Despite the Global Crisis, Sales at this Brazilian Retailer are Soaring…

Email – #231

** Despite the Global Crisis, Sales at this Brazilian Retailer are Soaring…

It’s no secret that Wal-Mart is the dominant force in consumer retail here in the U.S. and in many other areas of the world. But in Brazil Companhia Brasileira De Distribuicao, (NYSE:CBD) is giving it a run for its money.

CBD stores are similar in make-up to Wal-Mart’s “Supercenter” concept, selling food, clothing, appliances and numerous other products. Started as a pastry shop by Valentim dos Santoz Dinitz in 1948, the company is not only the largest food retailer in Brazil, but the largest retailer, period. Its 56,000 employees operate a total of 575 stores, of which 533 are grocery stores.

The company has a growth strategy that varies by location and also by the type of customer, and it’s growing its retail space 10% per year. Eight different banners makeup the company’s store lineup: 153 Pao de Acucar supermarkets, 178 CompreBem supermarkets, 62 Sendas supermarkets, 91 Extra supercenters, 42 Extra Eletro home appliance stores, 19 Extra Facil convenience stores, 15 Extra Perto supermarkets and 15 Assai cash and carry stores.

When it moves into a new region, the company acquires existing chains that are familiar with the region and already have an existing customer base. In addition to store growth, the company has a product growth focus, and continues to add new items to its private label line of foods.

And it’s paying off: third quarter sales totaled $2.1 billion, an increase of 22% over the same quarter a year ago. Net income was up an impressive 138% over the same quarter a year ago.

And if you think the global slowdown is hampering the company’s sales, think again: customer visits continue to increase, as well as the average ticket (amount spent per visit). Results for the month of October show sales of non-food products grew 19.3% and food by 12.1%

Same-store sales, a key measure of ongoing growth increased 13.9%, and operating expenses were actually down, an amazing feat, considering the current global slowdown.

As Brazilian consumers begin to watch their Reals as much as Americans are pinching pennies, CBD’s growth prospects look very good indeed.

*** Action to Take***

Buy Companhia Brasileira De Distribuicao, (NYSE:CBD) at market. And place a sell stop at $23 for protection. There are no options on this one for speculators to consider.

Elsehwere in our ADR portfolio, we hit our sell stop on AstraZeneca (NYSE: AZN).

If you have any questions, feel free to call one of our VIP Trading Services representatives at 888.570.9830 (toll-free) or e-mail: viptrader@oxfordclub.com , or call Pillar One Advisor Rick Pfiefer at 800.438.3040 or 407.667.4729.

Current Portfoli

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Country: Brazil
Current Price: New
Comments: Buy at market. Place a sell stop at $23.

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