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DIA Sees Double-Digit Brazil Growth As Prices Lure Clients

Published on Sep 27 2015 11:53 AM in Retail tagged: Supermarket / Spain / Dia

DIA Sees Double-Digit Brazil Growth As Prices Lure Clients

Distribuidora Internacional de Alimentacion SA, the Spanish supermarket chain that relies on emerging markets for more than a third of revenue, expects sales in recession-hit Brazil to increase more than 10 per cent this year as it attracts shoppers with lower prices.

“Double-digit growth is expected in local currency for 2015, which amounts to a significant challenge for any distributor in the current context of the country,” Amando Sanchez, the Madrid-based company’s chief corporate officer, said in an e-mailed response to questions. Customers are “more price-oriented than ever,” drawing them to DIA’s stores.

Retailers in Brazil are battling for sales as the country faces its deepest recession in 25 years and a 33 per cent plunge in the currency against the dollar. Sanchez said DIA’s business model is resistant to economic cycles, pointing to an increase in market share during Spain’s five-year economic slump that ended in 2013.

DIA doesn’t plan to hedge its currency risk in the country because almost all its purchasing and operating expenses are paid for in Brazilian reais, said Sanchez. DIA hasn’t changed its expansion plans for Brazil and will open a net 132 stores this year, about the same amount as in 2014, Sanchez said.

Net sales from Brazil rose 8.1 per cent in the first half of the year from the same period a year earlier to 759 million euros ($847 million) and represented more than 17 per cent of the total, the company said in July.

The stock rose 1.7 per cent to 5.18 euros at 1:33 p.m. in Madrid on Friday, paring the declines this year to 5.2 per cent.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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