BRAZIL: Discount retailer Dia in talks on franchise deal
Dia plans to expand in emerging markets, including Brazil
Discount retailer Dia said today (31 August) that it hopes to close a deal to open more franchise stores in Brazil by the end of the year.
The Spain-listed company, spun off by Carrefour last month, is in talks with an unnamed party to expand its network in Brazil.
"The name of the franchise company with which we are negotiating is, at this stage, confidential [but] we hope to sign the contract at the end of this year," a Dia spokesperson told just-food.
According to company data, as at 30 June, Dia had 262 company-owned stores in Brazil and 148 franchise outlets. The retailer plans to open 25 owned stores this year.
At present, Dia outlets are only located in and around Sao Paulo but the company also plans to move into the southern city of Porto Alegre. The retailer is also considering whether to open outlets in seven other Brazilian cities, including Brasilia, Recife and Rio de Janiero, the spokesperson said.
Dia's expansion plans in Brazil emerged as the retailer issued its financial results for the first half of 2011.
The company reported a net profit of EUR4.7m (US$6.8m), compared to a net loss of EUR18.9m a year earlier. EBITDA, excluding one-off items, increased 10.1% to EUR233.8m.
Sales were up 4.7% at EUR5.42bn, while same-store sales increased 1.5%. CEO Ricardo Curras said Dia's sales growth accelerated in the second quarter to 5.5%.
"The faster sales growth in Q2, mainly due to higher revenues in comparable stores, is the result of the good progress made on our transformation programmes, especially in Iberia and France," Curras said.
He also said Dia had improved its sales and profits in its emerging markets. "Of particular significance is the progress made in emerging countries - Argentina, Brazil, Turkey and China - both in terms of comparable sales - with double-digit growth - and absolute sales thanks to strong expansion while doubling our profitability."
During 2011, Dia plans to invest EUR100m in its emerging markets, including the expansion plans in Brazil, the spokesperson added.
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