PCAR3

Grupo Pão de Açúcar - GPA, formally named Companhia Brasileira de Distribuição, is one of the most traditional food retail groups in Brazil and traces its origins back to 1948, when Valentim dos Santos Diniz opened a confectionery shop called Pão de Açúcar in the city of São Paulo. In 1959, this first point of sale was converted into a supermarket, marking the beginning of its expansion in food retail and remaining both a historical reference and the company’s headquarters. Throughout the 1970s and 1980s, the group accelerated its expansion by opening new stores and acquiring relevant chains such as Eletroradiobraz, Superbom, Peg-Pag and Mercantil, as well as commercial points from Bazar 13 and Morita. In 1971, it opened the country’s first hypermarket and, in the 1980s, created the Extra banner, strengthening its presence in large-format stores with a wide variety of products. The formal incorporation of Companhia Brasileira de Distribuição under its current name took place in 1981, following the merger of the retail operations then in existence.

In the 1990s, GPA took an important step in its journey as a publicly held company by carrying out an initial public offering in 1995, becoming the first food retailer with preferred shares traded on what was then the São Paulo Stock Exchange, now B3 S.A. – Brasil, Bolsa, Balcão. In 1997, it began trading American Depositary Shares (ADS) on the New York Stock Exchange (NYSE), expanding its international investor base. Later, in 1999, it entered into a strategic alliance with Groupe Casino, which became a major shareholder and, in 2012, took sole control of the company. The corporate structure underwent several reorganizations and divestments during the 2000s and 2010s, including the association and later separation of businesses with Via Varejo (now Grupo Casas Bahia) and Cnova in the electronics and e-commerce segments. GPA’s common shares remain listed and traded on B3 under the ticker PCAR3, while the group opted to discontinue its ADS listing on the NYSE, concentrating its liquidity in the Brazilian market.

Grupo Pão de Açúcar - GPA’s business model is centered on food retail, which accounts for 99.4% of revenue, with predominant activity in supermarkets and convenience stores. The company operates a multi-format network of 726 stores under the Pão de Açúcar, Minuto Pão de Açúcar, Extra Mercado and Mini banners, focusing on different consumer profiles, especially in the premium and urban convenience segments. Its product offering consists mainly of food, including non-perishable items, beverages, fruit, vegetables, greens, meat, bread, dairy products, cleaning products, disposables and personal hygiene items, as well as a smaller share of non-food products such as clothing, household goods and electronics. A significant portion of sales is made up of private-label products, particularly Taeq and Qualitá, which have a meaningful share in revenue and reinforce the company’s strategy of differentiation in food retail. PCAR3 shares economically reflect this predominantly retail business, based on high inventory turnover and a wide store footprint.

The company structures its operations around a main segment of food and proximity retail, complemented by ancillary activities that reinforce the consumer ecosystem. In addition to its physical stores, GPA maintains an integrated digital operation, with online food retailing under the Pão de Açúcar and Extra banners, sales via its own app, and partnerships with marketplace and delivery platforms such as iFood, Rappi, Mercado Livre and Magalu. The digital strategy relies mainly on the 1P model, in which GPA sells directly to consumers, using stores as logistics hubs in a 100% ship-from-store model. The company also generates revenue by leasing commercial areas in its stores and centers, through its interest in Financeira Itaú CBD (FIC), which issues co-branded credit cards for the Pão de Açúcar and Extra Mercado banners, and through Stix Fidelidade e Inteligência S.A., which operates a coalition loyalty program with large national retailers. These adjacent businesses complement the core supermarkets and proximity activities but do not change the company’s predominantly food retail profile.

In terms of markets served, GPA operates in a highly fragmented and competitive food retail sector in Brazil, where, according to ABRAS data, the five largest chains – including the group itself – accounted for 26.1% of the industry in 2024. The company’s main market is the State of São Paulo, responsible for approximately 74.8% of revenue, in line with a strategy of geographic concentration in regions with higher income and consumption density. In other regions, such as Rio de Janeiro, the Federal District and Northeastern states, the group competes with national and regional chains, as well as medium-sized supermarkets and family-run operations. In online food retail, GPA ranks among the leading players, competing with Carrefour and regional chains with a premium and proximity profile. The company also maintains the Aliados platform, focused on direct sales to small businesses, broadening its presence among smaller corporate customers, although its core focus remains on end consumers (individuals).

Grupo Pão de Açúcar - GPA’s geographic presence is supported by its own logistics infrastructure, consisting of 10 distribution centers and warehouses located in states such as São Paulo, Rio de Janeiro, Ceará, Pernambuco and the Federal District. These assets total more than three hundred thousand square meters of storage area, including owned and leased facilities, and are integrated into automated replenishment systems that connect suppliers, distribution centers and stores, reducing stockouts and unproductive inventories. Store supply is carried out mainly through distribution centers, with a centralization rate above 80%, while a portion of sales corresponds to “Direct Delivery” products such as cigarettes, ice cream, yogurt, magazines and ornamental plants, supplied directly to stores by manufacturers. In digital operations, the delivery of online orders has migrated to a model based on physical stores, which have come to function as bases for home deliveries, express services and ultra-convenience, as well as click-and-collect.

From a regulatory standpoint, GPA’s activities are subject to a broad set of licenses and authorizations issued by federal, state and municipal authorities. The opening, renovation and operation of each store or distribution center requires operating permits, health licenses, safety authorizations, inspections by the Fire Department, property licensing and, when applicable, environmental licensing under the National Environmental Policy and related legislation. Depending on the type of project and its potential impact, preliminary, installation and operating licenses may be required, in addition to periodic renewals. Activities related to the sale of food, hygiene and personal care products are also subject to health surveillance, including oversight by the Brazilian Health Regulatory Agency (Anvisa) at the federal level and by local health surveillance agencies. The need for continuous management of these regulatory requirements is part of the company’s day-to-day operations and directly affects the opening of new stores and the maintenance of the existing base.

In the environmental, social and governance (ESG) field, GPA incorporates topics such as waste management, logistics efficiency and organizational culture into its strategy, although the specific details of targets and indicators are not set out in the excerpts presented. The company emphasizes the importance of ESG and culture as one of the pillars of its transformation, associating this pillar with attracting and retaining talent, aligning leadership and sustaining growth. The relevance of environmental aspects is reflected, for example, in the need for licensing and compliance with environmental conditions at its stores and distribution centers, while the social and governance dimensions appear in the management of relationships with millions of customers registered in loyalty programs, in data handling, and in joint initiatives with retail partners through Stix. As an issuer of shares traded on B3 under the ticker PCAR3, Grupo Pão de Açúcar - GPA is also subject to the governance, transparency and disclosure rules required by the Brazilian capital markets.

From an economic and financial perspective, GPA’s revenue is heavily concentrated in food retail, which includes both brick-and-mortar operations and the digital channel, and also encompasses rental income from commercial areas and equity pickup results from associated financial businesses. In 2024, the group posted gross revenue of approximately R$ 20 billion and remained highly exposed to typical retail seasonality, with stronger performance in the fourth quarter driven by year-end holidays and Black Friday, as well as additional peaks in periods such as Easter and in World Cup years, when demand rises for certain food items and beverages. The combination of traditional-format supermarkets, convenience stores and e-commerce, together with loyalty programs such as Pão de Açúcar Mais and Clube Extra, defines the core of the business, whose performance dynamics are directly reflected in PCAR3 shares traded on B3.