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Transcript – 1Q11 Conference Call - GPA Operator: Good morning, ladies and gentlemen. Welcome to the webcast of Grupo Pão de Açúcar on the earnings of the 1Q11. This event is also being broadcasted via webcast, which can be accessed at www.grupopaodeacucar.com.br/ir/gpa and www.globex.com.br/ir, with the respective presentation. The slide selection will be managed by you. There will be a replay facility for this call on the website. We inform you that the press release is also available at the Companies’ IR websites. This event is being recorded, and all participants will be in a listen-only mode during the Company’s presentation. After GPA’s remarks are completed, there will be a question and answer session and further instructions will be given. Should any participant need assistance during this call, please press *0 to reach the operator. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities litigation reform act of 1996. Forward-looking statements are based on the beliefs and assumptions of GPA management and on information currently available to the Company. They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of GPA and could cause results to differ materially from those expressed in such forward-looking statements. Now, I would like to turn the floor over to Mr. Vitor Faga, IRO of the Company. Please, Mr. Vitor, you can continue. Vitor Faga: Good morning. Thank you very much for participating. We are here on the Pão de Açúcar earnings release for the 1Q. I would like to thank Abilio Diniz, Chairman of the Board of Directors, Raphael Klein, in addition to all other presidents of the business units. I will now pass the floor to Abilio Diniz, who is going to make the opening remarks. Abilio Diniz: Good morning, everyone. Once again I highlight the juncture of the Company. Management is very happy, working with lots of determination and positive expectation that we will meet all the results and targets we have imposed ourselves. We continue working very hard, mainly aiming at enchanting our customers, building loyalty to our stores, and therefore continue working with determination, escalating down the Company, our values, our principles, everything we believe in. And on the other hand, causing our processes to be increasingly more tailored, or better tailored to our activities. Something else I would like to point out is the integration work with Casas Bahia and Nova Globex. The capture of synergies is surprising us, despite the hard work. We

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find lots of opportunities for synergy, which makes us believe that this Company will be even bigger than what we had imagined. The earnings that are to be presented to you are in line with our expectations, and I think this is really very good. It is to no avail for us to exceed by a large margin at a certain moment, and then face some difficulties in the future. It is important to keep consistency and earnings are according to planning, according to our budget. This on the side from the part of the Board and shareholders lends credibility to management to those who are responsible for presenting these results. And lastly, I would like to tell you that this good moment that the Group is living is in line with the good moment that Brazil is going through. Brazil shows no sign of crisis, no slump in consumption, no signs of income reduction. But Brazil shows signs of a country that grows with consistency, with determination, and very strongly relying on governance. And moving a bit away from the script of the earnings, I would like to tell you that this week I had the pleasure of being nominated by President Dilma Rousseff as one of the four members of the management committee, four persons from the private sector, production private sector and four ministers; the Minister of Development, Chief of Staff, Planning Minister. I was very honored and I have accepted the invitation despite the difficulties with time management. And on the other hand I was a bit concerned about the size of the job, of the task and the expectations around it. I do hope that God will help me and with the contribution of everybody here and with the vision that this Company gives us of Brazil being present in 19 states, selling virtually all kinds of products, 158,000 employees, millions of families, of households and clients, it really gives us a very good idea of Brazil, a country that is growing and for which we have the obligation to work to the best of our abilities. And this is why I wanted to tell you that I am very happy at the performance of our Company, and those people in charge. I now pass the floor to our executive officers, so that they will continue talking to you. Enéas Pestana, please. Enéas Pestana: Good morning everyone. Thank you Abilio. So, 1Q I would like to talk to you not about the figures, the figures will be explained. But I would like to start touching on some points that Abilio mentioned. I would like to personally say that we are very proud that Abilio is part of this committee, management policy or chamber for management policies performance and competitiveness. It is a source of pride for us to be in Brazil at this moment, and the fact that such a committee or chamber is being set up to improve management performance and competitiveness by the Government gives a clear sign that things are changing and that Brazil is changing and wants to change and wants to actually become a big country, admirable country, and a sustainable country. And we must mention this, we must acknowledge this. Now, regarding the Company, it has been keeping a very steady pace in growth. It is true that you analysts and investors, who are responsible for monitoring this performance to be able to make your reports, your recommendations, which is a job that entails great responsibility, look at a quarter aiming to check obviously not only the figures but the signals and trends that these numbers convey.

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I invite you all to analyze the context. Here we have been having very important meetings, strategic planning, and results analyses, and it is very important that we put you in perspective to see those results in a broader picture. That is, if we look at the numbers of past years and the curve, and the momentum of these curves, particularly in 2009 and 2010, I think that the trend analysis becomes much richer. And this quarter can corroborate this analysis. But it is not enough, since it is such a short period, to signal a change in the trends analyses. Also because we are talking about a very boring, complicated quarter to be compared in terms of performance, owing to seasonal effects and Easter, which is something extremely relevant, particularly in foods retail, other issues such as the World Cup last year, tax incentives last year that no longer exist this year, the in-house situation that this year we have Globex and Casas Bahia in a consolidation effort, which was not present last year. So, this is a result that should be looked at with lots of care and criteria so that you can obtain the knowledge that you look for, because data can be read in a number of ways. And our purpose is not to justify or explain anything because those who do that it is because they are not faring well. And this is not our case. This is why I invite you to look at the trends in a broader context, because this is exactly what I do together with Abilio and the other officers, and I can tell you that the numbers are according to our plan, to our budget. There is no interruption or diversion that causes concern. So, this is why I am extremely happy. And I will still emphasize a few points that really prove that the Company is on the right track, is under control and managed by a highly competent team. Obviously we see competent people everywhere, but what makes the difference here is I would say not in the individual competence of the managers who are here, but their ability to work in teams and create a lot more value in this collective effort in this atmosphere of energy, of success, of balance, and sustainability. And we say this in house, and today I decided to open up what is happening to you to talk about what happens in here, because I know that for you, who are over there, deciding on whether to invest or not and influencing your clients on this decision, when you participate in a call such as this I imagine, I guess that what can really add value to your analysis is competence and this pre-décor that actually exists in the Company. And this is what really makes a difference, and this difference can be proved vis-à-vis our competitors here in Brazil and the relative position that Grupo Pão de Açúcar has today, owing to this great ability in team work that exists in the management of this Group. And this is obviously what produces these great numbers in return on capital. We peaked in 2010, net income, dividends distributed, and all kinds of indicators that we can mention, a very sound capital structure with liquidity and ability of indebtedness, and an important improvement in our rating. And a quarter this complicated could create some confusion, but never change the reality of a team that is doing an outstanding job in this Group and in the various lines of business. For instance, the issue of food retail that is faring very well. We are snapping up market share and within the relative position that we hold in each of the regions our presence is becoming more important and this is reflecting on market share. In 2010 we had an increase in market share Brazil of more than 3 p.p., and this reflected on our leadership, and the convergence of Compre Bem and Sendas are at full blast. And what is really cool is not that we are towards conclusion. But the most interesting

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impart and that really pleases us is how correct this decision to make the convergence were, because Extra Super has shown their strength in terms of sales growth and improvement of the bottom line, also reflecting on a leverage of the capital used by the Group. Integration of Casas Bahia will be thoroughly explained by Raphael and the team. It has been mentioned by Abilio, and I would like to leave my opinion about this. This has been done with extreme competence and dedication, no efforts are measured for this to happen as soon as possible, and as deeply as possible, but always preserving the values built by the Klein family over a 60-year period, which are very sound and ensure success of Casas Bahia, and that can be replicated for the Ponto Frio brand. This will be thoroughly explained by Raphael. For e-commerce we have here Quiroga and his entire team. And we are here to answer all your questions and help you have the correct reading of these figures. It is a really source of pride for us this e-commerce company. We had the Investors Day for the new DotCom. It was a roaring success, something that we were not under an obligation to do but we feel morally that we must do it. And we made a deep disclosure of the transactions, of the plans, exposing the management. And this is a winning team with winning products and brands, a very sound connection with the physical world. So, we are here to present and show everything to you, whatever is necessary for you to make your conclusions. Finally, you have copies of the presentation. Now, on page number three we have a chart showing the new management model. We have just reviewed the management model. You can see that it remains unchanged. It is going through a consolidation, day after day. We made just minor adjustments to simplify the model or to validate, clarify, and confirm roles and responsibilities, the main target of this review effort. And I was very close to the team. Silvia Leão was our people and people management executive responsible for this adjustment, together with Paulo Gualtieri. They worked with a lot of dedication. We also made adjustments in processes so the Company becomes increasingly more agile, flexible, and swift, which is one of our differentiators compared to the competition. We are a large company with different lines of businesses, and different regions. But we are swift. We are nimble, we do not discuss about conflict. We make decisions and ensure their implementation. For that we have to permanently review our processes so they are a perfect fit to reality. We need people to feel happy. We need joy and motivation to make this Company happen, to make the Company successful and to attain the results. The management is consolidated. We made a few adjustments. We are now communicating these adjustments. You can see in the chart that we have simplified and we defined the six main indicators: EVA, net income, you can see them here. So we will have variable compensation this year already based on these six indicators, which makes the whole process simpler because we have only six indicators, but they are right here: net income, valuation or EVA, return on capital employed, growth and expansion, customer satisfaction, and satisfaction of our people. These are the six indicators valid for all executives. All executives’ performance are measured according to these six same indicators. Only their weight may vary. So, the teamwork is even more consolidated. We all strive together towards the same targets. That is why Pão de Açúcar Group is a winning company, an admirable company, which can produce results and also do good to people. Our people work with joy.

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So, this is what I had to say. Great trust in Brazil, as Abilio expressed, and trust in this team and in this Company. We are doing brilliant work. I hope you will find here all the necessary information for the correct understanding and validation of trends. And let me now give the floor to Hugo Bethlem, so we can continue the call. Thank you very much. Hugo Bethlem: Good morning everyone. Thank you very much for participating in our call, talking about earnings in the 1Q11. On page number four we can see we will be talking about two separate blocks. We have segregated GPA Food, including Pão de Açúcar and Extra supermarkets, Assai Cash and Carry, Extra Hypermarket, Extra Fácil proximity, and specialized business lines, gas stations, and drugstores. And in the second block we will be talking about Eletro, Bahia, and Ponto Frio, and in the e-commerce business B2C PontoFrio.com, and CasasBahia.com, Extra.com, and B2B Ponto Frio Atacado, plus the e-hub business. Now, moving on to page five, gross sales for the 1Q were R$12.4 billion, representing a growth of 58.9% compared to the 1Q10. GPA Food, the same-store growth, we would like to highlight an analysis of the first four months of 2011, to try and neutralize the Easter effect, which is extremely important for food. But even doing that the growth is very representative, 8.4% in the same-store concept. Globex. When we talk about same-store growth, we are referring to Ponto Frio, including e-commerce minus CasasBahia.com, and we are not yet considering Casas Bahia here. With that, the same-store growth was 10.9%, despite the seasonal effects already mentioned by Enéas. So, we had the end of IPI tax incentives, which existed until the end of last year. Actually we had to rent the stores in February because of this, and also sales of television sets for the World Cup. Gross profit, R$2.8 billion, growing 70.5% compared to the 1Q10, and it is important to highlight that GPA Food margins were 25.7%, a growth of 110 b.p., so 1.1% compared to the 1Q10. Now, Globex margin has already attained 26.9%, not comparable to last year’s margin. EBITDA R$609 million, 40.5% growth and margins, specifically in GPA Food, 7.2%, representing a growth of 20 b.p. compared to the 1Q10, and Globex margin 3.6%, not comparable to the 1Q10. The figures presented in this document already reflect the IFRS change in 2010 and 2011, and it changes the Company’s already published figures, the figures we had already published last year. Now, going into details, and I am now on page number six, but let us move on to page number seven, where we have gross sales of R$6.6 billion and same-store sales growth of 8.4%. We had already announced figures on April 12th this year. It is also important that for the 11th quarter in a row we are growing above the second player in Brazil. And the same-store growth is both 15% in three of our formats, Extra Fácil, Assai, and Extra supermarkets. Now on page eight, gross margin of GPA Food has advanced by 110 b.p., but it is extremely relevant to see that the gross profit has grown 9.3% in the quarter, so above sales growth, meaning we have gained margin. As we look at the chart with

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retail growth, this retail is 180 b.p., from 25.8% to 27.6%, thanks to the full implementation of our pricing tool, which is playing an important role in the hypermarket and supermarket categories. A mix improvement, more participation of perishables in the conversion of Extra supermarket and also we have to talk about a factor of higher purchasing power of the population and better relationship with suppliers. All of this with maintenance of our competitiveness in relation to the competition; we never take our eye away from the price. To have the right pricing is key to win in this game. Now, the impact on GPA Food is going up 1.1%, 110 b.p., despite the share of Assai going from 10.3% to 13.9%, contributing with a lower margin. Now, on page nine, operating expenses in the quarter totaled R$1.1 billion. We had a slight increase from 17.6% in the 1Q10 to 18.5% this quarter. If we look at the chart below where we neutralize seasonal effects, then it goes down to 18.1%. We also had two other impacts that contribute with 0.5 p.p., a decision in 2009 to transfer all our data center to IBM, it was called the IT outsourcing, where the effect last year was capitalized for amortization because the transfer had not been concluded operationally. Now this year we have included as operating expenses the overall expense, which is smaller than the previous addition of OPEX plus CAPEX we had before. In addition, we have opened many stores; Assai alone, we opened seven stores only in December. We increased our headcount; this has not yet been diluted by sales, because they are still in the ramp up. They produce an effect of 2 p.p. Now on page number ten we can see the EBITDA margin, 7.2%, which means a growth of 7.7% year on year. In food retail, it grows from 7.4% to 8.2%, and when we look at the overall GPA Food, it has grown from 7% to 7.2%. Let me one more time confirm the importance of Assai participation. Its margin is smaller because of its business model, so it has this participation of 10.7% to 13.9%. In slide number 11 you will see one of our challenges, the financial result. The GPA Food suffers a distortion because it works as if it were the business holding, with all the acquisitions and all operations they are accounted for in GPA Food. For that reason financial expense has gone up from 2% to 2.7%. Some effects are well known by the market. The important impact of the Selic rate, which moved from 7.75% to 11.25%, also interest of the restatement of contingency REFIS, which is no longer in the provisioning line, it is now considered interest expense of contingency. The impact was R$38 million. Now in terms of interest on debt, R$76 million, this has been maintained. And another important piece of information, it is the same level of receivables that we had in the 4Q10. Before we go on to slide number 11, where we will be talking about the electro-electronics household appliance results, let me invite Raphael Klein, CEO of Globex, to speak about the business. Raphael Klein:

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Good morning, everyone. On behalf of Globex and the Klein family, we are participating in one more call. It is important to give you a brief overview of our electronics business, but first let me say we are working in union, joy, and high motivation for this year. It is the 1Q, we are reporting a full quarter in this line of business, but we are also analyzing macroprudential measures levied by the Government. In our management message we have already spoken about some of this impact. However, we believe this is going to be surpassed and we will have an excellent year ahead of us. The acceleration of our integration and focus on capturing synergies has taken us to more union. It is a great union, something we never saw before. We have changed 600 corporate tax payer registries, and it was a huge effort. We changed 6,000 IT programs without impacting daily operations. This is a clear sign of the united team we have between Globex and Pão de Açúcar. We have a committee in Globex to look at our credit business; we hired a consulting group, Signatura, to help us in this process. But it is also important to talk about everything we did in the financial and commercial areas. We are using a lot of commercial intelligence to be able to reduce our average term and increase installments with interest, increase interest-bearing installments and try to decrease non-interest bearing installments. We have been able to reduce the number of receivables, the cost of discounted receivables despite the higher Selic. We have also started a process to reduce general and administrative expenses, which shows that we are right on the curve of capturing synergies. New positioning for Ponto Frio brand; we have opened the first concept store in São Paulo, in Shopping Iguatemi. I would like to invite you all to taste a bit more of our new layout in the Ponto Frio stores. We also opened a new concept store for Ponto Frio in Rio de Janeiro, in the Via Brasil shopping mall. But I think it is important that all synergies we can identify to capture we have a process in Globex not only to monitor how we can capture this synergy, but how it is going to be shown in our balance sheet. And the new dotcom, it is a very pleasant surprise to all of us, integration has been concluded. In the next slide we will be talking about something extremely important: the new Ponto Frio format, which will take Ponto Frio and Globex to where they deserve to be. We have changed the windows, it is a completely new layout, the environment is much more inviting for consumers. We are using Ponto Frio brand inside the store too, not only on the outside. We have a more welcoming and cozy environment, better communication; you can actually touch and feel the products. They are no longer behind the counter. We have worked with lighting to make a more pleasant environment. It is an aspirational store, and with that we will be able to meet this market niche, which is not fully tapped.

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Here on slide 16 we can see an old format traditional store of Ponto Frio. Those who know Ponto Frio, Casas Bahia, know that this store was designed to fight Casas Bahia. On the next slide we can see the new concept. Obviously this store is not fighting with Casas Bahia; it is an improvement from Casas Bahia, particularly at a mall. But it is not only the store, it is the entire team. Last year we invested more than 1.4 million hours to train our team, and we can say the following: that we are capturing our synergy, we are retaining our DNA, our differentiator of seven clients with full dedication. And now I will again pass the floor to Hugo, who is going to talk about the details. Hugo Bethlem: Before we go into the numbers, I would like to say the following: this quarter is not comparable to last year, either the 1Q or the 4Q, owing to the full integration of Casas Bahia this year. This is why we have only compared Globex without Casas Bahia, and we are also showing Globex figures for the 1Q. Therefore gross sales amounted to R$5.7 billion, and same store, as has been said, grew by 10.9%. In total sales, Ponto Frio and e-commerce we grew 43.1% and e-commerce grew 33%. It is important to point out that despite the removal of IPI tax last year this growth is very significant. On the following slide, 19, we see gross profit of R$1.3 billion in the 1Q, with a margin of 26.9%. I point out that this margin is at the top guidance that was given to you September of last year as our target for the model year referring to 2012. Therefore Globex adjusted margin grew from 19.2% to 20%, 50% growth, despite the participation of the dotcom, although it grew in its participation within Globex, without Casas Bahia, from 25% on this quarter to 38% in the 1Q11. The improvement in margin already shows the beginning of commercial synergy gains mentioned by Enéas and ratified by Raphael. Ponto Frio, despite all, within those 20% we have an 8.4% adjustment that had a negative impact on this margin owing to the conversion of 44 stores of Extra Eletro to Ponto Frio, where we had to liquidate the assortment existing in those stores. This margin is being recovered with a refreshment of the appropriate assortment for the new Ponto Frio positioning. Slide 20, we see that operating expenses for the 1Q amounted to 23.2% of net sales. It is important to say that in the comparable expenses there is a decline in the dilution between 1Q10 to the 1Q11, where we moved from 17.7% of net sales to 17.3% of net sales. As has been said by Raphael the expense synergies have been identified and under a process of capture within the yearly curve as we said on our Investors’ Day last year. Additionally the seasonal effect of the 1Q has brought a different impact from the 1Q10, owing to dilution of expenses. On slide 21, EBITDA is R$187 million in the 1Q, with margin of 3.8%. In what is comparable, again, we see a growth of 1.5% to 2.7%, again despite the dotcom contribution that went from 25% to 38%. Our EBITDA comes from a greater gross

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margin, there is a seasonable effect which is not favorable, a greater share of Novo.com, but we wanted to ratify the guidance given last year, and this year our margin, we will reinforce the guidance for margin from 4.5% to 6%. Slide 22, financial results. One of the main focuses of the Company, as regards Globex, it is doing very well, thank you. We can see the downward curve from 5.8% to 5.9%, 4.9% and 3.4%. I want to ratify that the 3.4% expense is within our guidance given to you September last year. The reduction in the 1Q brings about a few consequences of strategic decisions made, such as the reduction in the average payment period in two months. Reduction in the share of non-interest bearing sales without losing sales growth, where we lowered 17 p.p., and today we operate with no interest below 50% of participation in sales. Lower discounted receivable rates through FDIC, and an increase in the share of interest bearing sales. From the first integration in the 3Q10, Casas Bahia had 16% and now grew to 24%. Ponto Frio, which was virtually inexistent at 3%, now has 15% and both moving up. Financial expense of 3.4% of net sales has an important emphasis, whatever refers to the business, that is the discounted receivables from credit operations, is only 2.4% of net sales. Let us now see the consolidated results, where we see on page 24 the effect of FIC, which not yet reflected in total sales because it is not applicable to the operation of Casas Bahia. Therefore we have a 17% share of total sales without Casas Bahia, more than 8 million active clients, and under the equity method for the 1Q we have R$10.5 million; R$7.5 million for GPA Food and R$3 million for Ponto Frio in Globex. Now the net consolidated result is R$141 million, adjusted 1.3% of net sales. The greater impact on financial expenses is very significant. R$161 million net of income tax from last year to this year. We have to remember that our business is totally different from what we had last year, and therefore they are not comparable. The effects of IFRS of R$40 million have affected the equity income and depreciation. If we recover the result of R$141 million and take into account that the business would be different if we did not have R$160 million of financial expenses, our income would be R$340 million, more than 3% of net sales. In terms of consolidated net debt also answering questions from the other call, we have details of these figures that can be seen. The effect of R$800 million between the 4Q10 to the 1Q11, part of that is absolutely natural because it is the seasonal effect of the working capital in the previous quarter, because of Christmas we had a better situation in the 1Q11. Obviously the situation is different owing to the payments we made on Christmas purchases. Now, summing up payments that we made for the acquisition of Assai and Sendas, R$592 million, that is 82% explained in this difference of R$800 million. We thank you very much for your attention, and invite you all to participate in the questions and answers session.

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Tobias Stingelin, Banco Santander: Good morning everyone. First question is: looking at the foods result, the margin increased relatively well, but financial expenses were the great villain of the result. But if you did not have tax credit, a very strong change in the tax rate, results would have been different. We know that this is because its holding has a debt, but even in line with Enéas, what you have said about the strategy focused on capital employed and income, when do you believe we will start seeing your debt leveling off, or falling, so that the operation result can go to the bottom line. This is the first question. Enéas Pestana: Hi, Tobias. I am going to pass on to Filippo, who is going to answer. Filippo: Tobias, the concern that we have is to monitor our debt and see vis-à-vis the indicators. Obviously we have the indicators of EBITDA/debt, we have some targets, but what we have tried to balance, first of all, is the investment level vis-à-vis the debt. So investments must be validated, so that you can strike a balance in your debt and not increase it. So that the investment creates EBITDA, so you cannot forget that since investments lead to future EBITDA, if you look at past EBITDA, there must be a situation. It may be denting your vision, because future EBITDA of these starting stores will have its maturity in the future. And the installment sales program has been monitored, and Hugo talked about the percentage vis-à-vis installment sales, and we are always concerned about not losing competitiveness, we want to reduce non-interest bearing sales, and we have had some wins on this front. But there is a third factor, which is the finance taxation, and indexation of these taxes that end up creating an interest expense, but this can be positive because it is a way of paying taxes within the debt. So financing tax also imposes interest expenses. And this is the perception, this is the strategy regarding interest expenses, but it is a factor that we are monitoring, and we are looking at the indicators; the indicators are guiding us, and we have big discussions to monitor this and the performance of installment sales. So this is our monitoring strategy. Stability will come when investments level off, and as the return becomes consistent. Tobias Stingelin: I do not know whether you want to give us a guidance about when we should expect the stabilization, but in terms of investments, can we expect that investments will suffer a significant reduction? Because we see going up owing to acquisitions and the number of payments you have done. So if your CAPEX is lower, perhaps we will be able to see an improvement now. I would like to understand if there is something you can tell us. Filippo:

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As regards the guidance, we will have the opportunity to talk about it throughout the year, we are preparing it, and it would be a more specific communication, with further information. But as you say, and very well, we are also carrying the payments for investments that we made in acquisition, and we have had a last tranche on Assai, and we have had a first tranche on the acquisition of Sendas, that was purchased late last year. And all of that will reflect in future gains. Now 100% of Sendas will enable us to expect future gains from the Company in tax terms that will bring about benefits from this investment. Going back to the guidance, our intention is to have a specific event where we will address this. I think this is not the right time to talk about. Enéas Pestana: I would like to add two brief comments. First, I would like to ask Roberto Fulcherberguer, who is our Vice-President in charge of the commercial area and operational area, he works here with Raphael. We would like him to say a few words, because about financial expense, or interest expense, we do have the influence of CAPEX. I will speak about this immediately after Roberto, but we also have the issue of non-bearing installment sales and interest-bearing installment sales, and this produces even more impact than the CAPEX itself. The impact is bigger. If you can maximize interest-bearing sales and minimize non-interest bearing sales, of course this has to be sustainable, we cannot miss sales, but this is even more important than the reduction of CAPEX. Let me ask Roberto. He is conducting a very interesting work on this; actually we already see the results, a very good trend we can already see in the 1Q. So please, Roberto. Roberto Fulcherberguer: Good morning. Thank you, Tobias, for your question. In fact, what are we doing? In time, we are reducing in a strategic fashion the participation of non-interest bearing sales. It used to represent 70% of our business, and today it is below 50%. Obviously we are doing this as carefully as possible and as smartly as possible, so as not to lose sales. But looking at our market positioning, the competition is actually doing the same thing, they are following suit on this movement of reducing non-interest bearing sales. On the other hand, we are increasing interest-bearing sales. So that is why we have this bigger impact in the financial expenses. And this is sustainable. It is not only an isolated effect only in this quarter. In addition, we have a better fit between payments to suppliers, and that also helps reduce our interest expense. Let me give the floor back to Enéas. Enéas Pestana: Thank you, Roberto. I would like to ask Filippo to say a few things about GPA Food, because in this 1Q we had results a bit worse, but I want him to speak about this too,

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because in fact, at the origin of financial expenses, this issue is the single most important issue. So Roberto spoke about this, but I would like Filippo to say a few things about this in regard to GPA Food. Filippo: In sales of electronic products in the hypermarket, we are also trying to keep our competitiveness, while we reduce interest expense. Although in this quarter we had between 55% of our sales in non-interest bearing sales, we have reduced the number of installments, now fewer than eight installments on average, which also helps reduce interest expense. We actually have a credit committee, which meets regularly to discuss this initiative, without, of course, changing the strategy in each line of business, but we try to share best practices in terms of market view and competitiveness. So what do we do? Although the percentage is a bit higher of non-interest bearing sales until now, we have also been able to reduce the number of installments, which means we have also reduced the interest expense, and our competitiveness has been protected. Tobias Stingelin: Just two follow-ups, because Roberto and Raphael are here, I would like to hear from them: so you feel comfortable with sales for this year? You are not concerned about perhaps losing market share or losing sales, because you are monitoring this from closely, and I think we will be able to attain our goals this year without changing the strategy? This would be my first question. And the second is about Casas Bahia: when we will see a reduction of operating expenses? Thank you for the opportunity. Raphael Klein: Tobias, thanks for your question. We are looking at macroeconomic measures, we are monitoring them, and so far things are under control. Of course if we have new government measures, they may produce an impact, and then the situation might change. However, regarding sales, if the market remains as is, we will maintain our guidance, which we presented at GPA Investors’ Day last year. Tobias Stingelin: I apologize, but not changing the term, can everybody see this improvement in interest expenses? Do you believe that you will be able to meet the guidance, you still have this trend of improvement? Do you not think you can be a bit more aggressive? Roberto Fulcherberguer: Hello, Tobias. We feel quite comfortable in maintaining the control we have on interest expense, as we have done in the 1Q. We have already conducted a big change, and we have maintained our sales, as you can see. I do not see future problems in sales because of this initiative, because we are doing it in a very

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strategic fashion, it is a very well controlled process; the whole commercial area is involved. So trying to answer your question objectively, I do not see risks for sales because of this initiative. Now I will give the floor to Herzog. Jorge Herzog: Hello, Tobias. Good morning. Thank you again for your question. About expenses, I would like to say three things. First, the expenses are within our expectations, as we announced in our guidance. We are working on different fronts, we have consultants helping us in our day-to-day work, to identify the main synergies, not only in the merger of Pão de Açúcar and Casas Bahia, and Casas Bahia with Ponto Frio, but also we want to be sure that we will have a curve of synergy capture that is exactly as we announced in the beginning. So this is something we spoke about from the beginning. Let us be very careful with our clients, with our customers. Whenever we reduce expenses, whenever we identify synergies, we want to capture them, but without losing the essence of this Company, which is that it provides a very special treatment, a very special service to clients and customers. We have already captured some synergies, and we know that this curve will happen, it will be implemented in the next few months, and we feel safe, we feel comfortable that we will be able to deliver our guidance. Tobias Stingelin: Thank you one more time. Thanks for the opportunity. Andrea Teixeira, JPMorgan: Thank you. Good afternoon everyone. I would like to know the operational result. It was very good, one more time, but I would like to isolate the effects of non-recurring items of interest expense, and also the profit of Globex, the profit contribution. Also, the credit update in the negotiation of credit for Casas Bahia. First, on interest expenses, you spoke about a mark-to-market of R$38 million GPA Food, and I would like to know if this is going to be repeated. Globex is R$10 million right? This is the first part of my question. The second part would be about the accounting method, because in the 2Q10 it changed for Globex, so that is also going to have an effect. Will it be a positive of negative effect for the comparison in the next quarters when we look at interest expense? And next, the second part of my question, about the contribution of profit of Globex, R$17 million, I think, in the 1Q, but I think this is something new, at least looking at projections for the next quarters. And finally, an update on the negotiation with Casas Bahia. That is it. Thank you. Orivaldo Padilha: Good morning, Andrea. I took note of three questions: MTM, mark-to-market, the debt that was marked to market. This is actually an accounting procedure and does

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not affect cash at this time. We will have recovery of this number until the end of the debt, which I think is the end of 2011, beginning of 2012. So, this is going to disappear in the next three or four quarters. Now change in the accounting procedure of interest expense, in 2009, even before the 1Q10, and 2009 and in 2008 our accounting method acknowledged expenses as they were paid in installments, especially for cards. Until the 1Q10, we posted expenses in this format. But in the last three quarters of 2010 we made the adjustment, so that is we changed, and we started to post 100% of the expense in the month when the receivable is received, that is when the advance on the receivable is actually cashed. This was changed last year, so for the 1Q11 we do not have any carry away from last year. And in terms of figures it is much better, because now you bring to the same quarter the financial impact in the quarter when the sales were conducted. So this is much better for commercial control. As Roberto said, it also means a benefit for interest expense, so we believe it is the right way to do it. Andrea Teixeira: OK, Padilha. So after this is done, the effect will be positive then, for the next quarters? Orivaldo Padilha: Yes, I understand there will be favorable effect. Actually, in the 1Q we have already concluded the adaptation, there are no carryovers from last year; it is just this quarter. So this is how we will present, we will state these expenses from now onwards, very much in line with what the commercial area is doing in terms of sales strategy. Andrea Teixeira: Right. So if it was 3.8% of sales in the 1Q, in the next quarters we may even see a reduction? Orivaldo Padilha: 3.4% is actually below the guidance. And there are a few other factors that may exercise pressure, for example, a higher Selic rate. We believe this percentage will be maintained. Roberto is showing his agreements, so the whole financial, commercial, and operational areas of the Company agree on this. About your third question, we spoke about this expense of R$17 million, this is related to the PLR, the profit sharing scheme, and this R$17 million basically refers to an agreement signed with the Union, including the Union for distribution centers, Casas Bahia, and the other stores. With this agreement with the Union we will pay approximately 80% of a 14th annual wage. This is the agreement, this is what we are doing, and it is recurring, it is going to represent approximately R$10 million in the next three quarters, not the overall R$17 million. So for the next quarters we can expect R$10 million, not R$17 million. And in terms of guidance, we have already considered, we have already included this in our expense guidance. So, for us, in terms of projections, we have just changed the line where we place that. We are not going to reduce the net profit, or the net income position because of this.

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Andrea Teixeira: Along the same lines, you also have a negotiation with another union, which affects GPA Food. Do you see any pressure there in terms of labor costs, which might affect EBITDA, not only yours, but also GPA Food? Orivaldo Pestana: I think I did not understand your question. Could you please repeat? Andrea Teixeira: Yes. I understand from previous conversations that you also have negotiation bargaining collective agreement for CBD, including food. So it is not really your area, but is there any other negotiation about which we do not know, and which might bring further pressure on margins from now onwards? Hugo Bethlem: Good morning, Andrea. Thank you for participating. No, we do not have this information, Andrea. There is no pressure from unions related to the food area. Every year we have the regular negotiation, usually the line about productivity is negotiated, sometimes the union would like to have that above inflation, and we also want our associates to contribute with more productivity in their work. So yes, we have provided adjustments above inflation, 7.5% last year, whereas inflation was 5.5%. José Roberto Tambasco is also here, from Retail, but these levels are adjusted looking for more productivity from our associates. Andrea Teixeira: Thank you. And the next negotiation would be in October this year? Hugo Bethlem: It depends. For São Paulo it will be September, Rio de Janeiro was May. Every state, every city has a different date, which changes throughout the year. But the most significantly really occurs in September. Andrea Teixeira: And lastly, if you could talk about the negotiation on the credit side. Raphael Klein: Good morning. Andrea, I think in this credit negotiation, it is important to say that we have two strong partnerships, healthy partnerships, Casas Bahia and Bradesco, and Ponto Frio with Itaú. So this eases the pressure, because partnerships are faring very well. What we want is obviously to move ahead with these partnerships, we want to sign a new contract, we really believe in that. But to us it is like I said, a committee was

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created with Enéas, Gustavo Franco, Diogo, and Ramatis, so they are participating in this council, SIGnatura, the consultancy helping us out. And we believe that it is extremely important to delve into details about what will be the impact in the short, medium and long terms. Until we have absolutely clear information on the medium and long-term impact, no decision will be made and it will be made in the right time, peacefully, calmly. So, we have this credit committee that is active, actively working on this, but we have not got a specific deadline. Andrea Teixeira: OK. Thank you very much. Just for us to have an idea, we should not expect a decision by the committee this year; do you have any idea of timing? Raphael Klein: This decision lies with the Board. Obviously, we want to make a decision on that, we want to. Is it likely to happen this year? It is likely, but I would not be surprised if it happened next year. Andrea Teixeira: Perfect. Thank you very much for your attention. Hugo Bethlem: And lastly, I would like to ratify, in no moment, nor in the guidance or the GPA Day did we provide any financial consideration to the conclusion or non-conclusion with any financial operator. So, this impact only has upsides and I believe that this impact should be looked at very carefully, bearing in mind everything that is going on the market and what would be best way to capture those results. Andrea Teixeira: Well, thank you very much. I know that the financial part does not have anything to do with this potential joint venture. Daniela Bretthauer, Raymond James: I would like to talk about the increase in expense, not in Ponto Frio. Well, Ponto Frio expenses have grown 48% from last year to this year. So, I was surprised because I overestimated Ponto Frio’s results and Bahia’s results. I did exactly the same. It is exactly the opposite, because Bahia provided a profit. So, what is going on at Ponto Frio that the return is dropping and Bahia is climbing? Was it a localized episode? What happened? Hugo Bethlem: Good morning, Daniela. I would like to thank you for your question and say that we have to start little by little educating ourselves and the market not to make a separate comparison between Ponto Frio and Casas Bahia, because they are no longer companies. They are now brands with different positioning. And the synergy lies in the unification of the back office. The front office is differentiated to customers. Therefore, from now

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on we will start looking at a single Globex figure. What may happen between quarters, between results are trade-offs in expenses that were or not posted to one company or the other. So, Jorge, please, if you could explain a bit further. Jorge Herzog: Daniela, hi. Thank you very much for your question. Hugo gave you a very good explanation. It is exactly that. But first of all, I think we cannot state that Ponto Frio has gone sour. We have had an increase in the expenses, obviously owing to the sales, so when we talk about percentage terms, the sales growth was also important. We have reported a very important growth in the LP, and today we are actively looking for synergies in the Ponto Frio brand and Casas Bahia as well. And obviously, a few synergies have been captured under Casas Bahia and others under Ponto Frio. So, we are very comfortable vis-à-vis the actions being implemented. We do not see any problems on the guidance capturing; we believe that over the coming months we will continue to see this performance. But, again, looking at the Company as a whole, a consolidated Globex, because it will become really impossible to look at each of the brands. Hugo Bethlem: Just to ratify, despite all this, we have a dilution of Ponto Frio expenses vis-à-vis its sales. If we take a look at the indicators that you yourself have mentioned, which is the expense growing 41%, gross profits grew 50% and therefore, with dilution of expenses and the next EBITDA line, it will grow 170%. Daniela Bretthauer: Perfect. But my point is that Ponto Frio was trending upward with an EBITDA margin of 4.5%, and all of a sudden it was halved. Hugo Bethlem: But it no longer exists as a company, Daniela. I think we have to start looking at this reality, otherwise the effective capture of synergies and the positioning of brands is more important than to look at details. I know it may be hard upfront, but our objective is to show you that we are an integrated business, and the results will bring this benefit in the consolidated Globex EBITDA that will add to GPA shareholders. Daniela Bretthauer: Thank you. Carlos Albano, Citibank: Hi, thank you. With regard to Globex, I would like to know, just to confirm, whether Ponto Frio today is already buying in the same conditions as Bahia and can we imagine a margin expansion that you see for the business? Will we see a lot coming

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from the gross margin or is the EBITDA margin coming from expense control and SG&A? Hugo Bethlem: Thank you very much for your participation. If we take a look at the gross margin, as I said in the call, we are at 27%, which represents or means that we have achieved the guidance for the model year that will give us EBITDA at 7.5%. Obviously, what is missing is to show the synergy of expenses captured. But this is just moving OK. Roberto is going to ratify with you since when the businesses are being done under the same conditions however respecting what has been determined by the provisional agreement for the possible reversal of transition. Roberto Fulcherberguer: In fact, the negotiation is underway. According to the APRO, we have captured synergies of Ponto Frio, but we have not seen the Ponto Frio brand with a full quarter, with all benefits since last quarter. We were sourcing out, we were resolving the assortment of the Ponto Frio brand in the 1Q. We are tailoring the assortment of the Extra Eletro stores that have become Ponto Frio, so we have not had a quarter with full benefits. But if I understood your question, if purchases can be comparable between Bahia and Ponto Frio, yes, they buy together, they have joint purchases. Carlos Albano: And Hugo, I think that you will be able to answer this, but about the CI report, when do you think you will have a decision by the CADE, and how do you feel about it? Will you have to sell any part of assets, of permanent assets? How will this affect margins in the future? Hugo Bethlem: I will pass this on to Jorge because he is the one dealing with CADE. Jorge Herzog: Hi, thank you for your question. As regards the CI report, it is important to say that this is part of the process, it is not a final decision. So, our case is still before the CADE. We have a group of two lawyers supporting us, and we are totally confident that there is a lot of room to be negotiated with CADE so that we will have a final report that meets our original expectations. It is important to point out that we have with APRO, the provisional agreement, which enabled us to make decisions on our guidance whatever comes our way. That is more positive than what the agreement is, and obviously it will be passed on to our results. So, we are very confident. We are working with CADE concerning demands they have to analyze the case. But we believe, well, a week before last, the new Board member was nominated, appointed after Vinicius departed, so I think that they will gather speed again, and we are confident that before the year is out we will hear the final decision.

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Carlos Albano: Thank you, Herzog. For me to understand all the guidance numbers that you have given us, taking into account that you will not have to sell part of your PP&E, if there is a more negative position or decision, you will have to bring down these numbers. Jorge Herzog: Well, these numbers take the APRO into account, it has certain restrictions concerning shutting down stores and negotiations, but the APRO does not have anything that talks about shutting down stores, and I said that we consider what is in the APRO. Carlos Albano: Yes, but the guidance you have given us for 2011 and 2012, I understood that you are not thinking about, in your projections you do not envisage a very unfavorable decision by the CADE. Jorge Herzog: No, obviously, we did not. Carlos Albano: OK. Thank you. Juliana Rozenbaum, Itaú BBA: Hi, good afternoon. I would like to understand what kind of follow up you do of the trade-off between your reduction of non-interest sales and sales performance. What kind of metrics you use? Do you compare with budget? What would have to happen for you to decide to speed it up or to slow it down as regards non-interest bearing sales? GPA: Well, in fact, it is part of our strategy, the same way we decide the pricing policy, payment terms are part of pricing, and this is part of the sales strategy. We are looking at the market as a whole, sales terms and conditions. So, I could be here for the entire day listing all the items that we use to make our commercial decisions, but they are closely connected to product price. Juliana Rozenbaum: But in addition to this pricing fine-tuning, do you have a more strategic guidance? That is, I am going to decrease non-interest sales so that the guidance will be met, is it just a fine-tuning, you do not have this macro vision? GPA:

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Well, obviously, we are bringing this down and we are never going to do anything that will prevent us from achieving the guidance. So, the big strategic decision is that we are pursuing the guidance to improve it, and not to let it have a negative impact on sales. So, there is this strategic alignment, and we expertly, we disseminate these two projects, but obviously this reduction, we do not want it to bring any problems concerning sales. Juliana Rozenbaum: And then, I have two more accounting questions. I find it hard to understand how to make it compatible within the New Globex the gross receivables, thinking about net receivables of R$2.5 billion, and in the comments you talked about R$3 billion in discount in receivables. So, is FIDC included in the R$3 billion? Orivaldo Padilha: Juliana, good morning. Thank you. Those R$3 billion that we provided you with is the discount on credit card receivables, about 96% of installment sales on credit cards. The FIDC is a tool that we use to discount part of those receivables. FIDC today is working for Ponto Frio, PontoFrio.com, and Nova.com, and we have plans to expand it to Nova Casas Bahia. And I believe that you know this very well, but we need to trace receivables, so we need to fine tune the system, and we are already doing this FIDC for the Nova Casas Bahia. So, those R$3 billion we mentioned are basically credit card receivables, 96% of what was sold on credit cards. And this is volume, it is not the entire portfolio. The entire portfolio, I have to see the movement, what was carried over from previous periods, so this is what we had to discount in the quarter to face up to cash needs were those R$3 billion that we mentioned. Juliana Rozenbaum: But those R$2.5 billion include FIDC, about R$800 million in FIDC? Orivaldo Padilha: Yes, it does. Since I am the controller of the fund, I am obliged to show them. Juliana Rozenbaum: So, we should never sum the R$2.5 billion with the R$3 billion? Orivaldo Padilha: No. You have to look at the need of the quarter and what I needed to discount. Juliana Rozenbaum: Can you reconcile this for us? Orivaldo Padilha: We can work on it later, with Vitor. I would not be able to do it right now because it takes a bit longer than the time slot that we have.

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Juliana Rozenbaum: A last question, of those R$30 million that you put back on the premium of Casas Bahia, the sale of intangibles, is this within the income tax rate? Is it those R$27 million, I cannot find it certainly, only the R$27 million, is it the same number? GPA: The impact is on GPA, right? Juliana Rozenbaum: On Casas Bahia’s premiums, and it is opposed to your income tax. Vitor Faga: So, those R$30 million, yes, you should adjust it for the income tax. So, the net effect is R$19.8 million within GPA Food. Although it refers to the intangible owing to the business combination with the acquisition of Nova Casas Bahia and in the IFRS, you have to consider the discounts in income tax. Juliana Rozenbaum: But, in what line of GPA Food is it on? Vitor Faga: In the press release on page ten. Juliana Rozenbaum: But in what line? Vitor Faga: You can find it in page 13 in the depreciation, GPA Food went from R$93 million to R$124 million. Juliana Rozenbaum: OK. So it is in depreciation, but this is silly of me, but why does it not appear in results in IFRS? José Antônio Filippo: Hi, this is amortization because when you create the business combination amount, some of these components can be amortized. These are results that are ascertained throughout time, and others ascertained you amortize investment. And this is why they appeared in amortization and depreciation. Juliana Rozenbaum:

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So, it has a different feature? José Antônio Filippo: Yes, it is different. It is not amortization of goodwill, it is specific items that created an amount when you do the valuation of the investments and this will happen throughout time, so the effect is going to fade out. Juliana Rozenbaum: So, how much could we expect in the year? José Antônio Filippo: Well, it is expected to repeat itself in the next quarters. This is very technical, it is in line with the new IFRS procedures. Juliana Rozenbaum: OK. Thank you very much. Irma Sgarz, Goldman Sachs: Hello, good afternoon. It is just a question to follow up, I would like to understand a bit more in GPA Food, what are your plans? I am sorry, we had an interruption. Hugo Bethlem: Irma, hello. Thank you for your questions. We did not provide guidances on that, and they will not be announced now for GPA Food. We are working on the expansion on what we saw, Assai, Extra Facil, we still have the conversions, 110 conversions of Compre Bem and Sendas. This is where our investment this year is concentrated. We will continue to grow in Extra Facil, Assai and new opportunities that have already been identified for Pão de Açúcar and Extra Hiper. Irma Sgarz: So, in the short term, the focus would be on conversions and these formats you have mentioned, but not necessarily a change in the organic growth of GPA Food. Hugo Bethlem: Yes, exactly. Irma Sgarz: Thank you. Operator: The Pão de Açúcar earnings conference is now closed. The Investor Relations Department will be at your service to answer any further questions you may have. We thank you all for being with us and wish you a good afternoon. Thank you.

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