| From the courage and entrepreneurial spirit of a
Portuguese immigrant, Valentim dos Santos Diniz, who arrived in
Brazil in 1929, a big dream was born: to build a solid company,
committed to more than the commercial aspects, but also with a social
role. In the country chosen to be his homeland, Mr. Santos, as he
is known, founded the Doceira Pão de Açúcar, a pastry shop, in 1948.
It was the beginning of one of the largest Brazilian business groups.
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Doceira Pão de Açúcar's businesses developed and
in four years, in 1952, there were two stores already. In 1959 the
first supermarket of the chain was inaugurated, expanded to 11 stores
in 1965, after the merger with the "Sirva-se" chain. In the following
year, it inaugurated the first store outside the city of São Paulo,
in Santos. |
| In 1968, when the chain comprised of 64 stores, the
International Division was created, inaugurating stores of the Companhia
Brasileira de Distribuição (CBD) in Portugal, Angola, and Spain.
During the 70's, CBD faced a large expansion, with the acquisition
of the Eletroradiobraz chain and with the inauguration of the first
generation of hypermarkets in Brazil, the Jumbo stores. |
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In 1978, the supermarket chains Superbom, Peg-pag
and Mercantil were taken-over by CBD. The company pioneered the
creation of new models to meet the needs of the different segments
of society, and in 1979 inaugurated the Minibox chain, a concept
of "no-frills" stores, with less variety of items at very competitive
prices, targeting the low-income population. |
| The 80's marked a larger diversification of CBD's
businesses. Besides the acquisition of five stores of Bazar 13 and
six more from the Morita chain, the first two Superbox stores were
inaugurated in 1980, in Jundiaí - SP and Rio de Janeiro - RJ. Superbox
implemented the concept of large deposits of food products, which
was very successful and soon had nine more stores. At the end of
the decade, in 1989, the company begun to strongly participate in
the second generation of the hypermarkets scenario with the creation
of the Extra stores, which besides operating with large selling
areas, offer state-of-the-art technology and a broad range of products.
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In the process of recovering the efficiency lost
during its fast growth, CBD began the 90's facing a reengineering
process, driven by the concentration of its businesses in food retailing.
At the end of this process, the company started to operate with
4 formats of store, each one with a different market target: Pão
de Açúcar, Extra, Superbox and Eletro. |
| The economic reforms implemented
in Brazil in 1994, including the introduction of the Real as the
new Brazilian currency and the drastic reduction of inflation
rates, resulted in an unprecedented growth of the local consumption
market. It is estimated that more than 19 million people had access
to consuming goods and products for the first time, once the Brazilians,
especially the low-income families, had a real income increase
with the new economic situation. This income increase and the
correspondent growth in the consumer's confidence increased our
potential clients and offered us growth opportunities. |
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In order to raise funds for our investment needs,
we conducted our initial public offering in October 1995, which
raised US$112.1 million. It was the first issuance of preferred
shares by a food retailer to begin trading on the São Paulo Stock
Exchange - BOVESPA. Our public offering of May 1997, which raised
US$172.5 million, resulted in the first ADS listing on the New York
Stock Exchange by a Brazilian retailer. |
| In 1997, we started the replacement of our model
of independent store operation for a more centralizing system, so
that the responsibility of the purchasing was transferred to the
commercial division. Our distribution and other administrative functions
were centralized, aiming at creating an economy of scale. These
changes strengthened our bargaining power with the suppliers in
relation to price and payment conditions. |
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In 1998, in order to take more advantage of the economic
growth in Brazil, we needed to adjust our stores format according
to our expectations and to the needs of different segments of consumers.
We changed the Pão de Açúcar format in such a way to reach a high-end
market, and used the Barateiro format, acquired in 1998, to target
the low-end one. The acquisition of the Barateiro chain represented
a decisive step in the realization of our market segmentation plan,
as the previous efforts to adapt the Pão de Açúcar stores to a lower-income
public was not well received. The Barateiro format, on the contrary,
had a brand, an image and an operational model focused on the cost
aspect. The higher flexibility benefited our business, by permitting
the development of special characteristics of Pão de Açúcar, an
image of a brand associated with high quality services and products.
At the same time, the Barateiro format allowed us to reach the Brazilian
lower-income segment, which is increasingly important. |
In February 1999, CBD acquired the Peralta
chain, comprising 37 supermarkets and a hypermarket. This
was the main acquisition of the year. Incorporation of the
Peralta chain immediately boosted the organization in terms
of both market share and revenue in São Paulo State.
Peralta chain added 61,000 square meters of sales area and
4,800 new employees. In addition, CBD acquired the Guassu
store located on the coast of São Paulo State.
In August, 1999, the company announced the admission of the
Casino Group, a large French chain, with US$19.4 billion in
gross sales in 2001, as a strategic partner. The association
occurred by means of an issuance of convertible debentures
in preferred shares, followed by a private subscription of
shares. By the agreement, Casino Group could have an interest
of up to 40% in voting stock and approximately 35.5% of the
total capital foreseen by 2004.
CBD's main investments in 2000 were driven to acquisitions, renovations,
conversions and the opening of new stores, which made the group
overcome the growth targets defined for the year. CBD opened 16
new stores and acquired 64 more, resulting in a 23% increase on
the sales floor, which reached more than 815 thousand square meters
in December 2000. |
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The main chains acquired by CBD were: 'Reimberg'
and 'Nagumo', in the city of São Paulo; 'Parati', in Curitiba; 'Rosado',
in the Vale do Paraíba area, São Paulo state, and 'Mercadinho São
Luiz', in Fortaleza.
Through the acquisitions, CBD reinforced the positioning of the
Barateiro division with the consumers of low/medium income and consolidated
the Pão de Açúcar division in places where it had already a strong
presence. Additionally, the acquisition of the Parati chain allowed
the Pão de Açúcar division to enter the Curitiba market, one of
the most important in Brazil, with high purchasing power consumers
and in synergy with the division's positioning. |
| In 2000 CBD also reinforced its distribution and technology structure,
preparing to continue to grow, with even higher levels of efficiency.
Three new distribution centers were opened in São Paulo state, besides
the Regional Deposits in Brasília, Curitiba and Fortaleza, totaling
a distribution area of around 350,000 m2 at the end of the year.
Also in 2000, CBD invested in the construction of a new Data Center,
fully based on the EMC infrastructure, leader in systems of data
storage. This process resulted in the achievement of the maximum
level of the EMC Proven Certificate, making CBD the first company
in the world in its industry to receive this certificate. With this
investment, the company ended 2000 with a solid infrastructure in
information technology, supported by a data storage capacity of
25 terabytes, with high levels of efficiency, security and flexibility
for future growth. |
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 In
2001, we completed the implementation of our new category management
system, according to which our commercial division became responsible
only for the purchases, in order to maximize our bargaining power.
Although, we transferred the decisions related to the category management,
which refer to the pricing and the product mix, of each one of the
divisions, once those are in a better position to take these decisions
in relation to its respective target public.
In 2001, we also re-launched the Barateiro format to offer a larger
range of products, with more balance between the brands that are
market leaders, private labels and economy products. Additionally,
we started to offer more services in this format and launched the
Clube Barateiro store card.
Additionally, we acquired 26 stores of the Supermercados ABC
S.A. chain, in Rio de Janeiro state in November 2001. According
to ABRAS [Brazilian Supermarkets Association], Supermercados
ABC was the 14th largest supermarket chain in Brazil, based
on the sales income in 2000. The ABC chain has a total sales
floor of 42,000 square meters and an annual gross revenue
estimated at R$400 million. This acquisition increased our
total sales floor by 5.1% and will allow us to strengthen
our presence in Rio de Janeiro state, the second largest consumer
market in Brazil, representing nearly 14% of the total sales
in the industry.
In 2002, CBD acquired the Sé Supermercados chain. The
purchase price was R$ 375 million, including the absorption
of financial liabilities in the amount of R$ 124.4 million.
With 60 stores in operation in 16 cities of the state of São
Paulo, including the capital, the Sé chain achieved
a gross revenue of R$ 1 billion in 2001. An innovation in
relation to the other acquisitions made by the Group was the
inclusion, in the purchase price, of 12 real estate properties,
whose market value is estimated to be R$ 70 million.
Another important fact of the year 2002 was the reintegration,
in June, of 12 stores in Recife (PE), of the Comprebem chain,
that have a total sales area of 11,840 square meters and presented
a gross revenue of R$ 122.2 million in 2001.
In December 2003, we signed a letter of intent to enter into an association with Sendas S.A. The association was named Sendas Distribuidora, and became operational in February 2004. Sendas has been operating in the Brazilian retail market for 43 years, currently operating exclusively in the state of Rio de Janeiro, through a network of 68 multiformat stores. As we already operated 38 stores in the state of Rio de Janeiro, the association with Sendas was an important strategic step towards growth and leadership consolidation in the Brazilian market. Sendas Distribuidora has a total of 106 stores.
In 2004, we entered into a partnership agreement with Banco Itaú Holding Financeira, or Itaú Holding, to establish a new financial institution named Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento, or Itaú CBD. |
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