By Brazil Stock Guide – Assaí Atacadista (ASAI3) reported first-quarter revenue growth of 1.7%, reaching 20.6 billion reais, as deflation in staple foods and record household debt weighed on consumption among lower-income shoppers.
The Brazilian cash-and-carry retailer expanded market share by 0.3 percentage point on a same-store basis, even as comparable sales declined 0.9% due to weaker demand and falling prices in key categories.
Chief Executive Officer Belmiro Gomes said the quarter was shaped by an unusual combination of factors affecting the company’s core customer base. “The first quarter was marked by a combination of adverse factors that, taken together, posed an unusual challenge for those primarily serving lower-income households,” he said.
Prices of essential goods including rice, beans, sugar, soybean oil and milk fell by an average of 12% in the period, an uncommon scenario for the sector. At the same time, household indebtedness reached record levels, with more than 80% of families reporting some form of debt, Gomes added.
“This translates directly into reduced consumption capacity among Classes C, D, and E,” he said. “The top of the income pyramid continues to consume, but the base remains under pressure.”
Adjusted EBITDA totaled 1.0 billion reais, with a margin of 5.5%, unchanged from a year earlier. Recurring net income rose about 7% to 174 million reais, while reported net income reached 367 million reais, supported by tax credits related to PIS/COFINS.
Financial expenses increased, with net financial results totaling 564 million reais, reflecting higher interest rates in Brazil, including a rise in the benchmark CDI rate during the quarter.
Assaí generated 2.2 billion reais in free cash flow over the past 12 months, up 34% from a year earlier, helping reduce leverage to 2.52 times EBITDA, the lowest level since late 2021.
The company continued to expand operations, ending the quarter with 313 stores after opening 11 units over the past 12 months. Investments remained disciplined as the retailer focused on deleveraging.
Digital initiatives gained traction, with last-mile sales more than doubling year-on-year, driven by partnerships including iFood. The company also reported that transactions linked to its “Meu Assaí” app accounted for 47% of total sales, up from 42% a year earlier.
Assaí is also advancing new growth fronts, including private-label products, financial services and an entry into the pharmacy segment expected to begin in July.
“Commodity deflation is not permanent,” Gomes said. “When the cycle reverses, the model we have built will be even better positioned to capture growth.”
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