Brazilian retail giant Companhia Brasileira de Distribuicao CBD or Grupo Pão de Açúcar (GPA) reported losses in the first quarter, but sales increased over the past year. In the first quarter, CBD incurred a loss of R$17 million (*$4.7 million) as against a net income of R$226 million in the year-ago quarter. The loss reflects deterioration of the economic scenario during the year, which led to a decline in demand and lower consumer confidence. The weak scenario mainly impacted the Via Varejo category. Adjusted net loss margin was 0.1%, down 140 basis points (bps) from the year-ago quarter. Results in Detail After bearing the brunt of a weak economic scenario in Brazil in 2015, CBD posted improved first quarter 2016 sales, despite a weak economic environment and restricted spending. In the first quarter of 2016, consolidated gross sales grew 4.4% year over year (in local currency) and compared favorably with preceding quarter growth of 0.2%. Net sales of this retailer increased 3% year over year, which compared favorably with sales growth of just 0.2% in the preceding quarter. The improved sales growth was driven by 0.8% growth in comparable store sales. Assai Multivarejo continued to deliver stronger sales while Via Varejo generated its best sales performance since the second quarter of 2015, and witnessed market share gains. Pao de Acucar opened one Minimercado Extra and one Assai store in the first quarter. For 2016, the company plans to continue to focus on higher-return formats (Assai and Proximity). CBD plans to open between 12-15 stores in the year. Among these 8 Assai, 2 Pao de Acucar, 4 Minuto Pao de Acucar and 1 Minimercado Extra are under construction. Gross profit declined 6.3% in the quarter, narrower than a decline of 16.5% in the preceding quarter. Gross margin declined 220 bps to 21.8% as the company strengthened its promotional activities amid weak economic scenario. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) decreased significantly by 52.4%. Adjusted EBITDA margin declined 320 bps to 2.7% in the first quarter. Adjusted EBITDA declined 52.9% in the preceding quarter. The company operates through the food retail, cash and carry, electronics and home appliances retail (bricks and mortar), and e-commerce business segments. These segments are grouped into two large categories, namely Food Business (Multivarejo and Assai) and Non-Food Business (Viavarejo and Cnova). Food Business Food Business’ net sales increased 10.9% in the quarter. Sales growth was driven by solid performance of 96 Assai stores and improved sales performance at Multivarejo. It also compared favorably with preceding quarter growth of 6.7%. Despite the economic slowdown, same-store sales in the Food category grew 6%, reflecting growth in customer traffic across all banners. It was significantly higher than 1.9% growth in the preceding quarter. Adjusted for the calendar effect, same-store sales in the Food segment was 3.1%. Non-Food Business Net sales of the Non-Food Business decreased 5.5% in the quarter. However, the decline was narrower than the preceding quarter’s decline of 6.2%. Cnova: Category net sales increased 7.7% on a same store sales basis. Sales growth in the preceding quarter was 9.5%. Viavarejo: Viavarejo’s net sales declined 12.7% in the quarter due to same-store sales decline of 11.8%. The net sales decline was narrower than the preceding quarter’s decline of 14.7%. The company witnessed sequential improvement in same-store sales trend. Viavarejo also continued the closure of lower performance stores. Mobile phones and sales of services grew sharply in the period compared to the first quarter of 2015. Companhia Brasileira de Distribuicao has a Zacks Rank #4 (Sell). Stocks to Consider Better-ranked retailers worth considering in the broader retail sector include The Kroger Co. KR, New York & Company Inc. NWY and Shoe Carnival Inc. SCVL. All of these hold a Zacks Rank #2 (Buy). *1R$=$0.2781 for the quarter ending Mar 31, 2016Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NEW YORK & CO (NWY): Free Stock Analysis Report KROGER CO (KR): Free Stock Analysis Report COMPANHIA BRASL (CBD): Free Stock Analysis Report SHOE CARNIVAL (SCVL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research