Food retailer Carrefour Brasil is handing over the management of its 17 supermarkets in the southeastern state of Minas Gerais to a family-owned chain, Super Nosso, in a deal that aims to address the peculiarities of regional markets in a vast country.
The Brazilian subsidiary of France's Carrefour SA said it is dropping its own brand in all of the 17 supermarkets in the metropolitan area of Belo Horizonte to take them under the Super Nosso banner within a year, it said in a securities filing late on Wednesday.
Super Nosso, in turn, will take over the management of the 17 supermarkets, increasing the number of stores operating under its own brand to 49.
Carrefour Brasil will continue to take in revenue from sales, the filing said, but financial terms of the agreement were not disclosed.
'A Partnership'
"It's not a joint venture, but a partnership in which they (Super Nosso) will manage our supermarkets. Gains will arise from an improved operating performance and synergies," Luis Moreno, chief executive at Carrefour Varejo, under which the supermarkets business falls, told Reuters.
He said that both companies will invest in the process, which is expected to take 12 months, but declined to specify any figures or sales estimates. Once the stores are rebranded, Super Nosso alone will handle logistics, pricing and assortment policies, Moreno added.
'Sales Growth'
"We are hopeful we can deliver sales growth in these 17 supermarkets and gain more brand visibility in the region," said Euler Nejm, Super Nosso's chief executive, adding that Super Nosso will also be able to dilute fixed costs with the tie up.
Super Nosso is currently the fifth-largest supermarket group in Minas Gerais, according to Brazil's supermarket association, Abras.
Moreno did not rule out eventually acquiring a stake in Super Nosso, but said this possibility was not envisaged in the initial agreement. "We'll first learn from the partnership before deciding the next steps," he said.
Similar Deals
Carrefour Brasil is currently in talks with other local players in different regions to sign similar deals, he added, without providing any more details.
In France, parent company Carrefour is also partnering with family-owned chains, but according to Moreno each tie-up has its own dynamic and characteristics depending on the region and the partner.
Carrefour Brasil's shares have risen over 7% so far in 2019, outpacing its main competitor Grupo Pao de Acucar SA, whose stock has fallen 1.2% over the same period.
