São Paulo, Brazil, May 10, 2016 - GPA [BM&FBOVESPA: PCAR4 (PN); NYSE: CBD] announces its results for the first quarter of 2016 (1Q16). The comments refer to the consolidated results of the Group or of its business units. All comparisons are with the same period in 2015, except where stated otherwise.

First quarter 2016 Results

§   GPA net sales reach R$17.8 billion in 1Q16, with a remarkable 10.9% growth in the food segment;

§   Same-store sales in the food segment up 6.0%, the best performance in the last 12 months.;

§   Selling, general and administrative expenses were below the inflation rate: Highlighting the optimization of expenses at Via Varejo, with nominal reduction from 1Q15, and Assaí, where the increase in expenses was lower than sales growth as a result of greater discipline in controlling costs.

§   Greater selectivity in the expansion plan, with the focus on formats with higher returns: opening of 1 Minimercado Extra and 1 Assaí store, in addition to 15 stores currently under construction;

§   Cash management strategy enabled 12.6% growth in financial results, below the interest rate;

§   Multivarejo:

o    Improved sales trend across all banners;

o    Intensification of price competitiveness and adjustment of commercial dynamics to the current scenario, especially in the Extra banner, with the launch of the "1,2,3 Steps to Saving” campaign;

o    Adjusted EBITDA of R$308 million reflects the initial impacts of the new strategy at Extra. This dynamic of more competitive pricing should be compensated by increased customer traffic and volume in coming quarters;

o    Profitability level of Pão de Açúcar and Proximity similar to 1Q15

§   Assaí:

o    Total net sales increased by 36.2%, the highest quarterly growth since 1Q14, combined with strong double-digit same-store performance, significantly above inflation;

o    EBITDA up 43.9%, significantly outpacing sales growth in the period;

o    Strong net income growth of 103% in the quarter;

o    Financial structure of low leverage finances organic expansion of the banner; between 12 and 15 stores expected to be opened in 2016    .

§   Via Varejo:

o    Consistent market share gains and acceleration of the dynamics of recovery on same-store sales;

o    Gross margin of 30.6%, down 250 bps from 1Q15 but stable in relation to 4Q15, underlining the promotional strategy adopted in the period;

o    Adjustments to cost structure made in 2015 and 1Q16 led to nominal reduction in selling, general and administrative expenses. Via Varejo will continue the initiatives to adjust the cost structure;

o    Net income attributable to controlling shareholders, adjusted for other revenues and expenses, amounted to R$33 million in 1Q16.

§   Cnova Brasil:

o    Marketplace already has more than 2,300 partner stores, with 15.6% share of GMV, up 850 bps from the previous year;

o    Significant stock-out level reduction, providing a better customer service

o    Acceleration of synergies in distribution centers with Via Varejo

(1) Includes the results of Cnova (Cnova Brazil + Cdiscount Group); (2) Totals and percentages may not add up due to rounding. All margins were calculated as a percentage of net sales; (3) Earnings before interest, tax, depreciation and amortization; (4) EBITDA adjusted by the total of “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses; (5) Net Income adjusted by the total of “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses, as well as the respective effects of associated income tax.

Sales Performance

(1) Excludes revenue from intercompany transactions; (2) Extra and Pão de Açúcar banners; (3) Includes revenue from intercompany transactions.

Sales Performance – Consolidated

§        In 1Q16, consolidated net sales totaled R$17.8 billion, up 3.0%, reflecting a consumption environment strongly impacted by the adverse macroeconomic scenario;

§        The food segment (Multivarejo + Assaí) delivered remarkable performance, with total net sales growth of 10.9%, driven by stronger sales at Assaí (+36.2%) combined with improved sales at Multivarejo (+2.0%);

§         Via Varejo once again registered the best sales performance since 2Q15, gradually recovering during the quarter, accompanied by market share growth;

§        The Company has become more selective about its organic expansion plan for the year, with the focus on higher-return formats (Assaí and Proximity). During the quarter one Minimercado Extra and one Assaí store were opened. The Assaí banner already funds its own organic growth and expects to open between 12 and 15 stores in the year, similarly to in 2015. At present, 15 stores are under construction, namely: 8  Assaí, 2 Pão de Açúcar, 4 Minuto Pão de Açúcar and 1 Minimercado Extra. 

Food Business (Multivarejo + Assaí)

§        Net sales grew 10.9% in the quarter, the highest in the last 12 months, totaling R$9.9 billion, mainly due to the solid performance of the 96 Assaí stores, whose share of total food sales already exceeds the share of the hypermarket format;

§        On a same-store basis, food segment sales increased by 6.0%, the best performance in the last 12 months. This growth trend is observed in both Assaí and Multivarejo, with the growth registered by Pão de Açúcar and Proximity stores combined with that of Assaí coming close to the inflation in the period. Adjusted for the calendar effect, same-store sales in the Food segment would have grown 3.1%, in line with the adjusted growth in 1Q15, despite the impact of economic slowdown on consumption. Note that sales performance improved gradually during the quarter;

§       One of the highlights was the resilience shown by the food segment, which has delivered market share gains and improved sales performance by most of its banners in comparison with the second half of 2015, despite the stronger comparison basis. The food segment has been increasing its share of sales and already accounts for 56% of the Group’s portfolio;

§       It is important to highlight the improved sales performance by Multivarejo banners as a result of: (i) differentiated services and new product launches at Pão de Açúcar, translated into market share gains in most of the months in the last two years; (ii) the growth of the Proximity format, which has been growing its market share consecutively in the last 12 months, mainly through organic growth with the focus on higher-return formats (Minuto Pão de Açúcar); and (iii) the new commercial dynamics, more appropriate for the current scenario, which together with the continued adjustments to the assortment to meet consumer needs, operational improvements and modernization of assets in the Extra banner also helped in the recovery of Multivarejo;

§        Assaí continued to deliver strong sales growth, with net sales increasing by 36.2%, reflecting the favorable economic scenario for the segment and double-digit same-store sales growth, combined with the maturation of stores opened in the last 12 months. This result was driven by the correct positioning of the banner, which serves price-sensitive customers, reflecting in significant market share gains. The banner remains focused on the expansion plan, with another store opened in the quarter, bringing to nine the total number of stores opened in the last 12 months.    

Via Varejo

§        Net sales totaled R$4.7 billion, down 11.8% on a same-store basis. Total sales fell 12.7%. In the quarter, sales fell more sharply in January due to the strong comparison base of January 2015, while February and March performed above the quarterly average. In addition, Via Varejo continued to close underperforming stores. Mobile phones and sales of services grew sharply in the period compared to 1Q15;

§        Via Varejo continued to intensify its strategy of price competitiveness and better promotions which, combined with the healthy sales performance of services, has helped improve the company’s sales despite the continuing trend of weak consumption in Brazil. Consequently, Via Varejo has been

increasing its market share;

§        The performance of telephone categories in the stores renovated under the new concepts is 1,790 bps above the company average. In 2016, the Company will accelerate the renovation of telephone and furniture categories, thereby leveraging sales and improving the shopping experience for customers;

§       Via Varejo continues to offer a comprehensive range of payment options such as cash, credit cards, co-branded credit cards and payment books. The Company operates strictly and meticulously to control the credit risk in both the payment book operation and in credit card installment payments;

§        In the coming quarters, Via Varejo will continue to focus on increasing store productivity and improving customer service levels. With this, it expects to increasingly strengthen its competitive advantages and leverage its structural gains in market share.

 Cnova Brasil

§        GMV totaled €401.8 million (R$1,729 million) in the first quarter of 2016, down -10.5% p.a. on a constant currency basis. In the same period, the share of marketplace in GMV reached 15.6% (+852 bps in the annual comparison). On March 31, 2016, we had more than 2,300 vendors in the marketplace;

§        Traffic grew 15.7% p.a. to 269 million visits in the first quarter of 2016, with mobile devices accounting for 44.0% of total traffic;

§        Improvements in customer service in the quarter include the resolution of flaws in order processing, improved service at call centers and significant reduction in stockout levels.

Cnova Investigation

As announced by the Company and the subsidiary Cnova NV on December 18, 2015, the Board of Directors of Cnova had hired external legal advisors and accounting experts to help review issues, including alleged irregularities in the conduct of employees related to inventory management, at the distribution centers (DCs) of its Brazilian subsidiary. Cnova also identified discrepancies related to trade accounts payable and accounts receivable/products in transit with carriers.

On February 24, 2016, Cnova provided an estimated quantification of the overstatement of net sales and accounts receivable, the over-valuation of inventory as well as the incorrect accounting entries primarily related to accounts payable. The combined impact of these adjustments on operating EBIT was estimated at approximately R$177 million. This adjustment was fully booked in the financial statements of the fourth quarter of 2015.

On April 26, 2016, Cnova announced that the internal review was still in progress, with the following topics identified in addition to the issues reported on December 31, 2015:

§        Effects of unintentional errors arising from “orders to be invoiced” to customers and “provision for freight”, whose accounting impact of R$42 million was recorded as a debit entry in the income statement for the quarter ended March 31, 2016, of which R$20 million under revenue from “net sales from goods and services” and R$22 million under “cost of goods sold and services sold”;

§       The ongoing review at Cnova Brasil recently identified other issues (related to incorrect capitalization of expenses in intangible assets) that are currently undergoing additional reviews. The amount under investigation is approximately R$200 million, which, according to Cnova management, may have a partial adjustment of this amount. However, on the date of approval of these interim financial statements, not all elements are available to conclude this measurement, and thus no adjustment related to this matter was recorded in the quarterly financial information as of March 31, 2016.

In view of the above, the Company now expects to file its annual report on Form 20-F for the fiscal year ended December 31, 2015 by no sooner than June 2016. As such, the Company filed a 12b-25 form with the U.S. Securities and Exchange Commission (SEC) justifying the delay in filing said report.

Operating Performance

(1)      EBITDA adjusted by “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses

The Company's gross margin reached 21.8% in the quarter, mainly due to the lower contribution of Via Varejo to consolidated gross profit, in addition to the continuation of investments in price competitiveness in Multivarejo operations, especially at Extra banner.

The nominal growth of selling, general and administrative expenses was 8.7% in 1Q16, below inflation in the period, despite the opening of 100 new stores in the last 12 months, mainly due to the optimization of expenses  at Via Varejo. Moreover, it is important to highlight that expenses grew below sales increase in Assaí as a result of discipline in cost control.

The Company incurred other operating income and expenses of R$68 million in the quarter. Most of this amount is related to expenses with integration and restructuring, net result from fixed assets, and costs of the Cnova investigation.

Adjusted EBITDA, which excludes other operating income and expenses, stood at R$484 million in the quarter. This result primarily reflects the lower contribution of Via Varejo to the Company's EBITDA due to the downturn in the consumer goods market, in addition to the strong EBITDA margin of 10.1% presented in Via Varejo at 1Q15.  

 (1) EBITDA adjusted by “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses

In 1Q16, Multivarejo intensified its efforts to increase price competitiveness, adjusting the commercial dynamics to the current scenario in order to increase consumer loyalty and market share. The new commercial dynamics (1, 2, 3 Savings Steps) launched by the Extra banner aim to benefit customers that seek advantages and competitive prices, offering progressive discounts starting at 20% on the purchase of the first unit and up to 33% on the third unit. This strategy, combined with changes in consumer habits due to the economic scenario, resulted in gross margin of 26.0% in the period.

Selling, general and administrative expenses grew 9.6% from 1Q15, in line with inflation in the period. The main impacts were:

§  Higher personnel expenses, as a result of wage increases in the end of 2015;

§  Higher electricity costs, which grew approximately 40% year-over-year;

§  Expenses related to store expansion (67 stores were opened in the last 12 months).

Other operating income and expenses in the quarter are mainly associated with restructuring expenses and net result from fixed assets.

Adjusted EBITDA amounted to R$308 million, with margin of 4.6%, mainly due to the performance of gross margin and the pressure on expenses linked to inflation, as mentioned above. These effects were mainly seen in the Extra banner, whose profitability was lower year-over-year. Other Multivarejo banners registered similar profitability compared to the same period the previous year.

The consistency of Assaí's performance shows its right positioning in the current macroeconomic scenario. The banner continued to post significant net sales growth (36.2%), the highest quarterly growth since 1Q14, reaching R$3.1 billion in 1Q16.  This performance was due to double-digit same-store sales growth, the opening of nine stores in the last 12 months, and also a favorable economic scenario for the segment.

Note that combined with organic growth, Assaí has gained significant market share and increased its share of sales in the Food segment, from 28% in 2015 to 32% in 1Q16, and is currently the banner with the highest share in this segment.

Gross margin remained stable from the same period in the previous year. Operating expenses as a percentage of net sales decreased slightly (10 bps) due to the maturation of stores, despite the opening of new stores in the last 12 months. Selling expenses presented lower increase than revenue growth as a result of the combination of strong sales growth, which allowed greater dilution of expenses, and discipline in cost control, supporting the increase in customer traffic.

EBITDA grew 43.9%, significantly above sales growth in the period. EBITDA margin reached 3.2%, expanding by 20 bps.

In 2016, Assaí will continue to focus in organic growth and expects to open between 12 and 15 stores.

(1) Some figures in this earnings release differ from those presented in the Via Varejo release due to the effects of intercompany transactions; (2) EBITDA adjusted by “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expenses.

The measures taken in 2015 and 1Q16 to reduce expenses offset the increase in price competitiveness in the period and mitigated part of the increase in taxes. Via Varejo continues to focus on implementing initiatives aimed at adjusting the cost structure and increasing store productivity. 

Adjusted EBITDA stood at R$198 million due to the following factors: 

§       Gross margin of 30.6%, in line with the margin level of the 4Q15, strengthening promotional activity and competitiveness  based on efficiency gains and higher penetration of services;

§       Decrease of 0.2% in selling, general and administrative expenses, despite the inflation in the period;

§       Other Operating Income and Expenses of R$40 million, mainly related to restructuring expenses;

The end of tax exemption on payroll had an impact of approximately 50 bps on Via Varejo's EBITDA margin.

Financial Result

Financial result increased 12.6% in the quarter to R$317 million, despite the 15.8% hike in interest rate (average CDI rate) during the period.

The main variations in financial result were:

§        Decrease of R$22 million (or 10.2%) in financial revenue, reflecting the lower average cash balance in the period;

§        Decrease of R$10 million (or 5.6%) in the cost of sale of receivables (credit card and payment book) due to lower sales of non-food categories and the continuity of the Company's cash management strategy, which led to a reduction in the volume of the total sale of receivables, especially at Via Varejo;

§         Increase of R$24 million in the cost of debt and others, below the hike in interest rate in the quarter.

Net Income

  (1) Net Income (Loss) adjusted by “Other Operating Income and Expenses”, thus eliminating nonrecurring income and expense, excluding the effects on Income and Social Contribution Taxes.  

In 1Q16, net income attributable to controlling shareholders and adjusted by Other Operating Income and Expenses was negative at R$17 million.

In the Food segment, the highlight performance came from Assaí, which posted net income growth of 103%. Thus, the Food segment posted net income attributable to controlling shareholders, adjusted by other operating income and expenses, of R$33 million.

Via Varejo posted net income attributable to controlling shareholders, adjusted by other operating income and expenses, of R$33 million.

Indebtedness

(1)EBITDA in the last 12 months.

(2) Includes R$2,880 million in credit card receivables not sold in the quarter, for the purpose of comparison  with 1Q15.

The Company ended March 2016 with a decrease of R$62 million in gross debt compared to March 2015, and with cash reserve and cash equivalent of R$4.5 billion, in addition to a balance of R$2.9 billion in receivables not sold.

Consequently, net debt including payment book operation and credit card receivables not sold amounted to R$1.8 billion at the end of March 2016, increasing R$341 million from March 2015.

13

Capital Expenditure (Capex) 

The Company invested a total of R$367 million in the quarter, of which 87% was invested in the food segment.

The quarter registered the opening of one Minimercado Extra store and one Assaí store. Another 15 stores are currently under construction: 8 Assaí, 2 Pão de Açúcar, 4 Minuto Pão de Açúcar and 1 Minimercado Extra. In addition, the plan to modernize the assets of Extra was continued.   

The Company has become more selective about its organic expansion plan for the year, with the focus on higher-return formats (Assaí and Proximity). It will also carry on with the asset modernization and banner conversion plan in the food segment. At Via Varejo, the focus is on accelerating the revitalization of mobile and furniture categories, providing a better shopping experience to customers.

Appendix I - Definitions used in this document

Company’s Business Units: The Company’s business is divided into four units - Retail, Cash & Carry, Bricks-and-mortar (sale of home appliances and furniture) and E-commerce – grouped as follows:

Same-Store Sales: The basis for calculating same-store sales is defined by the sales registered in stores open for at least 12 consecutive months. Acquisitions in their first 12 months of operation are not included in the same-store calculation base.

Growth and changes: The growth and changes presented in this document refer to variations from the same period of the previous year, except where stated otherwise.

EBITDA: EBITDA is calculated in accordance with Instruction 527 issued by the Securities and Exchange Commission of Brazil (CVM) on October 4, 2012. 

Adjusted EBITDA: Measure of profitability calculated by excluding Other Operating Income and Expenses from EBITDA. Management uses this measure because it believes it eliminates nonrecurring expenses and revenues and other nonrecurring items that could compromise the comparability and analysis of results. 

Adjusted net income: Measure of profitability calculated as Net Income excluding Other Operating Income and Expenses and excluding the effects on Income and Social Contribution Taxes. Also excluded are the effects of nonrecurring direct income tax. Management uses this metric in its analyses given its belief that it eliminates any nonrecurring expenses and revenues and other nonrecurring items that could compromise the comparability and analysis of results.