Zacks Investment Research downgraded shares of Pao Acucar-Gdr (CBD) from NEUTRAL to UNDERPERFORM on July 26, 2013, with a target price of $42.00.
P o de A car delivered weak second quarter 2013 results with earnings of $0.08 per share, which declined from $0.31 per share, due to sluggish retail industry and eroding consumer confidence. Though sales have increased in the quarter owing to cost saving initiatives and new store openings, the results are weaker than the prior quarter on the back of stammering retail industry. Rising input costs are also harming the company's margins. Eroding consumer confidence has dented the sales of appliances and electronics. The company is now diverting its focus towards the supermarket business. However, the company is not able to increase its prices despite high input costs. Moreover, the company has high debts, which pressures the company's financial position. Currency translation headwinds and tough employment conditions, particularly in Europe, also remain a threat. Moreover, the disagreement between the holding groups might dent the operations of the company.
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