the previous criterion, 2Q11 EBITDA would have come to

R$429.0 million, with a margin of 6.9%. This result was obtained despite the greater contribution from Assaí (14.8% of gross sales, versus 11.9% in 2Q10), which operates with lower margins.

In the first half, EBITDA came to R$841.3 million, 13.2% higher than in 1H10, while the EBITDA margin widened from 6.5% in 1H10 to 6.9%.

GPA CONSOLIDATED

In GPA Consolidated, all comparisons were impacted by the consolidation of Casas Bahia in the second quarter and first half of 2011, which was not includes in the same periods in 2010.

In the second quarter, GPA consolidated EBITDA totaled R$641.2 million, 66.3% up on 2Q10, with a margin of 5.7%, 20 bps up on the 5.5% posted in 2Q10.

In the first half, GPA consolidated EBITDA came to R$1,224.0 million, a 50.8% year-on-year improvement, with a margin of 5.5%.

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Net Financial Result

Financial result corresponded to 2.7% of 2Q11 net sales

GPA FOOD

In the second quarter, the financial result was a negative R$166.3 million, equivalent to 2.7% of net sales, in line with the previous quarter, even with the increase in the SELIC rate in the period.

The net financial expense of R$166.3 million the result of the following factors:

(i) interest on the net bank debt totaling R$67.6 million, equivalent to 1.1% of net sales, identical to the first-quarter ratio;

(ii) discounted receivables of R$34.3 million, corresponding to 0.6% of net sales; a reduction compared to 1Q11 (0.8%);

(iii) other assets and liabilities restated by the CDI interbank rate totaling R$64.4 million, or 1.0% of net sales.

 In the first half, the net financial result was an expense of R$328.0 million, equivalent to 2.7% of net sales.

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GPA CONSOLIDATED

In the second quarter, the GPA consolidated net financial result was an expense of R$336.0 million, equivalent to 3.0% of net sales, identical to the previous three months despite the upturn in the SELIC base rate.

In the first half, there was a net financial expense of R$661.7 million, corresponding to 3.0% of net sales.

Debt

Evolution of Net Debt

GPA FOOD

In the second quarter, GPA Food’s net debt totaled R$2,188.6 million, remaining flat over 1Q11, broken down as follows:

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GPA CONSOLIDATED

In the second quarter, GPA consolidated net debt came to R$1,988.7 million, 14.3% less than the R$2,319.2 million recorded in 1Q11. The net debt/EBITDA ratio stood at 0.81x, less than the 1.05x posted in the previous three months.

The table below gives a breakdown of consolidated net debt:

Equity Income

FIC’s equity income contribution

GPA CONSOLIDATED

In the second quarter, FIC, including Globex’s operations, had 8.3 million clients.

Equity income totaled R$2.7 million, resulting from a loss of R$1.0 million in GPA and a gain of R$3.7 million in Globex. This result was impacted by expenses of R$9.2 million in 2Q11, chiefly due to the replacement of chipless cards with smart cards.

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Net Income

GPA Food’s net income totaled R$93.2 million in 2Q11

GPA FOOD

In the second quarter, GPA Food recorded net income of R$93.2 million, with a net margin of 1.5%. This result was impacted by certain  non-recurring expenses:

(i)                  Conclusion of the REFIS tax repayment program 11,941/2009 consolidation process with the Federal Revenue Service, totaling R$28.0 million; and

(ii)                Non-recurring expenses, mainly, from the association process with Casas Bahia (R$21.4 million).

Excluding these expenses, net of income tax, adjusted net income would have come to R$127.9 million, with a net margin of 2.1%.

In the first half, net income totaled R$238.8 million, equivalent to a year-on-year growth of 19.9%. Excluding these non-recurring effects, adjusted net income would have amounted to R$273.5 million, with a margin of 2.2%.

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GPA CONSOLIDATED

In GPA Consolidated, all comparisons were impacted by the consolidation of Casas Bahia in the second quarter and first half of 2011, which was not included in the same periods in 2010.

In the second quarter, GPA consolidated net income totaled R$91.0 million, with a net margin of 0.8%. Note that, in addition to the above-mentioned impacts from GPA Food, this result was also affected by expenses from Globex’s restructuring, totaling R$25.3 million, due to restructuring expenses. Excluding this amount, net of income tax, adjusted net income would have come to R$157.6 million, with a margin of 1.4%.

In the first half, GPA consolidated net income stood at R$223.4 million, 3.0% down on the same period in 2010. Excluding the non-recurring effects mentioned above, adjusted net income would have totaled R$296.6 million, accompanied by a margin of 1.3%.

Assaí Atacadista

Assaí recorded gross sales of R$1,028.3 million in the quarter,

a 37.6% improvement over 2Q10

In the second quarter, Assaí recorded gross sales of R$1,028.3 million, including the stores in São Paulo, Ceará, Rio de Janeiro, Pernambuco and Tocantins, 37.6% up on 2Q10, fueled by organic growth, the conversion of existing stores, and the format’s improved operating result. Net sales climbed by 38.7%.

In the first half, gross sales totaled R$1,938.6 million, 36.4% up on the same period last year, while net sales grew by 37.0% to R$1,759.8 million.

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Globex Utilidades S.A.

In same-store terms, gross sales increased by 14.1%.

In GPA Consolidated, all comparisons were impacted by the consolidation of Casas Bahia in the second quarter and first half of 2011, which was not included in the same periods in 2010.

In the second quarter, Globex recorded gross sales of R$5,676.2 million (including Ponto Frio, Casas Bahia and Nova Pontocom), while net sales stood at R$5,041.1 million.

Same-store gross and net sales climbed by 14.1% and 17.6% year-on-year, respectively, while gross sales from bricks-and-mortar stores increased by 8.1%.

Further details on Globex’s earnings release are available on the website: www.globex.com.br/ri 

Investments

GPA Food invested R$205.7 million in 2Q11

GPA FOOD

In the second quarter, GPA Food invested R$205.7 million, allocated as follows:

·         R$21.7 million to the opening and construction of new stores and the acquisition of strategic sites;

·         R$88.6 million to store renovations and conversions; and

·         R$95.4 million to infrastructure (technology and logistics) and others.

There were 12 conversions in the quarter:

·         11 CompreBem stores in São Paulo, ten of which were converted into the Extra Supermercado format and one into the Extra Hipermercado format;

·         One Sendas store in Rio de Janeiro was converted into the Extra Supermercado format. 

GPA CONSOLIDATED

Consolidated investments totaled R$289.9 million, R$84.2 million of which went to Globex.

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Dividends

R$22.6 million to be paid as dividends in the quarter

On July 25, 2011, the Board of Directors approved the prepayment of interim dividends totaling R$22.6 million in accordance with the Company’s Dividend Payment Policy, approved by the Board of Directors’ Meeting of August 3, 2009, equivalent to R$0.09 per preferred share and R$ 0.081818181818 per common share.

As for the fourth quarter, after the end of the fiscal year and the approval of the corresponding financial statements, the Company will pay shareholders the minimum mandatory dividends, calculated in accordance with Corporate Law, less the amounts prepaid throughout 2011.

Dividends in relation to the second quarter of 2011 will be paid on August 10, 2011. Shareholders registered as such on August 1, 2011 will be entitled to receive the payment. As of August 2, 2011, shares will be traded ex-dividends until the payment date.

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GPA FOOD

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