CONFERENCE CALL FOR THE DISCLOSURE OF 2Q09 RESULTS

Operator - Good morning and thank you for waiting. Welcome to Grupo Pão de

Açúcar’s conference call discussing the Company’s 2Q09 results. This event is

also being simultaneously broadcast on the Internet via webcast, available at

www.gpari.com.br, where you can find the respective PowerPoint presentation.

You will be in charge of selecting the slides. This event can be replayed as soon as

it is over. The 2Q09 press release is also available on the Investor Relations

website (www.gpari.com.br). This event is being recorded and during the

Company’s presentation, participants will only be able to listen to the conference

call. After the presentation, we will begin the Q&A session and, at that time, further

instructions will be provided. If you need assistance, please, dial ―* 0.‖

Before we begin, we would like to inform you that any statements presented during

this conference call concerning Grupo Pão de Açúcar’s business prospects and

operating and financial projections and targets constitute beliefs and assumptions

of the Company’s management, as well as currently available information. These

forward-looking statements involve risks, uncertainties and assumptions and

therefore depend on circumstances that may or may not occur. Investors should

understand that general economic and industry conditions, as well as operational

factors, may affect Grupo Pão de Açúcar’s future performance and lead to results

that differ significantly from those projected during this conference.

Now, I would like to give the floor to Mrs. Daniela Sabbag, Grupo Pão de Açúcar’s

Investor Relations Officer, who will begin the presentation. Please, Mrs. Sabbag,

you have the floor.

Daniela Sabbag – Good morning, everyone. Welcome to our conference call on

the 2Q09 results. Joining us today are Abilio Diniz, Chairman of the Group’s Board

of Directors and vice-presidents Enéas Pestana, José Roberto Tambasco, Caio

Mattar and Ramatis Rodrigues. We will begin today’s presentation discussing the

main operating and financial results and, at the end, we will have a Q&A session.

But before that, I would like to give the floor to Mr. Abilio Diniz for his opening

comments.

Abilio Diniz – Good morning, everyone. I’d like to give a word from the Board and a

quick word from the point of view of the shareholders. This is a really good time for

the Company--nothing new, everything is the same, and so it is the same very

good situation. We are very pleased with our latest transactions. Two months after

the acquisition of Ponto Frio, we can see this was a very good deal, a great

opportunity. Our team is really excited. Last week I attended a meeting with over a

thousand people. Ponto Frio’s employees are very enthusiastic about us having

acquired Ponto Frio, for the prospects this offers in terms of technology, logistics,

IT, credit concession, much more advanced systems and purchase synergy.

Basically, everyone is really enthusiastic and, evidently, we are also very

enthusiastic here at Pão de Açúcar. We are also very satisfied with the acquisition

of the remaining 40% of Assai. I know Rodolfo Nagai is very pleased and happy

and we are also very happy to have acquired this part of the business that will

enable us to increase dynamism in things we needed to implement, to take greater

advantage of the synergies among companies. The most important thing that I

wanted to tell you, even more important than the results we’ll talk about here, is

that we are meeting our targets, which is a confirmation that our year will be good

and that there is nothing new. I believe the results are in line with the best market

forecast and our budget. The most important thing I would like to tell you is what I

feel about the management. The team is very confident; there is a lot of unity

between executive officers and directors; there is a strong belief in the Company,

in the results, in the prospects, and what is ahead of us. We believe in the country,

we are sure that things are here and now and that it is worth making an effort

because it will pay off. So, this is a very good time for the Company, since there is

nothing exceptional, there is nothing new, just a little bit of the old news, which

means good results, motivation and the satisfaction of the people who work here. I

will be here for a while in case you have any specific question for the Board’s

leadership.

Enéas Pestana – Good morning everyone and thank you for participating in Grupo

Pão de Açúcar’s conference call. I’m going to go over the results with you quickly

to help you correctly understand them, and then we’ll move on to the Q&A session.

Following the presentation you received, let’s go to page 3 to analyze sales

performance. In the second quarter, gross sales increased 15.4% and net sales

18.1%, growing 10.7% and 13.7% in the first half, respectively.

I wanted to point out, yet again, that the continuous product migration from one

form of VAT tax collection to another, ―tax substitution‖, especially in São Paulo

State, has been causing this difference in net and gross sales. Just to give you an

idea, products subject to tax substitution already account for 45% of our sales and

that jumps to 75% in São Paulo. So, an increasing number of products is being

migrated to this regime and in the process, in the migration curve, is causing

increased growth in net sales as compared to gross sales, since this causes a

reduction of VAT tax vis-a-vis a proportional increase in the cost of goods sold. It

also affects the vertical analysis since, for vertical analysis, the 100 base is net

sales. But we’ll talk about this that later on.

In the same stores terms, sales increased 13.1%, and when you adjust for inflation

you have real growth of 7.6%, and 15.6% growth in same stores net sales. If we

look at the breakdown by category, food products grew significantly this quarter,

including due to Easter, growing 12.8%, whereas other product categories

performed well with 14.3% growth. In terms of sales growth, this quarter we can

highlight Pão de Açúcar, Extra, Extra Fácil and Assai formats. For the half, the

same stores terms grew 8.9%, representing real growth of 3.2%, above what was

forecast at GPA DAY, which was a growth above 2.5% for the year. Same stores

net sales in the half were 11.7%, as you can see in this chart on page 3. Food

increased 7.9% in the half. The smaller part of that growth happened in the first

quarter and the larger part in the second quarter. Other products grew 12%.

Regarding gross profit and gross margin, and those figures are on page 4, gross

profits grew 14.6% in the quarter, despite the 0.8 percentage point decrease in the

gross margin. In the half, also despite the 0.9 percentage point decrease in the

margin, profit grew 10.1%. Once more, the most important explanation for the drop

in the margin is the change in the way the VAT tax is collected, considering the

effect in the 100 base. This effect also increased net sales in the quarter 0.6 p.p.,

in line with the effect in the half, which practically explains the difference in the

margin. Gross profit reached R$2,400 million this half. As I have already said in the

past quarters, since the beginning of last year, we have been controlling costs.

This quarter we saw pressures on costs due to the Easter effect, since there is a

pressure on personnel expenses, overtime and advertising expenses. This

strictness and control allowed us to dilute expenses 0.7 and 0.9 percentage points

in the quarter and in the half respectively, since expenses are still taken into

account in seasonality, they remain under control and there is no news here, and

we will continue this strict cost control and might even see reductions in the second

half.

The acquisition of the remaining interest in Assai that Abilio touched on will allow

us to intensify synergy in Assai, thus reducing the necessary back office structure,

because there was a partner and structured corporate governance and now our

synergy can be stronger, and that will cut Assai’s costs, also reflecting in the

consolidated. Of course EBITDA reflects the result of this sales growth with the

maintenance of the margin. I wanted to point out to retail market analysts that this

healthy or sustainable sales growth equation with aggressive margins that

guarantees competitiveness stimulated increased customer traffic and average

ticket, evidently transforms our results in growth of the Company’s profitability,

especially as reflected in EBITDA, which increased 15.7% this quarter, reaching

EBITDA of R$345 million, in line with the increase of almost 15% in the first half,

reaching R$657 million. It is important to remember that on GPA DAY we prepared

a guidance report for the market referring to the EBITDA growth of at least 10%

this year and we have closed the first half with 15% growth.

On page 7 we highlight the financial result that contributed substantially to the

increase in net income since, as Claudio Galeazzi reaffirmed in the last reports and

quarters, our priority is to maintain a capital structure with liquidity and low

indebtedness. So, we still have a very strong structure; debt was contracted before

the crisis, when we were preparing ourselves for a more difficult period. Our

average debt cost is around 102% and, with the rather substantial reduction of

Selic or CDI rate, we were able to capture this gain, which is translated into a

decrease in our financial expenses. And, of course, we have been seeking a

proper balance in the means of payment between sales with interest and interest-

free sales in installments, so there is about a 30% reduction in our consolidated net

financial result.

On page 8, we can see our debt profile, an indebtedness of 0.68x EBITDA in the

quarter vs. 1.15x EBITDA last first quarter. So, a significant reduction in

indebtedness has also helped reduce net financial expenses. We closed the

quarter with net debt at R$939 million against R$1.3 billion in the same period last

year.

Also consistent with our guidance, on page 9 we can see that there was a major

improvement in the FIC results, reaching R$3.4 million vs. R$1.4 million last year

and, in the half, R$7.3 million vs. R$2.6 million last year. This represents 13.8% of

sales with 5.8, almost 6 million clients and the receivables portfolio currently at

R$1.7 billion. So, we are very pleased with the FIC growth, the progress and

improved results, which had already been expected but are above our budget for

the year.

With regards to Sendas Distribuidora, there aren’t major highlights. Gross margin

remained at 25.5%. Sendas’ total expenses, also in line with last year, increased

slightly 0.4 percentage points, related to the seasonal effect of Easter, and the

EBITDA margin decreased from 4.2% to 3.9%. We have already talked about

Sendas after its restructuring and it has consistently maintained the levels of

profitability it has reached.

In page 11, we talk a little about Assai. This quarter Assai improved substantially

as compared to the first quarter, posting year-on-year growth. The margin grew 1.7

percentage points and costs grew by one percentage point year-on-year, with the

EBITDA margin reaching 2.9% vs. 2.1% in the same period last year. We

understand that the increased synergy will allow us cut costs and maintain an

aggressive expansion plan for the year to consolidate our position in the

wholesale-retail segment.

Finally, referring to net margin, net income increased 155% in the quarter when

compared to last year’s reported result and 72% in the half if we consider last

year’s pro forma since, in addition to last year’s restructuring, Law 11.638 hinders

the comparison of the result, since last year goodwill was amortized and, this year,

it is not. But even adjusting for this, the growth in the quarter is 72% and 50% in

the half. So, despite this accounting change, growth in net income is very

expressive, a margin of 2.3%, representing a growth of 1.3 percentage points in

net income.

Page 13 shows that CAPEX in the quarter was stable year-on-year. We have

invested almost R$200 million in the first half, reaffirming our intention to invest

R$750 million this year. So, investments will be accelerated in the second half,

both in new stores and in remodeling and infrastructure, considering IT and

logistics. In the first half we opened three new Extra Fácil stores, one drugstore

and converted four stores, one from CompreBem, two from Sendas and an Extra

hypermarket in Rio de Janeiro, into the Assai format, and we also converted a

CompreBem into the new Extra Perto format. We closed the half with 603 stores

and 1.4 million m² of sales floor.

Something really relevant, really important that we are announcing now with the

results conference call, is the new dividend policy that was decided and approved

by Grupo Pão de Açúcar’s Board of Directors. We believe that the company has

achieved mature performance, allowing us to implement a mature culture or

dividend policy that can provide more appropriate return to shareholders, which is

more suitable to the Company’s current moment and also takes into consideration

capital and cash structure that allow us to advance dividends. For the first year we

will consider the results or dividends of the previous year, which were R$60 million,

advancing R$15 million per quarter in the first three months, and payment referring

to the first two quarters will be made on August 24. After that, we will advance

R$15 million for another quarter, and the dividends at the end of the year will be

adjusted in the final dividend payment, and that will evidently be a larger dividend

due to the growth of results so far and that will continue throughout 2009.

Well, that was a quick overview of the results so that we have time for the Q&A

session, so let’s start that. Thank you very much.

Andrea Teixeira, JP Morgan – Hello. Good morning ladies and gentlemen. Thank

you for taking my question. I will basically focus on price reinvestment. You made

the 0.1 percentage point of reinvestment really clear in the press release, I

appreciate that. This quarter, gross margin was favored by Easter. What is the

figure expected this year? Thank you very much.

José Roberto Tambasco – Regarding the margins, we believe that even though the

second half is a period with lots of promotions because of the anniversaries of

several formats and since every format has their anniversary promotion in the

second half and at the end of year, which normally causes a slight decrease in the

margin, we expect the margin to remain stable. We shouldn’t see a reduction even

though we are trying to improve negotiations with suppliers and improve the mix,

but we have a very strong policy of improving the competitiveness of our stores in

all formats. So our objective is to maintain this level of commercial margins.

Andrea Teixeira, JP Morgan – All right, Roberto. Just to be clear, when you talk

about maintaining the margins, do you consider conversions to Assai and that its

growth is higher or proportional to the Company’s average growth?

José Roberto Tambasco – That’s a good point, Andrea. We have already

commented on that. Clearly when you open new stores with the Assai format,

which operates with lower margins, percentage-wise the margin mix can see a

reduction as Assai represents a larger share. However, looking at cash margin, this

is within the guidance previously presented. So, it’s important to point out that we

should not make any analysis based on our history since the store mix breakdown

can be changed significantly, like with Assai.

Andrea Teixeira, JP Morgan – All right, Roberto. If we exclude the Assai effect,

should we consider the second quarter's margin as the one to be used by the

company in the current formats, in the current mix?

José Roberto Tambasco – Right.

Andrea Teixeira, JP Morgan – And adjust Assai as it grows?

José Roberto Tambasco – Exactly, Andrea. For each and every gain we have with

our suppliers, in our promotions, we have always looked to increase the

competitiveness of our stores. So, we are not expecting big increases in the

margin.

Andrea Teixeira, JP Morgan – All right. Perfect. What about DemandTec? Will it be

fully implemented in the second half?

Ramatis Rodrigues – Good morning Andrea. DemandTec is in the final stage of

implementation, which should be concluded by October. Practically 70% of

optimizable sales are currently being generated by DemandTec; so, we still expect

to conclude implementation by the end of October.

Andrea Teixeira, JP Morgan – Perfect, Ramatis. Thank you and have a nice day.

Daniela Bretthauer, Raymond James – Good morning everyone. Congratulations

on the results. I have two questions. In the first half, the Company’s strategy was to

be more cautious with investments due to the uncertain economic scenario. So I

would like explore the Company’s strategy to resume the expansion plan from now

on. Actually, I think you held back a lot on investments in the first half, even more

than you did last year. So this is the first part of the question.

Caio Mattar – Good morning, Daniela. This was our GPA DAY guidance. We

always hold back on investments more in the first half. If we analyze the situation,

we’re emerging from a global crisis, the situation has been improving and that is

why we decided to implement the strategy in the second half. We have a lot of

stores to open and we should end the year with practically 97 new stores.

Daniela Bretthauer, Raymond James – What is the breakdown of these 97 stores?

Is everything going to be the smaller format, I mean, Extra Fácil, Extra Perto?

Caio Mattar – No, we have 50 Extra Fácil stores, 8 Assai stores, 6 Pão de Açúcar

stores and 4 Extra stores. We also have 10 gas stations and 15 drugstores.

Daniela Bretthauer, Raymond James – So, the Company will probably not reach

R$1 billion in CAPEX this year with these planned openings.

Caio Mattar – We are expecting practically R$750 million in CAPEX this year.

Daniela Bretthauer, Raymond James – So it will be a maximum of R$750 million?

What about next year?

Caio Mattar – We have studied that, we don’t have it ready but we expect to have it

for the next year. We have a strategic planning meeting in the second half and,

after that, we will have the guidance for next year.

Daniela Bretthauer, Raymond James – All right. Thank you. About Ponto Frio – I

don’t know if Jorge Herzog is here today – what can he tell us in this short time

he’s been there?

Jorge Herzog – Good morning, Daniela. Well, as Abilio mentioned in his opening

remarks, we have been progressing very well in the integration process. We have

to finish our diagnostic analysis by the end of August. Actually, we are very

pleased and optimistic with the situation, not only in terms of our team’s motivation,

which was very positive since it really facilitates our work, but also in terms of

analyzing the synergies we will be able to capture. This will be detailed in the

business plan that will be prepared and presented to the Board of Directors.

Overall, things have been going very well and we are really pleased with

everything.

Daniela Bretthauer, Raymond James – Could you comment on sales? For

instance, I saw that on Father’s Day Ponto Frio offered an installment plan with 14

monthly installments for those who have a Ponto Frio card, I mean, I hadn’t seen

an installment plan offering more than 12 monthly installments for a long time.

Would you say that, overall, sales in July and the beginning of August are strong?

Jorge Herzog – Look, Daniela, about sales, we only really started working on a

turnaround twenty days ago, but, yes, we can already see a turnaround. However,

the things we’re going to implement and that will directly impact sales will occur in

the second half.

Daniela Bretthauer, Raymond James – All right. Thank you.

Gustavo Oliveira, the Citi Group – Good morning ladies and gentlemen. In the

release you talked about Sendas, which was affected by the increase in the

municipal property tax in Rio de Janeiro and, despite that, you were able to

maintain the EBITDA margin, which could’ve been even higher if the tax had not

been increased. You started the turnaround before doing the turnaround changes

at Pão de Açúcar stores. Do you think costs could still improve with Sendas? Do

you believe that Sendas is in a more advanced stage compared to the other stores

of the Group?

José Roberto Tambasco – Gustavo, we believe that we can still improve, but I

would not say so much in synergies reducing operating costs. Rio de Janeiro is

becoming a more important market each day. We currently have the Assai format

and expect to improve sales growth in our existing stores. We have been working

harder to integrate with the domestic commercial department and also with the

store investments department to improve the physical structure, thus increasing

store productivity. I believe this is how we are going to grow in Rio de Janeiro and

we should intensify our efforts in the second half.

Gustavo Oliveira, the Citi Group – According to you, Sendas is considered top line.

What about the rest of the Group, the other Pão de Açúcar stores, do you think

they can grow in the top line segment and in productivity or do you think you can

improve costs?

José Roberto Tambasco – Well, there is always room to win, this is our challenge

and, fortunately, we have been achieving significant results. We have even been

highlighting the growth of Pão de Açúcar stores and, this year, we have focused on

strengthening the growth of new Pão de Açúcar stores. Caio has already

mentioned that six new stores will be opened this year and we have been trying to

increase store performance for same stores, even with the aggressive expansion

plan.

Gustavo Oliveira, Citi Group – My second question is about financial expenses.

You had a really favorable mark-to-market result. Can you explain how you

reached this benefit, your positive amount vs. last year’s negative amount? I’d like

you to clarify this figure.

Aymar – Our mark-to-market is the liability of our debt swaps. Regarding the first

half, the difference between the current CDI and future CDI dropped considerably.

That is why we had a gain in the mark-to-market this quarter. But this is simply an

accounting effect since the only installment left to mark to market, taking into

account our current procedures, is the liability of our swaps, the liability in CDI. We

do not mark-to-market other instruments.

Gustavo Oliveira, the Citi Group – So, the positive result was due to the strong

drop in CDI?

Aymar – Exactly.

Gustavo Oliveira, the Citi Group – Okay. Then, if not for this, you would have a

near-zero result?

Aymar – The Idea is that for a constant CDI or a CDI that varies less, this swap

liability mark-to-market in fact tends to be close to zero.

Gustavo Oliveira, the Citi Group – Okay. Perfect. Now, my last question.

Abilio Diniz – Gustavo, this is Abilio. How are you?

Gustavo Oliveira, the Citi Group – I’m good, Abilio.

Abilio Diniz – Great. After the GPA DAY meeting, we had a great conversation

here at the Company’s headquarters and I would like to ask if you are surprised

with our results, if you are pleased with our results?

Gustavo Oliveira, the Citi Group – I believe the results show great stability, Abilio.

In my opinion this is important, this is what the market really needed. I think this

makes all the investors extremely happy since share prices are going up, and I

think this was one of your concerns and the market is really pleased with this

result. In my opinion, stability is important for Pão de Açúcar.

Abilio Diniz – Thank you, Gustavo.

Gustavo Oliveira, the Citi Group – The results are stable, they are much better and,

in my opinion, investors really like it. My last question is related to your same store

sales. I know that e-commerce is included in the same store sales results. By my

calculations, according to a figure you all had mentioned, 50% growth, your same

store sales is around 8%, 9%. Is this a reasonable figure to estimate the same

store sales growth, excluding e-commerce growth?

José Roberto Tambasco – We are always expecting more. Concerning these

figures, I would say they are not accurate since we are doing better than the

guidance presented, as explained by Enéas. Our result is not really focused on one

or another business model or a specific geographic region. Fortunately, our sales

performance has been very good for all formats, and as Enéas mentioned, Assai,

Pão de Açúcar stand out, as well as Extra and non-food products, which have a

slightly higher e-commerce impact. We always expect figures higher than the

current ones, but our figures have been showing that we are in line with the

guidance presented for the year and we expect to surpass these figures,

regardless of the performance of e-commerce as you have already pointed out,

which stands out the most, no doubt.

Gustavo Oliveira, Citi Group – All right. Do you plan to disclose the e-commerce

results, at least referring to sales, so we can separate this effect?

Caio Mattar – Good morning, Gustavo. No, we do not plan to disclose the e-

commerce separately. This is strategic, it’s part of the Extra format and we will not

disclose it separately.

Cristina Sarian, Neo Investimentos – Good morning, everyone. Congratulations on

the results. I have three questions. The first one is really quick: considering that

you expect to open stores this year according to each format, the area expansion

expected for the year is around 5% vs. 10% which, if I am not mistaken, was

estimated in the GPA DAY guidance. Has this figure been revised from 10% to 5%,

or I am miscalculating something? This is my first question.

José Roberto Tambasco – Your calculation is correct. At GPA DAY, the sales

increase guidance was 4.6%, excluding Ponto Frio. If you include Ponto Frio, this

figure changes and surpasses 10%, but we are on the way to reaching the 4.6%

guidance.

Cristina Sarian, Neo Investimentos – My second question is also about the GPA

DAY guidance. Regarding the R$40 billion in income for 2012, I would like to know

if you could give us more details on how you arrived at this figure, because,

according to my calculations, the area will be expanded by nearly 30% in a four-

year period, considering inflation of nearly 20% for the four-year period, you would

have room to improve sales per m². According to my calculations, you would need

over 10%, 12% p.a. to reach the R$40 billion. I would like to know if you could tell

us how you arrived at R$40 billion and whether this figure is still valid or if, after the

planning meetings held in the past months, this figure has been revised. This is my

second question.

Enéas Pestana – Good morning, Cristina. How are you?

Cristina Sarian, Neo Investimentos – I’m fine. Good morning, Enéas.

Enéas Pestana – It is difficult to give you details. We obviously talked about this at

GPA DAY to contextualize where we’re coming from, where we’re going and where

we’re at. So we didn’t intend to give you a detailed disclosure since this is part of

our strategic plan, which is updated every year and involves, besides organic

growth, the intense growth of the different business segments. So we have normal

business growth, a very aggressive expansion and strong business identification

such as ―dot com‖ for the following periods. Unfortunately we cannot tell you more

than that since this is a long-term objective, and not an unsupported goal. In our

strategic planning cycle, we detail strategic issues and their values are shaped to

reach long-term goals and are discussed in detail with our shareholders. So we

have to build the conditions for reaching a long-term goal and we aren’t able, we

shouldn’t, we can’t disclose it in detail since that implies disclosing strategic topics,

strategic moves we should make in the future.

Cristina Sarian, Neo Investimentos – So, this might include some small acquisition.

I mean, the R$40 billion figure does not necessarily represent organic growth, it

could include the acquisition of a drugstore chain, not necessarily a chain as big as

Ponto Frio, and obviously this figure could be much larger, but could include non-

organic growth. Is that correct?

Enéas Pestana – It could, but it doesn’t. When we prepare the strategic plan and

the budget, we do not include acquisitions. An acquisition can replace the organic

growth, since there are limits to investments and cash generation, but the plan

doesn’t include acquisitions. But it could, since acquisitions might happen and

maybe replace some organic growth.

Cristina Sarian, Neo Investimentos – My last question is very fast. Could you talk

about sales in July and the beginning of August? We know that the second half is

considered a more difficult comparison basis for the Company, but can you already

feel the slowdown in the same store sales growth rate? Thank you.

Ramatis Rodrigues – In the second half the market will tend to continue being

strong. We are still in line with our guidance, with the trend of obtaining gains in

market share. In the first half we posted growth of up to two times our competitors’

growth and this trend should continue in the second half.

Cristina Sarian, Neo Investimentos – Thank you very much.

Juliana Rosembaun, from Itaú – Hello. Good morning everyone. Enéas, in your

initial presentation you mentioned that now, with the acquisition of the remaining

40% of Assai, you would be able to improve the operating efficiency of the format.

Why? I mean, what were you not able to accomplish before having 100% of the

company?

Enéas Pestana – Good morning, Juliana. When we had a partner there, we had to

keep the Company open with committees, executive finance boards, CEOs and

board meetings. All the accounting was done there, controllership, management

control, reports and systems used belonged to the original partners, to the original

Assai. We maintained Assai’s original management system since the managers

were our partners so they were used to managing based on their own instruments.

As we adopt Pão de Açúcar management, taking advantage of the partners’ advice

during the transition about back office, transactional, accounting, management

control, information technology and several other areas, we are able to seek a

higher synergy taking advantage of Grupo Pão de Açúcar’s structure, including the

shared service center. This will certainly bring savings to Assai and a dilution in the

use of Pão de Açúcar’s structure.

Juliana Rosembaun, Itaú – Just to clarify, would these savings refer to general and

administrative expenses? And, could you tell us the percentage of Assai’s

operating expenses and general and administrative expenses within this 12%?

Enéas Pestana – Let me think of an answer for you while José Roberto talks about

synergies related to purchasing and expansion.

José Roberto Tambasco – Juliana, with regards to expansion, Pão de Açúcar’s

acquisition of the 40% interest that belonged to the partners, transferring the

management to Pão de Açúcar (before the management belonged to Assai’s

partners), allows us to seek the expertise of Rodolfo and Luiz about what they

didn’t have time to do, which in this case was the company’s expansion. Both of

them are very involved in Assai’s aggressive expansion project, and now that they

have more time, they are helping us, which will allow us to speed up the process.

Additionally, now, for the commercial and logistics department, we have the

opportunity to create efficiency gains in Assai’s operations, which should allow us

to greatly improve the operation, both from existing stores and new Assai stores.

Enéas Pestana – Juliana, looking at the breakdown, it is difficult to answer your

question since it would be very explicit if I told you exactly where we could see

reductions. Why? Because when Zé Roberto talks about logistics or marketing and

when I talk about management control, accounting and IT, we are talking about

selling, general and administrative expenses, i.e., both expenses with selling, and

administrative expenses, and probably a reduction in the cost of goods sold due to

more efficient purchase management and using the best parameters for each

product category. So we can say (and monitor this in the next quarters) that we are

expecting to reduce Assai’s costs, which will also be reflected in CBD. The effect

will be very small at CBD because Assai still doesn’t account for a major part of our

results, whereas in Assai it should be significant.

Juliana Rosembaun, Itaú – I would like to talk about the Globex merger. Have you

already decided on the integration of Globex’s card-related financial operations

with CBD? Have you already decided on any model related to the online platform

integration of both companies? Also following this line, what have you decided

about shareholding, the Globex.com minority shareholders?

Enéas Pestana – Well, Juliana. Nobody has asked yet, but I would like to make it

clear that we will merge with Globex in July. CBD’s Board meeting that approved

the merger was held on the 7th, so the merger will only happen in July. As for

shareholding, we are currently implementing what has been disclosed as an

acquisition process, acquisition engineering, both regarding the controlling and the

minority parties. We are in the middle of the capital increase period, which was

carried out to allow the controlling and the minority parties who wanted to

exchange their Grupo Pão de Açúcar Class B par value preferred shares. After

that, there is the public tender offer, which is also a possibility for the minority

shareholders’ to leave. This is currently in progress and will take at least another

ninety days to be concluded. Only then we will know whether minority shareholders

left, remained or left by means of the public tender offer. As soon as we know, we

will let you know.

Juliana Rosembaun, from Itaú – All right. So you still have not decided anything

about the online financial operation integration?

Enéas Pestana – This is also in progress. Investcred, a joint venture that belongs

50% to Globex and 50% to Unibanco, Itaú Unibanco now – already had an

exclusivity agreement which is valid until October, 2011. So, until then, there is

nothing we can do. We are glad to have Itaú Unibanco/FIC as a partner so we will

also be glad to have Investcred as a partner. There is a lot of synergy to be

consolidated between FIC and Investcred. Of course we will be careful with any

synergy and integration of Pão de Açúcar companies or businesses with Globex

when there are minority shareholders or different shareholders in the companies

since, clearly, we have to be transparent. This does not mean we are not going to

capture economies or synergies, but this has to be very transparent and with clear

cost sharing agreements, which will be disclosed as they happen. Since we are

going to disclose that, the financial issue is in progress. Soon we will be able to

present the way things are going to work with Investcred Itaú. All I can tell you now

is that the FIC model prevails over the Investcred model. FIC has already gone

through an important learning curve, currently posting good and improving results.

Therefore, the FIC model definitely prevails from the operational standpoint and, in

addition, discussions are in progress. I will give the floor to Caio, who will talk about

the ―dot com.‖

Caio Mattar – Good morning. As for the ―dot com,‖ we are still analyzing this. I

mean, there is a lot of synergy to be absorbed from both Extra.com and Ponto Frio,

which has a very good operation, the company is doing a good job. We are

working together, in a working group, to decide where to improve and how we can

do it together.

Juliana Rosembaun, Itaú – That’s great. Thank you.

Irma Sgatz, Goldman Sachs – Hi, good morning everyone. I would like to talk

about the margins. You said that operating costs dropped 90 basis points in the

quarter, but I believe that the 60 basis point impact of the tax changes on the gross

margin is embedded in this figure. I believe that with higher net revenues, the

percentage of operating costs in net sales should drop due to these tax changes. I

would like you to clarify that, please. Thank you.

Enéas Pestana – Good morning, Irma. As I said in the beginning, the increase in

net sales through tax substitution or migration, the continuous migration of

products to the tax substitution regime, increases net sales and the cost of goods

sold at the same time that the sales taxes line decreases. The increase in net sales

caused by this effect affects both the gross margin and the vertical analysis. We

highlight the gross margin since this is a sensitive line so it’s important to explain

its effect. It would even be worth explaining this effect in every line since the effect

happens in the base, in the denominator used for the vertical analysis. There are

also effects on costs of nearly 30 basis points, as you have previously mentioned,

which also affects EBITDA and the other lines. So, your analysis is correct. I tried

to summarize it at the beginning when I said that this affects the 100 base and,

therefore, it affects the vertical analysis of the results, not only for our Company,

but for every company in the states that are migrating to this tax regime. I hope that

cleared it up for you.

Irma Sgarz, Goldman Sachs – Thank you very much. That was exactly my

question. I have another question. When you talked about a more mature dividend

policy, what did you mean exactly? You are now paying 25% on net income. Will

this change in the future since the acquisition of Globex was integrated and you

feel comfortable with your balance sheet or do you expect to increase that

percentage from now on, will you focus on defense or CAPEX instead of

dividends?

Enéas Pestana – Good question. It is important to talk about the dividend policy.

When I said mature, I meant: when a company is willing to pay dividends in

advance its means that its results have to be consistent and sustainable enough

for it to believe that its results in the following year will be higher than the dividends

it paid in advance. So, let’s say that the Company’s increased consistency and

profitability makes us mature or makes us trust the generation of future results to

be able to say: I can pay dividends in advance because I know my profit in the year

will be higher than this amount and, therefore, there is no problem in paying

dividends in advance. But this is not the only thing involved. The Company must

have a solid capital structure and liquidity, cash generation that allows paying the

benefit in advance, but not at the expense of a reduction in investments, CAPEX or

any other thing that might be important for the Company’s growth. Therefore, if you

put together the level of trust reached by Grupo Pão de Açúcar, the growing, solid

and consistent results we have been able to achieve, with a solid capital structure,

liquidity and low level of indebtedness, we believe that paying dividends in advance

will guarantee liquidity to shareholders, in addition to being an economic gain. This

is not related to Globex or any other specific issue, but is our concern with our

shareholders, investors, since we worry about creating a transparent policy for the

Company’s shareholders. So this is the only thing behind the new dividend policy.

Irma Sgarz, Goldman Sachs – Thank you.

Marcelo Luna, Banif – Good morning, ladies and gentlemen. Congratulations on

your results. I have two or three quick questions. The first one refers to the top line

segment, the gross sales. I noticed that the growth in the quarter was mainly driven

by the Pão de Açúcar, Extra, Assai and CompreBem formats. I would like to know

if you can talk a little about openings and volume trends vs. prices in the quarter.

We have probably seen prices being stable or slightly decreasing and volumes

increasing fast. I would like to know if you can confirm that for the second quarter,

for the formats mentioned above, and if you can talk about the scenario for the

second half. Does Pão de Açúcar expect these formats to continue leading top line

growth and, I know you have already talked about guidance and maintenance, and,

if I am not mistaken, you have growth guidance of real 2.5% in same stores sales

for 2009 and, in the first quarter, this figure already exceeded real 3%. I would like

to know if you expect the top line growth to be higher than that forecasted at GPA

DAY. Thank you. This is my first question.

José Roberto Tambasco – First of all, not a correction, but a confirmation.

According to our guidance, we are expecting real sales growth above 2.5%, which

means that for us the 2.5% is basic, our growth should be above that, and that is

what we are doing. Talking about Sendas and Pão de Açúcar, we can see that

there are great opportunities to obtain better performance from the existing stores,

higher integration of regional stores, such as Rio de Janeiro with our whole

commercial structure, improvement of stores due to our investments in remodeling

stores. So we expect to keep sales up, improving performance in the Company’s

formats and regions. Ramatis can talk about price pressures or the increase in

volumes vs. growth, price variation. Ramatis, would you like to say something?

Ramatis Rodrigues – Marcelo, when we talk about prices, price objectives, our

price fluctuation is in line with inflation. We have not had significant deviations.

Regarding volumes, there is naturally a decrease in some categories, which are

offset by other categories – this will depend on the commodities. For instance,

consider milk, which right now is high but is going down. There are other

categories with similar behavior. But, in our product mix, this does not impact the

total. In the second half, with our strategy focusing mainly on anniversaries--in

August we have the anniversary of the Pão de Açúcar format, and then we have

the anniversaries of all the other formats, in addition to Children’s Day and finally

Christmas--we should maintain this strategy and increase customer traffic in our

stores. And we see that this effect is gradual, incremental since it is recursive. The

customer continually returns, buys again, makes purchases in our stores. We

notice a higher frequency of customers in our stores, which has a major impact on

our sales.

Marcelo Luna, Banif – Great, excellent. Could you talk about the price trend of food

products vs. non-food products for the second half? What are your expectations

when you focus on household appliances and other items vs. food? Do you expect

similar price behavior for both segments? Can you talk about this?

Ramatis Rodrigues – The trend is for stability. There is a new variable as of the

end of October: the end of the reduced excise tax for household appliances. This

has been discussed and there might be an extension. This type of thing is

important because, as the excise tax demonstrated, our average growth in the

household appliances segment was nearly 15% while the market was dropping.

With the excise tax reduction, our growth was 30% to 40% whereas the market

was growing 15%. So we can see the oscillations, mainly those impacted by tax

changes, which generate higher sales elasticity, but in terms of price trends in

function of increased industry prices, prices should remain stable.

Marcelo Luna, Banif – Great. And you have already mentioned the excise tax.

Could it be extended? Do you have a position so far or this is just your

expectation?

Ramatis Rodrigues – No, this is being discussed at the government level. Retail is

totally behind industry and they are both discussing with the government the

importance of maintaining the reduced excise tax. Actually, there have been

meetings to discuss its impact.

Marcelo Luna, Banif – Great, excellent. I have another question about the

performance of stores converted into Assai. I would like you to remind us of the

objective of the number of Assai-converted stores. I understand that the conversion

is the same presented at GPA DAY, that you have Extra and Assai stores and

many opportunities for cross selling, and whose expectations for same store sales

growth are higher. Therefore, I do not know if you can tell us how many stores

does Pão de Açúcar plan to convert next half and what is the performance of

converted stores vs. the average performance of the Group?

José Roberto Tambasco – I believe that most conversions have already been done

– we converted stores into Assai stores that could have better performance, which

has happened indeed. In the past calls I said that these conversions have been

providing us with an average increase of two or three times the increase of sales in

these stores. We have been experimenting with putting the Assai model next to a

hypermarket, such as the Extra store on João Dias Avenue. This is not really a

conversion, we are simply using the same site to capitalize on both models, which

has had positive results. We are currently studying those stores that we believe

can continue providing us with sales gains. Whenever we have this evaluation, we

will do the conversion. Right now I do not know the number of conversions and the

stores that will be converted; they can be from any of our formats, Pão de Açúcar,

CompreBem, Sendas or Extra. Next year, or in the next eighteen months, we will

focus even more on the organic growth of our new Assai stores. We have already

disclosed that we expect to open 30 new Assai stores in the next eighteen months,

not considering conversions.

Marcelo Luna, Banif – Great. And my last question is related to Ponto Frio’s

consolidation. If I am correct, from the third quarter on, we will be able to see the

consolidated results. I am not sure whether it has been mentioned earlier on or not

and if you can talk about what we should see in the consolidation. I mean, I think

you haven’t talked about restructuring costs yet. What are your expectations?

Earlier in the call, you commented that due diligence is being done and will be

concluded in August. So, if possible, could you comment on the level of

restructuring costs we might see in 2009? When do you think you might be able to

give the market some more detailed information about the impact of consolidation

on the Group as a whole? Thank you very much.

Enéas Pestana – As for consolidation, you are correct. Our consolidation starts

from July on, so Globex’s first quarter of consolidation will be during the third

quarter. Obviously, we will make a disclosure that allows you to analyze it

separately, so that you can finally make your own analysis without any problems.

What happens now is that Globex will close its balance sheet for the second

quarter, and this is their last balance sheet before acquisition. So this balance

sheet to be disclosed during the next quarters is already in Grupo Pão de Açúcar’s

sight. I will hand off to Jorge Herzog for him to talk about your other questions.

Jorge Herzog – Hi, Marcelo. As I had previously mentioned, right now we are doing

all the analysis, checking all remaining potentials and always considering, as

Enéas has said, transparency for shareholders from all the companies and, within

this plan by the Board of Directors, we will finish this analysis by the end of August.

We are also presenting the business plan in which we will be able to see more

effectively how Globex’s results will be and present them within 70 days.

Marcelo Luna, Banif – All right. Thank you.

Alan Cardoso, Ágora Corretora – Actually, someone had already asked my

question. It was related to the 2012 guidance. So I will pass. Thank you.

Luis Cesta, Banco Espírito Santo – Good morning, everyone. I have two questions

but I will try to be brief. The first question is related to the real estate operations. If

possible, I would like you to tell us about how the structuring of this business within

Pão de Açúcar is going during this quarter and also when we can expect to see

figures from this operation that are separate from the Group’s retail operations. My

second question is related to the Sendas S.A interest in Sendas Distribuidora. The

text of the quarterly release hasn’t changed in a while, so I wanted to know if you

still believe that Sendas S.A. stake will be acquired by Grupo Pão de Açúcar this

year or are we to expect this to happen next year? Thank you.

Caio Mattar – Concerning real estate, we have progressed quite a bit with GPA

Malls & Properties. We have a separate team working on it. There are some

internal adjustments to be made regarding internal rents among operations,

formats and the new company itself. Nevertheless, the company is working on

some projects to be released and two or three of them are subject to some final

studies. We believe these numbers, which are separated, will be disclosed in the

fourth quarter.

Enéas Pestana – As to your question about Sendas’ stake, I find hard to say it

could happen this year. It’s unlikely. We have been talking to them and if we were

to follow the agreement word for word, in 2007 they communicated the put option,

but since there is an issue with the company’s evaluation, both of us, especially

them, chose to reach an agreement or, at least, talk about it. Basically, we have

nothing concrete to present you with. We have been discussing the possibility of

acquiring the Sendas S.A. stake, but this should be a drawn-out negotiation.

According to the agreement, Companhia Brasileira de Distribuição is allowed to do

it through a stock swap and not money or lock-up provisions. One third of it is

released either right away or soon after the agreement. Two thirds are released

three years later and other one third, six years after the agreement. This is what is

in the agreement, but we are not exactly looking at the contract. We have been

discussing this with them for a more suitable and easier way out, but as of now, we

haven’t established anything. It doesn’t change a thing regarding the Company’s

operations. Our relation with our partners is very good. Nobody is fighting, arguing

or hiring lawyers. Caio and I have been talking directly to Arthur Sendas Filho and

there are mutual feelings of friendship and respect in our talks. We expect to reach

a balance, an agreement, but I have nothing settled to disclose or inform you

about, okay?

Luis, Banco Espírito Santo – Okay. Thank you.

Marcel Moraes, Credit Suisse – Good afternoon, everyone. My first question is

about Ponto Frio, so I think either Jorge Herzog or Pestana could answer it. How

much do you plan investing in remodeling its stores? How many stores do you

think should be remodeled for a, let’s say, more modern standard? Can you give

any numbers?

Jorge Herzog – Hello, Marcel. How are you? As we’ve said before, during this

evaluation process, we will also consider the need to remodel some stores. Today

we certainly have a more complete view of all the stores and this will also be in the

business plan we should present in the next 60 days.

Marcel Moraes, Credit Suisse – I think it may still be a while before we have certain

answers, maybe they fall into the same group, but I will ask anyway. Theoretically,

for the Ponto Frio business, what do the level of sales per square meter and the

EBITDA margin need to be for the company to give adequate return?

Jorge Herzog – Concerning sales per square meter, today we have our own

internal benchmark and we obviously will define what will be the best standard for

us to include in the proposal we will present. So, again, all these points will be

considered for further analysis of the numbers to be presented together.

Marcel Moraes, Credit Suisse – About the margin, probably will be the same. I

have another question for Pestana: the general expenses were approximately

R$100 million and they have decreased when compared to any other recent

quarter but I am not sure if it was due to seasonality, if there even was any. Last

year you had a non-recurring expense, so I don’t know how much of a decrease

there was or the reason for it.

Enéas Pestana – Good morning, Marcel. I was checking the numbers and you

have mentioned a reduction of R$100 million in expenses and…

Marcel Moraes, Credit Suisse – No, I’m sorry, that didn’t come out right. The

amount of R$100 million is for general expenses in the second quarter and then

compared to R$120 million....

Enéas – Okay, perfect. Thank you for helping me with that. I was looking for R$100

million in savings. Savings really are very concentrated compared to last quarter

but that has nothing to do with non-recurring effects. Last year’s non-recurring

effect happened during the first quarter, so this is a good comparison. Notice that

selling expense increased 20%, whereas general and administrative expenses

decreased 20%. Selling expenses can be explained by seasonality, as I have

mentioned about the Easter products, for example, and several other factors. As to

general and administrative expenses, it is exactly this expense group that is easier

to control. So, this efficiency gain, being able to reduce these expenses should

remain consistent and maybe they can even generate some sort of gain for

everything we have mentioned here. Selling expenses for the next quarters,

especially for the third, should see a small decrease because there are no holidays

like Easter. However, with the anniversaries of our stores, they tend to increase

again during the last quarter.

So I mean, I can assure you we have a structured process for controlling costs.

There is no magic or miracle or anything top down; it’s tough work done by working

groups with a strategic vision, and they control costs like Claudio Galeazzi loves to

do it—everything is questioned, any sort of cash outlay, not just expense, is

questioned. So, this is being incorporated into the Company’s culture, at the same

time the budget culture has been growing stronger in the past two years. So what I

can say is that this result of controlled expenses is the fruit of all this, I mean, it’s

not top down, it’s not about holding back on projects, it’s not about layoffs, and

that’s why it’s been so consistent and we expect it to be consistent for some time to

come.

Marcel Moraes, Credit Suisse – It must be originating several lines, because it’s

the result of an initiative. Now, how should I see these savings when I’m comparing

2008 and 2009? Does it allow general expenses to be stable in nominal terms?

Just so we know what to expect.

Enéas Pestana – I would say that expecting zero nominal growth is reasonable,

even though I expect it to be better than that, as you can see in the performance in

the quarter. General and administrative expenses fell 7% in the quarter, so I would

say that generally, there is no variable effect on these expenses. I think expecting

zero nominal growth would even be conservative.

Marcel – Great. Thank you very much.

Operator – Thank you, we now end the question and answer session. I will give the

floor to Mr. Enéas so he can make his final comments.

Enéas – In closing, I want to truly thank you for your attention, patience, interest

and all your questions. We are very strong, motivated and at your service to make

this Company the one we deserve and we have waited so long for. Claudio

Galeazzi is on his very deserved vacation now, but he has sent you all his best.

Have a nice day, everyone.

Operator – Thank you. This conference call on Grupo Pão de Açúcar’s results is

closed. The Group’s Investor Relations Team is available to answer any other

questions you may have. Thank you all for participating in this call and have a nice

day.