_________________________________       

3B. Capitalization and Indebtedness

Not applicable.

3C. Reasons for the Offer and Use of Proceeds

Not applicable.

3D. Risk Factors

An investment in the ADSs or our common shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information in this annual report before making an investment decision. The risks described below are those that we currently believe may materially affect us. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. This annual report also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” The trading price of the ADSs and our common shares could decline due to any of these risks or other factors, and you may lose all or part of your investment. Our actual results could differ materially and adversely from those anticipated in these forward-looking statements as a result of certain factors, including the risks facing our Company described below and elsewhere in this annual report.

For purposes of this Item 3D. Risk Factors, when we state that a risk, uncertainty or problem may, could or will have an “adverse effect” on us or “adversely affect” us, we mean that the risk, uncertainty or problem could have an adverse effect on our business, financial condition, results of operations, cash flow, liquidity, prospects, reputation and/or the trading price of our common shares and ADSs, except as otherwise indicated. You should view similar expressions in this Item 3D. Risk Factors as having similar meanings.

Risks Relating to Brazil and Colombia

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. Brazilian political and economic conditions may adversely affect us and the trading price of the ADSs and our common shares.

The Brazilian government has frequently intervened in the Brazilian economy and has occasionally made significant changes to monetary, credit, tariff, tax and other policies and regulations. The Brazilian government’s actions to control inflation have often involved, among other measures, increases and decreases in interest rates, changes in tax and social security policies, price controls, currency exchange and remittance controls, devaluations, capital controls and limits on imports. Our business, financial condition, results of operations and the trading price of our ADSs and common shares may be adversely affected by changes in Brazilian policy or regulations at the federal, state or municipal level involving or affecting various factors, such as:

Uncertainty over whether the Brazilian government will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and securities issued abroad by Brazilian companies. These uncertainties and other future developments in the Brazilian economy may adversely affect our business activities, and consequently our results of operations, and may also adversely affect the trading price of the ADSs and our common shares. Moreover, the business and results of operations of Brazilian companies as well as the trading price of their securities, including ours, may experience heightened volatility due to the Brazilian presidential elections, which will be held in October 2022.

Political instability has adversely affected and may continue to adversely affect our business, results of operations and the trading price of the ADSs and our common shares.

The Brazilian economy has been and continues to be affected by political events in Brazil, which have also affected the confidence of investors and the public in general, adversely affecting the performance of the Brazilian economy and increasing the volatility of securities issued by Brazilian companies.companies, including the trading price of the ADSs and our common shares.

Brazilian markets have experienced heightened volatility due to uncertainties from ongoing investigations onrelated to allegations of money laundering, corruption and corruption conductedmisconduct by government officials and legal entities and individuals from the private sector carried out by the Brazilian Federal Police and the Office of the Brazilian Federal Prosecutor. These investigations have adversely affected the Brazilian economy and political environment. We have no control over and cannot predict developments in these investigations nor whether the ongoingfuture investigations or allegations will result in further political and economic instability, or if new allegations against government officials and/orwhich could adversely affect the trading price of securities issued by Brazilian companies, will arise in the future.including ours.

In addition, any difficulty by the Brazilian government in obtaining a majority in the national congress could result in congressional deadlock, political unrest and demonstrations or strikes, which could adversely affect us. Uncertainties relating to the implementation by the Brazilian government of changes related to monetary, fiscal and social security policies, as well as to related laws may contribute to economic instability. These uncertainties and additional measures may heighten the volatility of the Brazilian securities market, including in relation to our ADSs and our common shares.

Brazilian government efforts to combat inflation may hinder the growth of the Brazilian economy and could harm us and the trading price of the ADSs and our common shares.

Historically, Brazil has experienced high inflation rates. Inflation and certain actions taken by the Brazilian government to curb it, including the increase of the SELIC rate, the basic interest rate in the Brazilian banking system, established by the Central Bank, together with the speculation about governmental measures to be adopted, have materially and adversely affected the Brazilian economy and contributed to economic uncertainty in Brazil, heightening volatility in the Brazilian capital markets and adversely affecting us. Brazil’s annual inflation, as measured by the general price index (Índice Geral de Preços – Mercado), or IGP-M index, was 17.1% in 2021, 23.1% in 2020 and 7.31% in 2019 and 7.54% in 2018.2019. Brazil’s Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo), or the IPCA, recorded inflation of 3.8%10.1%, 4.5% and 4.3% in 2021, 2020 and 4.5 in 2018, 2019, and 2020, respectively, according to IBGE. In 2021, 2020 and 2019, the SELIC rate was 9.25%, 1.90% and 4.90%, respectively. The Monetary Policy Committee (Comitê de Política Monetária), or COPOM, has adjusted the official interest rates in situations of economic uncertainty to meet the economic goals established by the Brazilian government. In February 2022, the COPOM increased official interest rates from 9.25% to 10.75%. As of the date of this annual report, the official interest rate in Brazil is 11.75%.

TightInflationary pressures may hinder our ability to access foreign financial markets or lead to government policies to combat inflation that could harm us or adversely affect the trading price of the ADSs and our common shares. In addition, we may not be able to adjust the prices we charge our customers to offset the effects of inflation on our cost structure.

Brazilian government measures to combat inflation that result in an increase in interest rates may have an adverse effect on us, as our indebtedness is indexed to the interbank deposit certificate (Certificados de Depósito Interbancário), or CDI, rate. An increase in interest rates may affect not only the cost of new loans, but also the cost of our current indebtedness, increasing our financial expenses. This increase, in turn, may adversely affect our cash availability and ability to meet our financial obligations. In addition, tight monetary policies with high interest rates have restricted and may restrict Brazil’s growth and the availability of credit. credit, which adversely affects our customers’ purchasing power and consequently our net operating revenue.

Conversely, more lenient government and Central Bank policies and interest rate decreases have triggered and may trigger increases in inflation, and, consequently, growth volatility and the need for sudden and significant interest rate increases, which could negatively affect our business and increase the payments on our indebtedness. In addition, we may not be able to adjust the prices we charge our customers to offset the effects of inflation on our cost structure.

Recently, the Monetary Policy Committee (Comitê de Política Monetária), or COPOM, has decreased official interest rates, which have reached historical record lows. We cannot assure that interest rates will remain at current low levels in the future. Any future measures adopted by the Brazilian government, including further reduction in interest rates, intervention in the exchange market and the implementation of mechanisms to adjust or determine the value of the Brazilian real may trigger inflation, adversely affecting the overall performance of the Brazilian economy.

financial expenses. Furthermore, interest rate decreases may affect our ability to maintain interest margins we charge on installment sales, which could have a negative effect on our net operating revenue. Brazilian government measures to combat inflation that result in an increase in interest rates may have an adverse effect on us, as our indebtedness is indexed to the interbank deposit certificate (Certificados de Depósito Interbancário), or CDI, rate. Inflationary pressures may also hinder our ability to access foreign financial markets or lead to government policies to combat inflation that could harm us or adversely affect the trading price of the ADSs and our common shares.

Exchange rate volatility may adversely affect the Brazilian economy and us.

The real has historically experienced frequent and substantial variations in relation to the U.S. dollar and other foreign currencies. In 2017, the real depreciated against the U.S. dollar, reaching R$3.308 per US$1.00 as of December 31, 2017. In 2018, the realfurther depreciated against the U.S. dollar in comparison to 2017, reaching R$3.875 per US$1.00 as of December 31, 2018. In 2019, the real further depreciated against the U.S. dollar in comparison to 2019,2018, reaching R$4.0301 per US$1.00 as of December 31, 2019. In 2020, the real further depreciated against the U.S. dollar in comparison to 2019, reaching R$5.1967 per US$1.00 as of December 31, 2020. In 2021, the real further depreciated against the U.S. dollar in comparison to December 31, 2020, reaching R$5.5805 per US$1.00 as of December 31, 2021. As of May 13, 2022, the real-U.S. dollar exchange rate was R$5.1075 per U.S. dollar.

The real may substantially depreciate or appreciate against the U.S. dollar in the future. Depreciation of the real against the U.S. dollar could create inflationary pressures in Brazil and cause increases in interest rates, which negatively affects the growth of the Brazilian economy as a whole, curtails access to foreign financial markets and may prompt government intervention, including recessionary governmental policies. Depreciation of the real against the U.S. dollar has also, including in the context of an economic slowdown, led to decreased consumer spending, deflationary pressures and reduced growth of the economy as a whole. Depreciation would also reduce the U.S. dollar value of distributions and dividends and the U.S. dollar equivalent of the trading price of the ADSs and our common shares. As a result, we may be materially and adversely affected by real/U.S. dollar exchange rate variations.

Economic and political conditions in ColombiaAny further downgrading of Brazil’s credit rating may adversely affect our business, results of operations and the trading price of the ADSs and our common shares.

EconomicCredit ratings affect investors’ perceptions of risk and, politicalas a result, the yields required on indebtedness issuances in the financial markets. Rating agencies regularly evaluate Brazil and its sovereign ratings, taking into account a number of factors, including macroeconomic trends, fiscal and budgetary conditions, indebtedness and the prospect of change in Colombiathese factors. Downgrades in Brazil’s credit rating can lead to downgrades in our credit rating and increase the cost of our indebtedness as investors may require a higher rate of return to compensate a perception of increased risk.

In January 2018, Standard & Poor’s downgraded Brazil��s credit rating to BB- with a stable outlook, which it changed to positive in December 2019 and back to stable in April 2020. Most recently, Standard & Poor’s reaffirmed its rating and outlook in June 2021. In February 2018, Fitch downgraded Brazil’s credit rating to BB- with a stable outlook, which it affirmed in May 2019. In May 2020, Fitch adjusted its outlook to negative, which it most recently reaffirmed in May 2021. Since April 2018, Moody’s has maintained Brazil’s credit rating at Ba2 with a stable outlook, which it most recently reaffirmed in December 2020.

We cannot assure you that rating agencies will maintain Brazil’s sovereign credit ratings. Any further downgrade of Brazil’s credit rating could heighten investors’ perception of risk and, as a result, increase the cost of debt issuances and adversely affect our business, results of operations and the trading price of the ADSs and our common shares, as our operations in Colombia represented 33.3% of our total net operating revenue in 2020. Economic growth or contractions, inflation, changes in law, regulation, policy or future judicial rulings and interpretations of policies involving exchange controls and other matters such as (but not limited to) currency depreciation, inflation, interest rates, taxation, banking laws and regulations and other political or economic developments in or affecting Colombia may affect the overall business environment and may, in turn, adversely affect us.

President Iván Duque Márquez, who took office in August 2018, inherited high government spending levels, and measures to meet fiscal targets led to protests around the country in late 2019 and early 2020, paralyzing activities in the main cities in Colombia for days. We may be adversely affected by changes in government or fiscal policies, and other political, diplomatic, social and economic developments that may affect Colombia. We cannot predict what policies will be adopted by the Colombian government and whether those policies would adversely affect the Colombian economy and, consequently, us.

In March 2017, Fitch Ratings (“Fitch”) upgraded Colombia’s rating outlook from negative to stable due to the perceived reduction in macroeconomic imbalances as a result of the sharp reduction in the current account deficit, diminished uncertainties surrounding Colombia’s fiscal consolidation path due to the tax reform measures passed in December 2016 and the expectation that inflation would meet the Colombian Central Bank’s target. Fitch reaffirmed the “stable” outlook in May 2017. In December 2017, S&P downgraded Colombia’s long-term foreign currency sovereign credit ratings from “BBB” to “BBB-.” In February 2018, Moody’s Corporation (“Moody’s”) changed Colombia’s rating outlook from stable to negative. In April 2020, amid developments relating to the spread of COVID-19 and the collapse of oil prices, S&P changed the outlook of Colombia’s credit rating to negative and Fitch downgraded Colombia’s credit rating from “BBB” to “BBB-” with a negative outlook.

Any further downgrade of Colombia’s credit rating could adversely affect the Colombian economy and us. In 2017 and 2019, tax reforms were implemented, which included raising the VAT rate from 16% to 19%, increasing the withholding income tax rate for foreign providers from 15% to 20% and introducing further taxation in the context of the indirect transfer of shares of Colombian entities.securities.

Developments and the perception of risk in other countries may adversely affect the trading price of Brazilian securities, including the ADSs and our common shares.

The market value of securities of Brazilian and Colombian issuers is affected to varying degrees by economic and market conditions in other countries, including developed countries such as the United States and certain European and emerging market countries.

Investors’ reactions to developments in theseother countries may adversely affect the market value of securities of Brazilian and Colombian issuers, including the ADSs and our common shares. Trading prices on B3, for example, have been historically affected by fluctuation in interest rates applicable in the United States and variation in the main U.S. stock indices. Any financial crisis or significant developments, such as increase in interest rates in other countries, especially the United States, may decrease global liquidity and the interest of investors in thesecurities of Brazilian or Colombian capital markets,issuers, adversely affecting the ADSs and our common shares. Moreover, crises or significant developments in other countriesgeopolitical conflicts, such as the military conflict between Russia and Ukraine, have had and may continue to have an adverse effect on global capital markets may diminishand investors’ interest in securities issued by companies operating in emerging markets, which could have a negative impact on the trading price of Brazilian issuers, including the ADSs and our common shares, and their trading price, limiting or preventing our access to capital markets and to funds to finance our future operations at acceptable terms.shares.

The outbreak of communicable diseases around the world including the COVID-19,has led and may continue to lead to higher volatility in the global capital markets, adversely affecting the trading price of ADSs and recessionary pressure on the Brazilian economy. Any outbreak in Brazil could directly affect our operations, each of which may materially and adversely affect our business, financial condition and results of operations.common shares.

The outbreak of communicable diseases on a global scale has adversely affected and may continue to adversely affect investment sentiment and result in higher volatility in global capital markets and may have adue to increased concerns of the recessionary effectpressure on the Brazilian and Colombian economies.global economy Since December 2019, a novel strain of coronavirus known as COVID-19 has spread in China and other countries. In 2020, theThe COVID-19 outbreak has compelled governments around the world including in Brazil and Colombia, to adopt temporary measures to contain the spread of COVID-19 by means such as lockdowns of cities, restrictions on travel and public transportation, business and store closures, and emergency quarantines, among others, all of which have caused significant disruptions to the global economy and ordinary course of business operations across a growing list ofnumerous sectors and countries. The measures adopted to combat the COVID-19 outbreak, including new variants, have adversely affected and willmay continue to adversely affect business confidence and consumer sentiment. They have been, and may continue to be, accompanied by significant volatility in financialthe global capital markets and commodity markets as well as stock exchanges worldwide.

In Brazil, the stock market experienced a few automatic suspensions known as “circuit breakers”,breakers,” as a result of significant volatility in stock trading caused by investors’ aversionreactions to risk.the uncertainty related to the COVID-19 pandemic in the global economy and recessionary effect on the Brazilian economy. The B3 dropped 36.9% from January 1, 2020, to March 31, 2020, following the downfall of international equity markets. The trading price of our common shares was also adversely affected.

TheUncertainties related to the spread of new variants of COVID-19, especially if the measures to curb the spread of the virus lingers, may continue to have broader macro-economicmacroeconomic implications, including reduced levels of economic growth and possibly a global recession, the effects of which could be felt well beyond the time the spread of infection is contained. Many countries are implementing relief plans to reduce the effects of the COVID-19contained and adversely affect investment sentiment in the local and world economy. Due to the uncertainties related to the length of this novel virus, weglobal capital markets. We cannot estimate the additional impacts that thenew variants of COVID-19 may cause on the price and performance of our common shares and ADSs. Any material change in the Brazilian, Colombian

Risks Relating to Other Latin American Countries Where We Operate

The political and international financial markets or the Brazilianeconomic conditions of Colombia, Uruguay and Colombian economies as a result of these events or any developmentsArgentina may materially and adversely affect our business, financial condition and results of operations.

Any further downgrading of Brazil’s credit rating may adversely affectoperations and the trading price of the ADSs and our common shares.

Credit ratings affect investors’ perceptions of risk and, as a result, the yields required on debt issuances in the financial markets. Rating agencies regularly evaluate Brazil and its sovereign ratings, taking into account a number of factors including macro-economic trends, fiscal and budgetary conditions, indebtedness and the prospect of change in these factors.

Standard & Poor’s initially downgraded Brazil’s sovereign debt credit rating from BBB-minus to BB-plus in September 2015 and subsequently downgraded it to BB in February 2016, maintaining its negative outlook, citing Brazil’s fiscal difficulties and economic contraction as signs of a worsening credit situation. On January 11, 2018, Standard & Poor’s further downgraded Brazil’s credit rating from BB to BB-minus. In February 2019, Standard & Poor’s affirmed Brazil’s sovereign credit rating at BB-minus with a stable outlook. In December 2019, Standard & Poor’s affirmed Brazil’s sovereign credit rating at BB-minus with a positive outlook, further maintaining the sovereign credit rating at BB-minus, but revising the outlook on this rating from positive to stable in April 2020.

Moody’s placed Brazil’s Baa3 sovereign debt credit rating under review in December 2015 and downgraded it to Ba2 with a negative outlook in February 2016, citing the prospect for further deterioration in Brazil’s debt indicators, taking into account the low growth environment and the challenging political scenario. In April 2018, Moody’s maintained Brazil’s sovereign debt credit rating at Ba2, but changed its prospect from negative to stable, maintaining it in September 2018, citing the expected new government spending cuts. In May 2019, Moody’s affirmed Brazil’s sovereign credit rating at Ba2 and changed the outlook to stable, which rating and outlook were further reaffirmed by Moody’s in May 2020.

Fitch initially downgraded Brazil’s sovereign credit rating to BB-plus with a negative outlook in December 2015, citing the country’s rapidly expanding budget deficit and worse-than-expected recession and subsequently downgraded it to BB with a negative outlook in May 2016. In February 2018, Fitch downgraded Brazil’s sovereign credit rating again to BB-minus, citing, among other reasons, fiscal deficits, the increasing burden of public debt and an inability to implement reforms that would structurally improve Brazil’s public finances. In November 2019, Fitch maintained Brazil’s sovereign credit rating at BB-minus, citing the risk of tax and economic reforms and political instability. In May 2020, Fitch reaffirmed Brazil’s sovereign credit rating at BB-minus and revised the outlook on this rating to negative asAs a result of the impactour acquisition of the COVID-19 pandemic.

Any further downgradeGrupo Éxito on November 27, 2019, we started to have operations in Colombia, Uruguay and Argentina, which represented 36.6%, 7.5% and 3.4%, respectively, of Brazil’s credit ratingour net operating revenue for the year ended December 31, 2021. We are exposed to political and economic crises and declining purchase power of our customers in Colombia, Uruguay and Argentina, which may be prompted by several factors, primarily including:

Uncertainties related to economic and political conditions in Colombia, Uruguay and Argentina, including changes in government policies and regulations, may adversely affect the business environment in these countries, which could heighten investors’ perceptionadversely affect our results of riskoperations and as a result, increase the cost of debt issuances and adversely affect the trading price of the ADSs and our securities.common shares.

In particular, the Colombian government has frequently imposed additional taxes and enacted modifications to existing taxes related to financial transactions, income, value added tax, or VAT, and taxes on net worth. More recently, in September 2021, the Colombian government approved the increase in the general corporate income tax to 35%, which became effective in January 2022. New tax laws and regulations as well as changes in tax-related laws and regulations can create significant additional tax burdens on us and our businesses, adversely affecting our results of operations and financial condition. Moreover, our Colombian business and results of operations as well as the trading price of the ADSs and our common shares may experience heightened volatility due to the Colombian presidential elections, which will be held in May 2022.

Historically, Colombia has experienced several periods of violence and instability. Future violence and instability in Colombia may adversely affect the Colombian economy and our operations.

Colombia has experienced several periods of violence over the past six decades, primarily due to the activities of guerrillas, organized crime groups and drug cartels.

While there has been a reduction of guerrilla and criminal activity in Colombia following the peace agreement between the Revolutionary Armed Forces of Colombia, or FARC, and Colombian government in 2016 and the creation of certain programs and policies of the Colombian government, guerrilla and criminal activity persists in Colombia. Any escalation in the violence associated with these activities and effects associated with it could have a negative impact on the Colombian economy and on our business and results of operations.

In addition, the level of dissatisfaction of the Colombian citizens towards the public institutions of that country is increasing and has led to massive protests, acts of violence, vandalism and disturbances to the public order. These events could have a negative effect on the Colombian economy and on us.

Risks Relating to our Industry and Us

We face significant competition and pressure to adapt to changing consumer habits and preferences, which may adversely affect our market share and net income.

We operate mainly in the food retail industry in Brazil and Colombia, including the home appliances segment, which are highly competitive. We compete with other retailers based on price, product mix, store location and layout and services. Consumer habits are constantly changing, and we may not be able to anticipate and quickly respond to these changes. We face intense competition from other store formats and sub-segments within the food retail industry, especially the cash-and-carry sector, which has in recent years imposed significant competitive pressure on our hypermarket stores. We also face competition from small and regional retailers, mainly in the retail segment, and especially from those that operate in the informal segment of the Brazilian and Colombian economies. In addition, in our markets, particularly in the São Paulo and Rio de Janeiro metropolitan areas, we compete in the Brazilian retail sector with a number of large multinational retail food, general merchandise and cash and carry chains, as well as local supermarkets and independent grocery stores. In the home appliances sector, we also compete with large multinational chains and large or specialized Brazilian companies. Acquisitions or consolidations within the industry may also increase competition and adversely affect our market share and net income.

If we are unable to compete successfully in our target markets (including adapting our store format mix or layout, identifying locations and opening stores in preferred areas, and quickly adjusting our product mix or prices under each of our banners and segments) or otherwise adjust to changing consumer habits and preferences, such as online shopping, onincluding through mobile devices, we may lose market share, which would adversely affect our financial condition and results of operations.

Our traditional supermarkets and retail stores face increasing competition from internet sales, which may negatively affect sales of traditional channels, and our digital transformation strategy might not be an effective response to this emerging competition.

In recent years, retail sales of food, clothing and home appliances products over the internet have increased significantly in Brazil and in other Latin American countries where we have operations. We expect this trend to continue as more traditional retailers enter into the online retail field or expand their existing infrastructure related to internet sales. For example, in recent years, Amazon recently announced that it would focus more resources onhas been expanding its Brazilian business.operations in Brazil. Growth in the internet retail business of our competitors would likely harm not only our retail operations but also our internet retail operations. Internet retailers are able to sell directly to consumers, reducing the importance of traditional distribution channels such as supermarkets and retail stores. Certain internet food retailers have significantly lower operating costs than traditional hypermarkets and supermarkets because they do not rely on an expensive network of retail points of sale or a large workforce. As a result, internet food retailers are able to offer their products at lower costs than we do and, in certain cases, are able to bypass retailing intermediaries and deliver particularly high-quality and fresh products to consumers. We believe that our customers are increasingly using the internet to shop electronically for food and other retail goods, and that this trend is likely to continue, especially as a result of the COVID-19 pandemic.

Additionally, technology employed in retail sales of food and home appliances evolves constantly as part of a modern digital culture. For example, one of our competitors announced a partnership with a startup company for the opening of an automated grocery store run by a smartphone application. We may not be able to adapt to these changes quickly enough to meet our customers’ demands and preferences, as well as standards of the industry in which we operate.

We have a digital transformation strategy, but we cannot provide any assurance that our strategy will be successful in meeting customer demands or maintaining our market share in light of our competitors’ internet retail businesses. For information on our digital transformation, see “Item 4. Information on the Company—4A. History and Development of the Company—Changes in Our Business—Digital Transformation.” If internet sales in Brazil continue to grow, consumers’ reliance on traditional distribution channels such as our supermarkets and retail stores could be materially diminished, which could have a material adverse effect on our financial condition and results of operations.

The Brazilian and Colombian food retail industry isand home appliances industries are sensitive to decreases in consumer purchasing power and unfavorable economic cycles.

Historically, the Brazilian and Colombian food retail industry which includes the cashin Brazil and carry segment,other countries where we have operations has experienced periods of economic slowdown that led to declines in consumer expenditures.spending. The success of operations in the food retail and home appliances sectors depends on various factors related to consumer expendituresspending and consumer income, including general business conditions, interest rates, inflation, consumer credit availability, taxation, consumer confidence in future economic conditions, employment and salary levels. Reductions in credit availability andin Brazil or the other countries where we have operations, as well as more stringent credit policies adopted by us and credit card companies may negatively affect our sales, especially for home appliances. Unfavorable economic conditions in Brazil or in other Latin American countries where we operate, or unfavorable economic conditions worldwide reflected in the Brazilian economy and in those other countries where we operate, may significantly reduce consumer expenditurespending and available income, particularly for lower income classes, who have less access to credit than higher income classes, more limited debt refinancing conditions and more susceptibility to be affected by increases in the unemployment rate. These conditions may have a material adverse effect on our financial condition and results of operation.

These factors are compounded as Brazil emerges from a prolonged recession after a period of slow recovery, followed by the crisis triggered by the COVID-19 pandemic, with only meager gross domestic product, or GDP, growth in 2019 and 2018.GDP. Brazil’s GDP growth rates were 4.6% in 2021, (4.0)% in 2020 1.1% in 2019 and 1.1% in 2018.2019. According to Colombia’s National Administrative Department of Statistics (Departamento Administrativo Nacional de Estadística), or DANE, asin 2021, the Colombian GDP increased by 10.6%. As of the end of December 31, 2020, the Colombian GDP decreased by 6.8% when compared to the same period of 2019, while the Colombian retail and wholesale industry as a whole decreased by 2.8%, mainly as a result of the adverse effects of the COVID-19 pandemic, including restrictions on the circulation of people, lockdowns, closing of commercial spaces, as well as the increased unemployment rate and lower consumer confidence.

Our results of operations and financial condition have been, and will continue to be, affected by the weak GDP of the countries where we operate. Developments in the economy of the Latin American countries where we operate, principally Brazil and Colombia, may affect these countries’ growth rates and, consequently, the usesales of our products, and services, which may adversely affect the trading price of our ADSs and common shares.

Because the retail industry is usually perceived as essentially growth-oriented, we are dependent on the growth rate of Brazil and Colombia’sthe urban population and differenton the income levels.levels of the population in the countries where we operate, especially Brazil and Colombia. Any decrease or slowdown in these metrics in Brazil or Colombia, may adversely affect our sales and our results of operations.

We cannot guarantee that our service providers or suppliers do not engage in irregular practices.

We engage in the ordinary course of business in commercial transactions with a significant number of service providers and suppliers. While we have policies and procedures in place to know the essential facts related to the operations of the service providers and suppliers with whom we enter into agreements, we cannot guarantee that they will not have issues, such as illegal working and improper safety conditions, environmental and sustainability matters, among other issues, nor that they will not engage in irregular practices. If our service providers or suppliers have issues related to those conditions or matters or engage in irregular practices, our reputation may be harmed and we could be subject to market scrutiny or legal proceedings, which may adversely affect the trading price of the ADSs and our common shares. In addition, our customers’ perception of our products may be adversely affected, causing a reduction in sales and in our results of operations.

Restrictions of credit availability to consumers in Brazil and Brazilian government rules and interventions affecting financial operations may adversely affect our sales volumes and operations, and we are exposed to risks related to customer financing and loans.

Sales in installments are an important component of the resultresults of operations for Brazilian non-food retailers. The increase in the unemployment rate combined with relatively high interest rates have resulted in an increased restriction of credit availability to consumers in Brazil. The unemployment rate in the country reached 11.1% in 2021, compared to 13.9% in 2020 compared toand 11.9% in 2019 and 12.3% in 2018. These circumstances have not been noticeably improved by gradual reductions in the basic interest rate in Brazil, the SELIC rate, which went from 2.0%, 4.5% and 6.5% in December 31, 2020, 2019 and 2018, respectively.2019.

Our sales volumes, particularly for non-food products, and, consequently, our results of operations may be adversely affected if the credit availability to consumers is reduced, or if the Brazilian government restricts the granting of credit to consumers.

Additionally, we are involved through FIC, in extendingwe extend credit to customers throughin Brazil. FIC is our partnership with Itaú Unibanco Holding S.A., or Itaú Unibanco, one of the largest privately-owned financial institutions in Brazil. FIC exclusively offers credit cards, financial services and insurance coverage at our stores. For more information on FIC, see “Item 4. Information on the Company—4B. Business Overview—FIC.Operations in Brazil—Financial Services.”

FIC is subject to the risks normallyusually associated with providing financing services, including the risk of default on the payment of principal and interest and any mismatch of cost and maturity of our funding in relation to the cost and maturity of financing to customers, which could have a material adverse effect on us.

Furthermore, FIC is a financial institution regulated by the Central Bank and is, therefore, subject to extensive regulation. The regulatory structureframework of the Brazilian financial system is continuously changing. Existing laws and regulations may be amended, and their application or interpretation may also change, and new laws and regulations may be adopted. FIC and, therefore, we, may be adversely affected by regulatory changes, including those related to:

Brazilian government rules and intervention may adversely affect our operations and profitability more than those of a competitor without financial operations.

We are increasingly dependent on credit card sales. Any changes in the policies of merchant acquirers may adversely affect us.

We are increasingly dependent on credit card sales. Sales to customers using credit cards accounted for 46.5%47.2%, 46.4%46.5% and 46.1%46.4% of the consolidated net operating revenue in 2021, 2020 2019 and 20182019 for our Brazilian retail segment. In order to offer credit card sales to our customers, we depend on the policies of merchant acquirers, including fees charged by acquirers.these companies. Any change in the policies of merchant acquirers, including, for example, their merchant discount rate, may adversely affect us.

AIn addition, a portion of our sales is paid in installments offered by merchant acquirers. As a result, we depend on those merchant acquirers to be able to continue offering credit cards as a payment option to our customers. Any change in the policies of acquirers regarding installment payments and credit may adversely affect us.

Our business depends on strong brands. We may not be able to maintain and enhance our brands, or we may receive unfavorable customer complaints or negative publicity, which could adversely affect our brands.

We believe that our Pão de Açúcar, Extra, Compre Bem, Éxito, Carulla, Surtimax, Super Inter, Surtimayorista, Devoto, Disco, Geant and Libertad banners contribute significantly to the success of our business. We also believe that maintaining and enhancing those brands is critical to expanding our base of customers, which depends largely on our ability to continue to create the best customer experience, based on our competitive pricing and our large assortment of products.

Customer complaints or negative publicity about our product offerings or services could harm our reputation and diminish consumer confidence in us. A reduction in the strength of our brands and reputation could adversely affect our business, financial condition and operating results.

The recent global outbreak of novel coronavirus (COVID-19) disease has disrupted andthe COVID-19 pandemic could further disrupt our operations and could have an adverse impact on our business, financial condition, results of operations or prospects.

Since December 2019, a novel strain of coronavirus known as COVID-19 has spread in China and other countries. In response to the COVID-19 pandemic, government authorities around the world and in the countries where we operate imposed restrictive measures that restricted the movement of persons, including: (i) quarantinein 2020 and lockdown; (ii) restrictions on travel and public transportation; (iii) extended closings of offices and working places, which caused interruptions in supply chains; and (iv) closing of certain stores, mostly those deemed non-essential.2021. In the countries where we operate, state and local governments followed the guidelines issued by the respective Ministry of Health to control the spread of COVID-19 and imposed restrictions on the movement of personsrelated to social distancing and social distancinglockdowns requirements, resulting in the closing of restaurants, schools, daycare centers, hotels, shopping malls, and areas with intense foot traffic, including parks and other public spaces.

CertainAs new variants of the COVD-19 virus emerged governments have continued to impose restrictive measures until recently. Most of the governments in Latin America, including in Brazil, Colombia, Uruguay and Argentina, have relaxed the restrictive measures imposed to contain the spread of the COVID-19 virus and variants.

As grocery stores, our activity is considered essential and our business operations in Brazil were not adversely affected by the restrictive measures imposed by Brazilian federal and state governments. On the other hand, our Colombian operations were adversely affected by the restrictive measures imposed by regional and state governments as a result of the COVID-19 pandemic, since the restrictions imposed in Colombia were more stringent than in Brazil and included, among other things, reduced business hours at stores, establishment of purchasing limits, closure of stores, dry law enforcement during certain weekends and curfew in the main Colombian cities. Additionally, certain of our operations were not considereddeemed essential by government authorities, which led to the closure of a significant part of our commercial galleries and centers.centers in Colombia. Even after the re-opening of these commercial galleries and centers, we have experienced a reduced traffic of people at these venues. Consequently, revenue from these operations has decreased significantly, which has adversely affected and may continue to negatively affect us.

Moreover, our administrative office and other facilities were affected as we adopted a remote work policy on March 2020 for our administrative and back-office personnel in the countries we operate. WeAfter the decrease in the number of cases and hospitalizations caused by the Omicron variant of COVID-19, we have been gradually returning our employees to the office, but we cannot guarantee that we will not have to implement this policy once again in the eventon a hybrid model of new restrictive measures imposed as a response to a new COVID-19 wave.work. The use of this policy partially or in full, may affect our productivity, result in errors and delays in our operations, and cause other business interruptions.

To meet the demand ofdivert our customers and protect our employees, we implemented emergency protective health measures at our stores, hired temporary employees to maintain them operational and invested in additional training, which caused a temporarymanagement’s attention, increase in our operating costs. We cannot assure you that we will not have to implement these measures or adopt new protective measures, which may adversely affect us.

If a significant percentage of our employees is not able to work, due to illnesses, restrictions on travel or government restrictions related to the pandemic, we may be adversely affected. An extended period of remote work may alsocosts, increase our operating risks, including cyber security and labor risks, among others, whichlitigation. As new variants of the COVID-19 virus continue to spread throughout the world, we may adversely affect us. We may also be affected as a result of a lower flow of people on the streets, and consequently in stores, in addition to changes in the consumption pattern of customers.

We may also face supply chain risks, includingsuch as scrutiny or embargoing of goods produced in infected areas, in addition to failures of third parties, including our suppliers, contract manufacturers, contractors, commercial banks, joint venture partners and external business partners to meet their obligations, or significant disruptions to their ability to do so, which may adversely affect us.so.

The extent to which the coronavirusCOVID-19 pandemic will continue to affect or other diseases affect us will dependfurther disrupt our operations depends on future developments, which are highly uncertain andfactors that cannot be predicted, including (i) the severity and duration of the pandemic, including whether there arewill be new waves caused by additional periods of increases or spikes in the number of COVID-19 cases, future mutations or related strains of the virus in areas in which we operate; (ii) evolving macro-economicmacroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures; (iii) unknown consequences on our business performance and initiatives stemming from the substantial investment of time and other resources to the pandemic response; (iv) the long-term impact of the pandemic on our business, including changes in consumer behaviors.behavior. Accordingly, if the COVID-19 pandemic causes further disruption in our operations, our business, financial condition, results of operations or prospects may be adversely impacted by the fear of exposure to uncertainties related to or actual effects of the COVID-19 or similar disease outbreak. affected.

In addition, the COVID-19 pandemic may negatively impact our business by causing or contributing to, among other things, the following, each of which could adversely affect our business, results of operations, financial condition and cash flows:

If new restrictions are imposed that again impact the production capacity of some of our suppliers, we might face new shortages in the future, in which case we may have to seek alternate sources of supply which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our customers.

Contingent obligations for the benefit of unrelated parties may cause a material adverse effect on our business and result of operations.

On June 14, 2019, we completed the sale of all of our equity interest in Via Varejo and Via Varejo ceased to be a consolidated subsidiary. Since then, we do not control Via Varejo nor have exercised influence over its management or operations, and, as a result, Via Varejo has no longer been our related party. However, certain transactions, previously existing between the Company and Via, Varejo, when Via Varejo was part of the Pão de Açúcar Group, remained in effect, including the guarantees we have granted for certain obligations of Via. While most of the guarantees have been terminated, we and Via Varejo.are under discussions with respect to allegedly outstanding obligations under certain agreements. In the event of non-compliance by Via Varejo of these obligations, including as a result of non-payment, our business and results of operations may be adversely and materially affected. For additional information on these transactions, see “Item 7. Major Shareholders and Related Party Transactions—7B. Related Party Transactions—Via Varejo.Via.”

We may not be able to protect our intellectual property rights.

Our future successbusiness strategy depends significantly on our ability to protect our current and future brands and to defend our intellectual property rights, including trademarks, patents, domain names, trade secrets and know-how. We have been granted numerous trademark registrations covering our brands and products and have filed, and expect to continue to file, trademark and patent applications seeking to protect newly developed brands and products. We cannot assure that trademark and patent registrations will be issued with respect to any of our applications. There is also a risk that we could inadvertently fail to renew a trademark or patent on a timely basis or that our competitors will challenge, invalidate or circumvent any existing or future trademarks and patents issued to, or licensed by, us. Although we have put in place appropriate actions to protect our portfolio of intellectual property rights (including trademark registration and domain names), we cannot be certainassure that the steps we have taken will be sufficient or that third parties will not infringe upon or misappropriate our proprietary rights. Any failure in our ability to protect our proprietary rights against infringement or misappropriation could adversely affect our business, results of operations, cash flows or financial condition, and, in particular, on our ability to developcarry out our business.business and implement our business strategy.

Our sales depend on the effectiveness of our advertisement and marketing campaigns, which may adversely affect our revenues and profitability.

To promote increased traffic of customers and attract them to our stores, we dedicate substantial resources to our advertisement and marketing campaigns. Our revenues and profitability depend on our ability to, among other things, identify our target consumers and decide on the marketing message and communication method to reach them most effectively. If we do not conceive, plan or execute our advertisement and marketing activities in order to successfully and efficiently increase revenues and market share, our profitability and financial position may be adversely affected.

We may not be able to renew or maintain our stores’ lease agreements on acceptable terms, or at all, and we may be unable to obtain or renew the operational licenses of our stores or distribution centers in a timely manner.

Most of our stores are leased. The strategic location of our stores is key to the development of our business strategy and, as a result, we may be adversely affected in the event that a significant number of our lease agreements is terminated and we fail to renew these lease agreements on acceptable terms, or at all. In addition, in accordance with applicable law, landlords may increase rent periodically, usually every three years. A significant increase in the rent of our leased properties may adversely affect our financial position and results of operations. Furthermore, we are party to an arbitration proceeding related to the lease agreements of 61 stores entered into with Fundo de Investimento Imobiliário Península, or Península, which is beneficially owned by members of the Diniz Family. We cannot assure you that the outcome of this arbitration proceeding will not adversely affect our business and operations. For more information on this arbitration proceeding, see “Item 8 Financial Information—8A. Consolidated Statements and Other Financial Information—Legal Proceedings—Arbitration—Península.”

Our stores and distribution centers are also subject to certain operational licenses. Our inability to obtain or renew these operational licenses may result in the imposition of fines and, as the case may be, in the closing of stores or distribution centers. Given that smooth and uninterrupted operations in our stores and distribution centers are a critical factor for the success of our business strategy, we may be negatively affected in the case of their closing as a result of our inability to obtain or renew the necessary operational licenses.

Our product distribution is dependent on a limited number of distribution centers and we depend on the Brazilian transportation systems and infrastructure to deliver our products, and any disruption at one of our distribution centers or delay related to transportation and infrastructure could adversely affect our supply needs and our ability to distribute products to our stores and customers.

In our Brazilian retail segment, approximately 75%65% of our products are distributed through our 15eleven distribution centers and warehouses located in the Southeastern, Midwestern and Northeastern regions of Brazil. The transportation system and infrastructure in Brazil are underdeveloped and need significant investment to work efficiently and to meet our business needs.

Any significant interruption or reduction in the use or operation of transportation infrastructure in the cities where our distribution centers are located or in operations at one of our distribution centers, as a result of natural disasters, fire, accidents, systemic failures, strikes (such as the May 2018 Brazilian truckers’ strike) or other unexpected causes, may delay or affect our ability to distribute products to our stores and customers and may decrease our sales, which may have a material adverse effect on us.

Our growth strategy includes the opening of new stores which may require the opening of new distribution centers or the expansion of the existing ones to supply and meet the demand of additional stores. Our operations may be negatively affected if we are not able to open new distribution centers or expand our existing distribution centers in order to meet the supply needs of these new stores. For more information on our distribution and logistics operations, see “Item 4. Information on the Company—4B. Business Overview—Distribution and Logistics.”

Our systems and database are subject to cyberattacksviolations, breaches and security and privacy breaches,interruptions, which could cause a material adverse effect on our business and reputation. Moreover, failure to protect our database could have an adverse effect on us.

We, like all business organizations in the digital world, have been subject to a broad range of cyber threats, including attacks, with varying levels of sophistication. These cyber threats are related to the confidentiality, availability and integrity of our systems and data,database, including our customers’, suppliers’ and employees’ confidential, classified or personal information.

We maintain what we believe to be reasonable and adequate technical security controls, policy enforcement mechanisms, monitoring systems and management oversight to address these threats. While these measures are designed to prevent, detect and respond to unauthorized activity in our systems, certain types of attacks, including cyberattacks, may occur. In addition, our information systems may suffer interruptions due to factors beyond our control, such as natural disasters, hacking, energy interruptions, failures in telecommunication and computer viruses, among other factors. Any of these types of interruption may adversely affect our business and reputation, thereby adversely affecting our financial condition and results of operations.

Furthermore, someMoreover, we maintain a database of information about our suppliers, employees and customers, which mainly includes, but is not limited to, data collected when customers sign up for our loyalty programs. If we experience a breach in our security procedures that affect the integrity of our database, including unauthorized access to any personal information of our customers, we may be subject to legal proceedings that could result in damages, fines and harm to our reputation.

Some of our suppliers and service providers have significant access to confidential and strategic data collected by our systems, including confidential information regarding our customers.

Any unauthorized access to, or release or violation of our systems and data or those of our customers, suppliers or service providers could disrupt our operations, particularly our digital retail operations, cause information losses and cause us to incur significant costs, including the cost of retrieving lost information, which could have a material adverse effect on our business and reputation.

OurWe depend on our information technology systems, may suffer interruptions due to factors beyond our control, such as natural disasters, hacking, energy interruptions, failures in telecommunication and computer viruses, among other factors. Anyany failure of these types of interruption maysystems could adversely affect our operations, thereby impacting our cash generationbusiness and our financial condition.

Failuresubject us to protect our database, which containsrisks associated with non-compliance with the personal data of our clients and employees, and developments inapplicable data protection and privacy laws, could have an adverse effect on our business, financial condition or results of operations.laws.

We maintain a database of information about our suppliers, employees and customers, which mainly includes, but is not limited to, data collected when customers sign up for our loyalty programs. If we experience a breach in our security procedures that affect the integrity of our database, including unauthorized access to any personal information of our customers, we may be subject to new legal proceedings that could result in damages, fines and harm to our reputation.

The processing of personal data is regulated in the jurisdictions where we operate by a series of rules enacted in Brazil and Colombia, some of which have just been recently implemented by local authorities,authorities.

The general personal data protection regime was established in Colombia in 2012, with the enactment of Law 1581, requiring companies that handle personal data to protect such information and subjecting these companies to fines and penalties such as is the suspension of the use of personal databases or the temporary or permanent closure of operations in case of non-compliance with the rules underlaw or personal data leaks.

In 2018, Law No. 13,709/2018 (Lei Geral de Proteção de Dados), or the Brazilian General Data Protection Law, that came intowas enacted to take effect in August 2020 and to change the personal data protection system in Brazil. After a few congressional setbacks, the law entered into force as of September 18, 2020. FailureThis law sets forth a new legal framework for the treatment of personal data, including the rights of personal data owners; the legal basis applicable to personal data protection; the requirements to obtain consent; the obligations and requirements related to security incidents, personal data leaks and transfers; and the creation of the Brazilian Data Protection Authority, among others. If we fail to comply with provisions of these laws, especially related to (i) providing clear information on the data processing operations performed by us, (ii) respecting for the purpose of the original data collection; (iii) legal deadlines for the storage of user data, and (iv) the adoption of legally required security standards for the preservation and inviolability of the personal data processed, can give rise to penalties, such as fines and even temporary or permanent suspension of our personal data processing activities.

In the event of non-compliance with Brazilian law or any other applicable law related to personal data, or in the event of a personal data breach,General Data Protection Law, we may be subject to legal proceedings, finespenalties, including warning, obligation to disclose the incident, temporary blocking or deletion of personal data and damagea fine of up to 2% of our reputation, whichrevenue or the revenues of our group or conglomerate in Brazil in the last fiscal year, excluding taxes, up to an aggregate amount of R$50.0 million per infraction. In addition, we may materiallybe held responsible for pecuniary, non-pecuniary, individual, or collective damages caused by us and adversely affect us. We are subjectjointly and severally liable for pecuniary non-pecuniary, individual or collective damages caused by our subsidiaries, due to uncertainties as to how Brazilian courts will apply and interpretnon-compliance with the obligations set forth in the Brazilian legislation,General Data Protection Law.

Accordingly, failures in protecting personal data processed by us and complying with applicable law may result in significant fines, disclosure of the incident to the market, deletion of personal data from our database and suspension of our operations, which may materially and adversely affect us.

Our controlling shareholder has the ability to direct our businesses and affairs.

According to Brazilian Law No. 6,404, dated December 15, 1976, as amended, or Brazilian corporate law, our controlling shareholder, the Casino Group, has the power to (i) appoint the majority of the members of our board of directors, who, in turn, appoint our executive officers; and (ii) determine the outcome of the vast majority of actions requiring shareholder approval. Our controlling shareholders’ interests and business decisions may prevail over our other shareholders or holders of ADSs.

Unfavorable decisions in legal orand administrative proceedings could have a material adverse effect on us.

We are party to legal and administrative proceedings related to civil, regulatory, tax and labor matters. We cannot assure you that these legal proceedings will be decided in our favor. We have made provisions for proceedings in which the chance of loss has been classified as probable by our external legal advisors, management and our audit committee. Our provisions may not be sufficient to cover the total costliabilities arising from unfavorable decisions in legal or administrative proceedings. If all or a significant number of these proceedings have an outcome unfavorable to us, our business, financial condition and results of operations may be materially and adversely affected. In addition to provisions recorded on our financial provisionsstatements and the cost of legal fees associated with the proceedings, we may be required to post bonds in connection with the proceedings, which may adversely affect our financial condition. See “Item 8. Financial Information—8A. Consolidated Statements and Other Financial Information—Legal Proceedings” and note 21 to our audited consolidated financial statements as of and for the year ended December 31, 2021, included elsewhere in this annual report, for a description of our material litigation contingencies.

We may be unable to attract or retain key personnel.

In order to support and develop our operations, we must attract and retain personnel with specific skills and knowledge. We face various challenges inherent to the administrationmanagement of a large number of employees over a wide geographical area. Key personnel may leave us for a variety of reasons and the impact of these departures is difficult to predict, which may hinder the implementation of our strategic plans and adversely affect our results of operations.

We could be materially adversely affected by violations of the Brazilian Anti-Corruption Law, U.S. Foreign Corrupt Practices Act, the Sapin II Law and similar anti-corruption laws.

Law No. 12,846, of August 1, 2013, or the Brazilian Anti-Corruption Law, introduced the concept of strict liability for legal entities involved in harmful acts against the public administration, subjecting the perpetrator to both administrative and civil penalties.  Similar to the Foreign Corrupt Practices Act of the United States, to which we are also subject, the Brazilian Anti-Corruption Law considers that an effective implementation of a compliance program may be used to mitigate the administrative penalties to be applied as a consequence of a harmful act against the public administration. 

InSimilarly, in Colombia, we have a similar provision. Law No. 1,778 of 2016 created a new case ofimposes liability foron companies in case any ofif their controlling shareholders, employees, contractors or administrators or of any of their subsidiaries, carry out foreign bribery offences. The sanctions include significant fines (up to 200,000x the current minimum monthly wage) and a prohibition to contract with the Colombian government, among others. Likewise, Colombian law contemplates among its criteria for limiting corporate liability the existence, execution and effectiveness of transparency and business ethics programs or anti-corruption mechanisms within the company.

Additionally, French Law No. 1,691, of December 2016, or the Sapin II Law, relates to transparency, preventing corruption and the modernization of economic activity, and determines that companies must establish an anti-corruption program to identify and mitigate corruption risks. Under the Sapin II Law, among others, any legal entity or individual may be held criminally liable for offering a donation, gift or reward with the intent to induce a foreign public official to abuse their position or influence to obtain an undue advantage. The Sapin II Law is applicable to companies belonging to a group whose parent company is headquartered in France and whose workforce includes at least 500 employees worldwide. As such, the Sapin II Law applies to us. The key anti-corruption provisions of the Sapin II Law have been in force since June 1, 2017.

Failure to comply with anti-corruption laws in any of the countries where we have operations and to which we are subject or any investigations of misconduct, or enforcement actions could subject us to fines, loss of operating licenses, and reputational harm as well as other penalties, including individual arrests, which may materially and adversely affect us, our reputation, and the trading price of the ADSs and our common shares.

Some categories of products that we sell are principally acquired from a few suppliers and over-concentration could disrupt the availability of these products.

Some categories of products that we sell are principally acquired from a few suppliers. If any supplier is not able to supply the products in the quantity and at the frequency that we normally acquire them, and we are not able to replace the supplier on acceptable terms or at all, we may be unable to maintain our usual level of sales in the affected category of product, which may have a material adverse effect on our business and operations and, consequently, on our results of operations.

We may be held responsible for consumer incidents involving adverse reactions after consumption of products sold by us.

Products sold in our stores may cause consumers to suffer adverse reactions. Incidents involving these products may have a material adverse effect on our operations, financial condition, results of operations and reputation. Legal or administrative proceedings related to these incidents may be initiated against us, with allegations, among others, that our products were defective, damaged, adulterated, contaminated, do not contain the properties advertised or do not contain adequate information about possible side effects or interactions with other chemical substances. Any actual or possible health risk associated with these products, including negative publicity related to these risks, may lead to a loss of confidence among our customers regarding the safety, efficacy and quality of the products sold in our stores, especially our private label products. Any allegation of this nature made against our brands or products sold in our stores may have a material adverse effect on our operations, financial condition, results of operations and reputation.

We are subject to environmental laws and regulations and any non-compliance may adversely affect our reputationfinancial condition and financial position.results of operations.

We are subject to a number of different federal, state and municipal laws and regulations relating to the preservation and protection of the environment, especially in relation to our gas stations. Among other obligations, these laws and regulations establish environmental licensing requirements and standards for the release of effluents, gaseous emissions, management of solid waste and protected areas. We incur expenses for the prevention, control, reduction or elimination of releases into the air, ground and water at our gas stations, as well as in the disposal and handling of wastes at our stores and distribution centers. Any failure to comply with those laws and regulations may subject us to significant administrative and criminal sanctions, such as fines and shutdown of business and operations, in addition to the obligation to remediate or indemnify others for the damages caused. We cannot ensure that these laws and regulations will not become stricter. If they do, we may be required to increase, perhaps significantly, our capital expenditures and costs to comply with these environmental laws and regulations. UnforeseenSanctions for non-compliance with environmental laws and regulations and unforeseen environmental investments may reduce available funds for other investments and could materially and adversely affect us.

The politicalour financial condition and economic conditionsresults of the countries in which we operate may adversely affect us.

The political and economic conditions of the countries in which we operate may adversely affect us.

As a result of Éxito Group’s acquisition on November 27, 2019, we started to operate in Colombia, Argentina and Uruguay.

We are vulnerable to international economic crises and declining per capita income in the countries in which we operate, especially Colombia. A decrease in consumption in these markets could adversely affect our sales.

We face risks related to the international markets in which we operate, primarily including:

The occurrence of any of these factors, as well as any other factor affecting economic, political and social conditions in the markets in which we operate or intend to operate, may prevent us from fulfilling our strategic goals in these countries or in our international operations as a whole, and may adversely affect us.operations.

Risks Relating to the ADSs and Our Common Shares

ADS holders may find it difficult to exercise voting rights at our shareholders’ meetings.

ADS holders may only exercise their voting rights in accordance with the deposit agreement governing the ADRs. Holders of ADSs face practical limitations in exercising their voting rights because of the additional steps involved in our communications with ADS holders. For example, we are required to publish a notice of our shareholders’ meetings in specified newspapers in Brazil. Holders of our common shares are able to exercise their voting rights by attending a shareholders’ meeting in person or virtually (whenever the shareholders’ meeting is held under a partial or 100% digital format), by means of the distance voting form (boletim de voto a distância) or by voting by proxy. By contrast, ADS holders will receive notice of a shareholders’ meeting by mail from the depositary bank for the ADSs if we give notice to the depositary requesting it to do so. To exercise their voting rights, ADS holders must instruct the depositary on a timely basis. This voting process necessarily takes longer for ADS holders than for holders of our common shares. If the depositary fails to receive timely voting instructions for all or part of the ADSs, the depositary will assume that those ADS holders are instructing it to give a discretionary proxy to a person designated by us to vote their ADSs, to the extent permitted by the New York Stock Exchange, or the NYSE, rules.

ADS holders also may not receive the voting materials in time to instruct the depositary to vote our common shares underlying the ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions of the ADS holders or for the manner of carrying out those voting instructions. Accordingly, ADS holders may not be able to exercise voting rights, and they have little, if any, recourse if the common shares underlying the ADSs are not voted as requested.

If you exchange the ADSs for common shares, as a result of Brazilian regulations you may risk losing the ability to remit foreign currency abroad.

As an ADS holder, you benefit from the electronic certificate of foreign capital registration obtained by Itaú Corretora de Valores S.A., or the Custodian, for our common shares underlying the ADSs in Brazil, which permits the Custodian to convert dividends and other distributions with respect to the common shares into non-Brazilian currency and remit the proceeds abroad. If you surrender your ADSs and withdraw common shares, you will be entitled to continue to rely on the Custodian’s electronic certificate of foreign capital registration for only five business days from the date of withdrawal. Thereafter, upon the disposition of or distributions relating to the common shares, you will not be able to remit abroad non-Brazilian currency unless you obtain your own electronic certificate of foreign capital registration or you qualify under Brazilian foreign investment regulations that entitle some foreign investors to buy and sell common shares on Brazilian stock exchanges without obtaining separate electronic certificates of foreign capital registration. If you do not qualify under the foreign investment regulations, you will generally be subject to less favorable tax treatment of dividends and distributions on, and the proceeds from any sale of, our common shares.

If you attempt to obtain your own electronic certificate of foreign capital registration, you may incur expenses or suffer delays in the application process, which could delay your ability to receive dividends or distributions relating to our common shares or the return of your capital in a timely manner. The depositary’s electronic certificate of foreign capital registration may also be adversely affected by future legislative changes. See “Item 10. Additional Information—10D. Exchange Controls.”

You might be unable to exercise preemptive rights with respect to the common shares underlying the ADSs.

You will not be able to exercise the preemptive rights relating to the common shares underlying your ADSs unless a registration statement under the United States Securities Act of 1933, as amended, or the Securities Act, is effective with respect to those rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement or to take any action to make preemptive rights available to holders of ADSs. Unless we file a registration statement or an exemption from registration applies, you may receive only the net proceeds from the sale of your preemptive rights by the depositary or, if the preemptive rights cannot be sold, they will lapse and you will not receive any value for them. In addition, we may issue a substantial number of common shares as consideration for future acquisitions or for any other fundraising needs, and we may choose not to extend preemptive rights to holders of ADSs.

The volatility and illiquidity of the Brazilian securities markets and of our common shares may substantially limit your ability to sell the common shares underlying the ADSs at the price and time you desire.

Investing in securities that are traded in emerging markets, including in Brazil, often involves greater risk and are generally considered to be more speculative in nature than investing in securities traded in the securities markets of more developed countries. These investments are subject to certain economic and political risks, including (i) changes in the regulatory, tax, economic and political environment that may affect the ability of investors to obtain a total or partial return on their investments; and (ii) restrictions on foreign investment and return of capital invested.

The Brazilian securities market is substantially smaller, less liquid, more volatile and more concentrated than major international securities markets, including the securities market of the United States. Furthermore, the regulations of B3 may differ from what foreign investors are accustomed to seeing in other international exchanges. The characteristics of the Brazilian securities market may substantially limit the ability of holders of the common shares underlying the ADSs to sell them at the time and price they desire and, consequently, may adversely affect the market price of our common shares. If a liquid and active trading market is not maintained, the trading price of our common shares may be negatively affected.

Holders of the ADSs and our common shares may not receive any dividends.

According to our bylaws, we must pay to our shareholders at least 25% of our annual net income as dividends, as determined and adjusted under Brazilian corporate law. This adjusted income may be used to absorb losses or otherwise be appropriated as permitted by Brazilian corporate law and may not be available to be paid as dividends. We may not pay dividends to our shareholders in any particular fiscal year if our board of directors determines that suchthese distributions would be inadvisable in view of our financial condition.

Our status as a foreign private issuer exempts us from certain of the corporate governance standards of the New York Stock Exchange, or the NYSE limiting the protections afforded to investors.

We are a “foreign private issuer” within the meaning of the NYSE corporate governance standards. Under the NYSE listing rules, a foreign private issuer may elect to comply with the practice of its home country and not to comply with certain NYSE corporate governance requirements, including the requirements that (i) a majority of the board of directors consist of independent directors, (ii) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, (iii) a compensation committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities, and (iv) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken. Therefore, ADS holders do not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements.

For example, as a foreign private issuer, we chose to rely on an exemption under Rule 10A-3(c)(3) of the Exchange Act of 1934, as amended, or the Exchange Act with respect to our audit committee. For a further discussion of our statutory audit committee and the audit committee exemption, see “Item 6. Directors, Senior Management and Employees—6C. Board Practices—Committees of the Board of Directors—Audit Committee.”

U.S. securities laws do not require us to disclose as much information to investors as a U.S. issuer is required to disclose, and you may receive less information about us than you might otherwise receive from a comparable U.S. company.

The corporate disclosure requirements applicable to us may not be equivalent to the requirements applicable to a U.S. company and, as a result, you may receive less information about us than you might otherwise receive in connection with a comparable U.S. company. We are subject to the periodic reporting requirements of the Exchange Act that apply to “foreign private issuers.” The periodic disclosure required of foreign private issuers under the Exchange Act is more limited than the periodic disclosure required of U.S. issuers. For example, we are required only to file an annual report on Form 20-F, but we are not required to file any quarterly reports. A U.S. registrant must file an annual report on Form 10-K and three quarterly reports on Form 10-Q. In addition, we are required to file current reports on Form 6-K, but the information that we must disclose in those reports is governed primarily by Brazilian law disclosure requirements and may differ from Form 8-K’s current reporting requirements imposed on a U.S. issuer. Finally, we are not subject to the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders are not subject to the short swing insider trading reporting and recovery requirements under Section 16 of the Exchange Act.

4A. History and Development of the Company

We were incorporated in Brazil under Brazilian lawthe laws of this jurisdiction on November 10, 1981, as Companhia Brasileira de Distribuição. Our principal executive offices are located at Avenida Brigadeiro Luiz Antonio, 3142, São Paulo, SP, Brazil (telephone: +55-11-3886-0421). Our agent for service of process in the United States is CT Corporation, 28 Liberty Street, New York, New York, 10005.

We have been a pioneer in the Brazilian retail food industry, opening our first store, a pastry shop, in 1948 in the city of São Paulo under the name Pão de Açúcar. We established one of the first supermarket chains in Brazil, opening our first supermarket in 1959 and opening the first hypermarket in Brazil in 1971. Brazilian economic reforms implemented in 1994, including the introduction of the real as the Brazilian currency and the drastic reduction of inflation rates, resulted in an unprecedented growth in local consumer markets. This increase in available income and the resulting increase in consumer confidence broadened our potentialaddressable customer base and provided us with growth opportunities.

We responded to these changes by strengthening our capital structure, increasing our logistics and technology investments and implementing an expansion strategy focused on the different consumer preferences and needs of the Brazilian population. To support our expansion strategy, consisting of acquisitions and organic growth, we defined the format of our stores to tailor them to the expectations, consumption patterns and purchasing power of the different income levels in Brazil. Our stores have operated under different banners targeting the various income segments of the Brazilian population, with the aimaiming to provide comprehensive and targeted coverage of the regions where we operate. For further information on our banners, see “—Item 4B. Business Overview—Our Company” and “—Item 4B. Business Overview—Our Company—Operations.” In order to implement this strategy and to increase our market share, between 1981 and 2003throughout our history, we acquired important Brazilian supermarket chains, which were later and gradually converted into our current banners. We summarize below major events from 2004also acquired or entered into association with retailers in the home appliances segment and a financial institution, Ítaú Unibanco, to offer credit cards and financial services.

Throughout the present related toyears, our organic growth, divestitures, acquisitionsprincipal banners included Pão de Açúcar (premium supermarkets), Extra (hypermarkets, supermarkets, drugstores and other significant developmentsgas stations), Mercado Extra and Minuto Pão de Açúcar (proximity and neighborhood concept stores), Assaí (cash and carry stores), and Ponto Frio and Casas Bahia (home appliances). For further information on our banners, see “—Item 4B. Business Overview—Operations” and “—Item 4B. Business Overview—Operations—Operations in our business.

Historical Changes in Our BusinessBrazil.”

In 2004,addition, we entered into a financial partnership called FIC with Itaú Unibanco. FIC exclusively offersUnibanco to offer credit cards and financial services and insurance coverage at our stores.services. For further information on FIC, see “—Item 4. Information on the Company—4B. Business Overview—FIC.Operations in Brazil—Financial Services.”

In the end of the 2019, with the acquisition of Grupo Éxito, we started to have operations in Colombia, Uruguay and Argentina, through the following banners: (i) Viva Malls, Éxito, Carulla, Surtimayorista, Surtimax and Super Inter in Colombia, (ii) Devoto, Disco and Géant in Uruguay, and (iii) Libertad, Mini Libertad and Paseo Libertad Malls in Argentina.

More recently, our strategy in Brazil has been to focus on the food retail segment in the premium and proximity formats under the banners Pão de Açúcar, Minuto Pão de Açúcar and Mercado Extra.

We summarize below principal historical changes in our business related to acquisitions, divestitures and other significant developments.

Changes in Our Business

Discontinued Operations for the Year Ending December 31, 2022

Extra Hiper Stores

On October 14, 2021 and December 16, 2021, the directors of CBD and Sendas at meetings of the board of directors of both companies approved the conversion of 70 Extra Hiper stores operated by us and located in several states of Brazil into cash and carry stores to be operated by Sendas, or the Real Estate Properties Assignment Transaction. The total estimated price of the Real Estate Properties Assignment Transaction is R$5,200.0 million, of which R$3,973.0 million will be paid by Sendas to CBD in installments between December 2021 and January 2024. The Real Estate Properties Assignment Transaction was formalized through an assignment agreement between CBD and Sendas for the assignment of the Extra Hiper stores and the sale to Sendas of certain equipment of these stores. The consummation of the transaction is subject to several conditions precedent, including the demobilization of all the assigned stores. As of December 31, 2021, we had received R$1.0 billion from Sendas under the Real Estate Properties Assignment Transaction.

As of the date of this annual report, we had concluded the assignment of 60 Extra Hiper stores to Sendas. We expect to assign all the stores to Sendas under the Real Estate Properties Assignment Transaction by the end of May 2022.

Of the 33 Extra Hiper stores that were not assigned to Sendas, up to 29 will be converted into Pão de Açúcar or Mercado Extra stores. We are analyzing whether the remaining four Extra Hiper stores will be closed or converted into other banners.

Starting in the second semester of 2022, we will no longer operate under the Extra Hiper banner and will focus on the premium and proximity segments, notably under the banners Pão de Açúcar, Minuto, Compre Bem and Mercado Extra. Accordingly, we expect to classify the results of operations of the Extra Hiper banner as discontinued operations in our statements of operations in the audited consolidated financial statements for the year ending December 31, 2022. For more information on the discontinuance of the Extra Hiper banner, see “Item 5. Operating and Financial Review and Prospects—Item 5A. Operating Results—Discontinued Operations— Discontinued Operations for the Year Ending December 31, 2022—Extra Hiper Stores.”

In addition, on February 25, 2022, we also entered into an agreement with Barzel Properties, a Brazilian real estate investment fund, or Barzel, and Sendas, as an intervening and guaranteeing party, to sell to Barzel 17 of the 70 Extra Hiper stores that would initially be assigned to Sendas under the Real Estate Properties Assignment Transaction. The estimated total sale price of these properties is R$1,200.0 million, which will be paid by Barzel to us. After the conclusion of the sale, the 17 properties will be leased by Barzel to Sendas for a period of 20 years, renewable for the same term. On April 13, 2022, the Administrative Council of Economic Defense, or CADE, approved the sale of these 17 properties.

Drugstores

In line with our strategy of optimizing store platform and allocating resources to accelerate the growth of our most profitable banners, we decided to close all our drugstores.

As of the date of this annual report, we had already closed all our drugstores and discontinued 68 of our drugstores.

We expect to classify the results of operations of our drugstores as discontinued operations in our statements of operations in the audited consolidated financial statements for the year ending December 31, 2022.

Acquisition of Grupo Éxito

In June 2019, our board of directors approved the recommendation of our controlling shareholder, Casino, to carry out a reorganization to simplify its activities and businesses in Latin America. The proposed transaction comprised: an all-cash tender offer by our then wholly owned subsidiary Sendas in which it acquired 96.57% of the shares of Grupo Éxito; a purchase agreement between Casino and Grupo Éxito, pursuant to which Casino acquired all controlling shares issued by us and held indirectly by Grupo Éxito; and our migration to the Novo Mercado listing segment of B3 with the consequent conversion of all of our preferred shares into common shares.

The acquisition was consummated in November 2019 and we have begun to consolidate Grupo Éxito’s results of operations in our financial statements since December 1, 2019. On February 14, 2020, B3 approved our migration from the Level 1 listing segment to the Novo Mercado listing segment of B3, its highest level of corporate governance.

With the acquisition of Grupo Éxito, we started to have operations in Colombia, Uruguay and Argentina, through the following banners: (i) Viva Malls, Éxito, Carulla, Surtimayorista, Surtimax and Super Inter in Colombia, (ii) Devoto, Disco and Géant in Uruguay, and (iii) Libertad, Mini Libertad and Paseo Libertad Malls in Argentina.

Our banners in Colombia include Viva Malls (shopping malls), Éxito (hypermarkets and supermarkets) Éxito Express (convenience stores), Vecino (supermarkets), Carulla (high quality supermarkets) Carulla Express (proximity and neighborhood concept stores), Surtimayorista (cash & carry stores), Surtimax (lost-cost convenience stores) and Super Inter (low-cost supermarket).

Our banners in Uruguay include Disco (supermarkets), Devoto (supermarkets), Devoto Express (convenience stores) and Géant (hypermarkets).

Our banners in Argentina include Paseo Liberdad Malls (shopping malls), Libertad (hypermarkets) and Mini Libertad (proximity and neighborhood concept stores).

Spin-off of Cash and Carry Operating Segment

From 2007 to 2009, we acquired a 100% ownership interest in Sendas Distribuidora S.A., which operatesoperated cash and carry stores under the Assaí chain and was segregated from CBD onbanner.

In December 31, 2020. For additional information on2020, our board of directors approved a corporate reorganization to carry out the spin-offseparation of ourthe cash and carry business see “—Changes in Our Business—through a spin-off of our then wholly owned subsidiary Sendas and the shareholders of CBD and Sendas at extraordinary shareholders’ meetings of both companies approved the Sendas Separation and Sendas Spin-off.

In addition, pursuant to a series of corporate transactions, Sendas underwent a corporate reorganization, the “Sendas Corporate Reorganization,” which consisted of the transfer of certain Sendas’ assets and 96.57% equity interest in Éxito to CBD for certain CBD’s assets, including capital contributions, 50% of the shares of Bellamar Empreendimentos e Participações Ltda., or Bellamar, a holding company that holds an investment in 35.8% of the shares of FIC, and five parcels of real estate assets.

In addition, on December 14, 2020, we entered into a Separation Agreement with Sendas, which provides a framework for our relationship with Sendas following the Sendas Separation and the Sendas Spin-Off. For further information on the Separation Agreement, see “Item 7. Major Shareholders and Related Party Transactions—7B. Related Party Transactions—Agreements with Sendas.”

Set forth below are simplified structure charts showing CBD and its relevant subsidiaries, including Sendas and Éxito, and equity interests: (1) immediately prior to the Sendas Corporate Reorganization; and (2) immediately following the Sendas Corporate Reorganization.

Pre- Sendas Corporate Reorganization

Post-Sendas Corporate Reorganization

Set forth below is a structure chart showing CBD and Sendas and their relevant subsidiaries immediately following the Sendas Spin-Off:

Post Sendas Spin-Off

On February 26, 2021, our shareholders received shares issued by Sendas, in proportion to their respective holdings in the capital stock of CBD, on a pro rata basis for no consideration. The distribution occurred after the listing of Sendas common shares on the Novo Mercado segment of B3 and after the approval of listing of ADRs representing Sendas common shares on the NYSE. Upon consummation of the Sendas Spin-Off, Sendas has become an independent and publicly traded company. The goal of the Sendas Spin-off was to unlock the full potential of the Company’s cash and carry and traditional retail businesses, allowing them to operate on a standalone basis, with separate management teams, and focusing on their respective business models and market opportunities. Additionally, the Sendas Spin-off is expected to provide each of the businesses with direct access to the capital markets and other sources of funding, hence allowing them to prioritize investments according to each company’s profile, thus creating more value for their respective shareholders.

Sale of Home Appliances Operating Segment

In 2009, we acquired a 98.8% of ownership interest in Globex (which later changed its corporate name to Via Varejo)Via), a company which operatesoperated in the home appliances sector under the brand name Ponto Frio.

In 2010, through an association with members of the Klein family who represent the partners of Casa Bahia Comercial Ltda., or Casa Bahia Comercial, a Brazilian home appliances retailer which operatesoperated under the brand name Casas Bahia, we and the partners of Casa Bahia Comercial merged our respective businesses in the home appliances and e-commerce segments under Via Varejo.Via. As a result, we then owned 52.4% of Via Varejo. On December 27, 2013, Via Varejo concluded itsVia. After Via’s initial public offering in Brazil. AfterBrazil in the offering, we reducedend of 2013, our equity interest in Via Varejo towas 62.25% of the common shares and 43.35% of the total capital stock.

In November 2016, our board of directors approved the plan to sell our equity interest in Via, in line with our long-term strategy of focusing on the development of the food retail segment. Since then, in accordance with IFRS 5, we reported separately the results of Via as discontinued operations in one single line item in assets, liabilities and income statement.

In December 2018 and February 2019, through total return swap transactions, involving the sale of common shares of Via, we sold an aggregate of 6.95% of Via’s total capital stock on the B3 at a price of R$4.90 per share, totaling R$2,300 million. We recognized a gain on sale in the results of discontinued operations of R$398 million, net of the effect of income taxes of R$199 million and related costs. On June 14, 2019, we sold by means of an auction procedure all of our equity interest in Via on B3 for the price of R$4.90 per share, totaling R$2,300.7 million. Since then, we ceased consolidating Via’s assets, liabilities and operating results that were classified as held for sale. As a result of the sale, we recognized a gain on sale of investment of R$398 million, net of tax.

Since June 14, 2019, we no longer exercise influence over Via’s management.

After the consummation of the sale of all our equity interest in Via, certain transactions, previously existing between the Company and Via when Via was part of the Pão de Açúcar Group, remained in effect. While most of the transactions have been terminated, we and Via are under discussions with respect to allegedly outstanding obligations under certain agreements regarding their amicable termination or replacement.

For additional information on these transactions, see “Item 7. Major Shareholders and Related Party Transactions—7B. Related Party Transactions—Via”.

Corporate Reorganization of E-commerce Operating Segment

Cnova Brazil was a wholly owned subsidiary of Cnova until October 31, 2016, owningand owned our and Via Varejo’sVia’s Brazilian non-food e-commerce businesses. Following the completion of the Cnova Corporate Reorganization (as defined below) (i) oncorporate reorganization in October 31, 2016, Cnova Brazil became a wholly owned subsidiary of Via, Varejo, operating the websites Extra.com.br, Pontofrio.com and Casasbahia.com.br, and was no longerceased to be a shareholder of Cnova; (ii)Cnova. Cnova has continued its e-commerce operations outside of Brazil, focusing entirely on CdiscountCdiscount. Also, ; and (iii) we were no longer the majority shareholder of Cnova, remaining with a 34.2% equity interest in Cnova, which we started to recognize through the equity pick-up accounting method.

The corporate reorganization of Cnova or Cnova Corporate Reorganization, consisted of (i) a reorganization agreement entered into by and among Cnova, Cnova Brazil and Via, Varejo, dated August 2016; and (ii) concurrent tender offers launched by Casino to purchase any and all Cnova ordinarycommon shares in the United States and in France in December 2016.

In connection with the Cnova Reorganization,corporate reorganization, Casino and CBD entered into a commitment and support letters which are intended to govern the parties’ ongoing relationship in their capacity as shareholders of Cnova after the Cnova Reorganization.corporate reorganization. Casino submitted the commitment letter to CBD, pursuant to which it grants us certain governance and liquidity rights in relation to the interest held by CBD in Cnova, including, among others: (i) CBD’s right to designate at least one member to the board of directors of Cnova, taking into account the number of members proportional to CBD’s interest; (ii) CBD will have priority over Casino to sell its shares in a public offering for the distribution of shares with respect to 90% of the total shares to be offered in the secondary offering; (iii) CBD will have partial tag along rights in case Casino sells its Cnova shares and the sale does not constitute a change of control; in case of change of control, CBD will have the right to sell all of its shares; (iv) CBD will be treated pari passu in relation to Casino in any transfer of Cnova shares to any third party or in case of any reorganization or corporate transaction resulting in any exchange, redemption or another issuance of Cnova shares; and (v) in case of any reorganization or corporate transaction involving Cnova, Casino will use its reasonable measures to cause CBD to receive securities in exchange for Cnova shares that are as liquid as the Cnova shares currently held by CBD.

In line with our long-term strategy of focusing on the development of the food retail segment, on June 14, 2019, we sold all of our equity interest in Via Varejo, corresponding to 36.27% of Via Varejo’s capital stock, by means of a public auction on B3. For more information about our divestment of Via Varejo, see “—Changes in Our Business—Via Varejo Sale” and “—Item 4E. Discontinued Operations.”

Furthermore, as a result of the reorganization to simplify Casino’s activities and businesses in Latin America, (i) on November 27, 2019, Casino acquired all shares issued by us and indirectly held by Almacenes Éxito S.A., or Éxito Group, a publicly held company located in Colombia, and (ii) on November 27, 2019, Éxito Group became our indirect subsidiary. For additional information on our Latin America corporate reorganization, see “—Changes in Our Business—Latin America Corporate Reorganization.”

In addition, to advance our digital transformation and expand our investment in technology, we acquired James in 2018 and Cheftime in November 2019 and partnered with Raia Drogasil in 2019 to launch Stix Fidelidade, in order to better adapt to our customers’ demand for delivery and e-commerce services.

On February 14, 2020, B3 approved our migration from the Level 1 listing segment to the Novo Mercado listing segment of B3, the highest level of corporate governance of B3. For additional information on our enrollment in the Novo Mercado, see “—Changes in Our Business—Latin America Corporate Reorganization.”

On December 14, 2020, we entered into a Separation Agreement to carry out the separation of the cash and carry business through a spin-off of our then wholly owned subsidiary Sendas, which operates under the banner Assaí. For additional information on the Sendas Separation and Sendas Spin-Off, see “—Changes in Our Business—Sendas Spin-Off.”

Changes in Our Business

Latin America Corporate Reorganization

Overview

On June 26, 2019, our board of directors approved the recommendation of our final controlling shareholder, Casino, to carry out a reorganization to simplify its activities and businesses in Latin America. The proposed transaction comprised (i) the launch of an all-cash tender offer by us to acquire up to all of the shares of Éxito Group; (ii) the acquisition by Casino of all controlling shares issued by us and held indirectly by Éxito Group for a fair price; and (iii) our enrollment at Novo Mercado listing segment of B3 and, consequently, the conversion of all of our preferred shares into common shares. Our board of directors approved the creation of a special committee with three independent members to analyze and consummate the proposed transaction; the special committee was subsequently dissolved when the reorganization was concluded.

Casino’s Acquisition of our Shares

On September 12, 2019, Casino entered into a purchase agreement with Éxito Group to acquire all shares issued by us and indirectly held by Éxito Group for R$113.00 per share, corresponding to a total amount, net of debt, of US$1,161 million. The shareholders agreement entered into by and among Éxito Group, Casino and their subsidiaries governing their relationship as our shareholders was terminated. As a result of the acquisition, our board members appointed by Éxito Group resigned; they were Manfred Heinrich Gartz, Carlos Mario Giraldo Moreno and José Gabriel Loaiza Herrera.

Éxito Group’s Acquisition

On September 13, 2019, Sendas, our then wholly owned subsidiary launched an all-cash tender offer for the price of COP$18,000 for each Éxito Group share. Concurrently with the tender offer, Casino and Sendas entered into a pre-arrangement providing for the terms of the all-cash tender offer and Casino’s commitment to sell, by means of the tender offer, its 55.3% equity interest in Éxito Group to Sendas. On November 27, 2019, shareholders representing 96.57% of Éxito Group’s equity interest accepted the all-cash tender offer, corresponding to a total amount of COP$7,780.6 billion. We have begun to consolidate Éxito Group’s results of operations in our financial statements since December 1, 2019. The Sendas spin-off included the transfer of the equity interest currently held by Sendas in the Exito Group to CBD.

On July 24, 2019, during the offering period relating to the acquisition of Éxito Group, our financial committee approved the realization of a cash flow hedge, via non-deliverable forward agreements, or NDF agreements, to mitigate our exposure to the Colombian pesos. These NDF agreements were terminated prior to December 31, 2019. The resulting effects of these NDF agreements were taken into account for purposes of the consideration paid in for the acquisition of the Éxito Group.

In 2020, Éxito Group’s gross revenue totaled R$24.7 billion and net income totaled R$228 million.

As a result of Éxito Group’s acquisition, we started to consolidate the operations in Colombia, Uruguay and Argentina, through the following banners: (i) Viva Malls, Éxito, Carulla, Surtimayorista, Surtimax and Super Inter in Colombia, (ii) Devoto, Disco and Géant in Uruguay, and (iii) Libertad, Mini Libertad and Paseo Libertad Malls in Argentina.

Novo Mercado

On November 28, 2019, our board of directors approved the proposal to be submitted to the shareholders’ general meeting regarding the migration of the Company’s shares to the Novo Mercado listing segment of B3, the highest level of corporate governance of B3, and, consequently, the conversion of all of our outstanding preferred shares into common shares.

At an extraordinary shareholders’ meeting held on December 30, 2019, our shareholders approved, among other things: (1) the conversion of all of our preferred shares into common shares, at a ratio of one common share for one preferred share, (2) the Company’s adherence to the Novo Mercado rules and the transfer of trading of the common shares issued by the Company to the Novo Mercado, and (3) amendments to our bylaws. At a special meeting of holders of our preferred shares, held on that same date, our preferred shareholders ratified the conversion of all of our preferred shares into common shares.

On February 14, 2020, B3 approved our migration from the Level 1 listing segment to the Novo Mercado listing segment of B3, the highest level of corporate governance of B3. According to the Novo Mercado requirements, on February 28, 2020, all of our then outstanding preferred shares were converted into common shares. In order to join the Novo Mercado, we entered into a Novo Mercado Participation Agreement with B3, dated February 28, 2020. According to this agreement, we are required to adhere to heightened requirements relating to corporate governance and the disclosure of information to the market. Additionally, on March 2, 2020, the trading of our common shares began on the Novo Mercado listing segment of B3.

In the U.S., the preferred ADS positions were converted into common ADS positions on March 4, 2020, with a corresponding change of CUSIP. On March 5, 2020, the NYSE suspended the trading of the ADSs represented by preferred shares and trading of the ADSs represented by common shares began.

For additional information on our amended bylaws, see “Item 10. Additional Information—10B. Memorandum and Articles of Association—Shareholders’ Meetings.”

Via Varejo Sale

On November 23, 2016, our board of directors approved the plan to sell our equity interest in Via Varejo, in line with our long-term strategy of focusing on the development of the food retail segment. Since then, in accordance with IFRS 5, we have separately reported the results of Via Varejo as discontinued operations in one single line item in assets, liabilities and income statement.

On November 26, 2018, we held 43.23% of Via Varejo’s total capital stock. On December 21, 2018 and February 20, 2019, our board of directors approved total return swap transactions, involving the sale of common shares of Via Varejo, corresponding to 3.86% and 3.09% of Via Varejo’s total capital stock, respectively. These sales were carried out on the B3 at a price of R$4.90 per share, totaling R$2,300 million, on December 27, 2018 and February 25, 2019, respectively. The sale of Via Varejo resulted in the recognition of a gain on sale of R$398 million, net of the effect of income taxes of R$199 million and related costs. Such gain was presented in the results of discontinued operations. For more information on the impact of the Via Varejo sale on our financial results, see notes 12.4 and 34 to our audited financial statements.

On June 14, 2019, we sold by means of an auction procedure all of our equity interest in Via Varejo on B3 for the price of R$4.90 per share, totaling R$2,300.7 million. Since then, we ceased consolidating Via Varejo’s assets, liabilities and operating results that were classified as held for sale. As a result of the sale we recognized a gain on sale of investment of R$398 million, net of tax.

Since June 14, 2019, we no longer exercise influence over Via Varejo’s management.

After the consummation of the sale of all our equity interest in Via Varejo, certain transactions, previously existing between the Company and Via Varejo when Via Varejo was part of the Pão de Açúcar Group, remained in effect. We have been in discussions with Via Varejo’s management regarding the amicable termination or replacement of the outstanding transactions that we had entered into with Via Varejo while it was part of the Pão de Açúcar Group.

For additional information on these transactions, see “Item 7. Major Shareholders and Related Party Transactions—7B. Related Party Transactions—Via Varejo” and note 12.4 to our audited financial statements.

Digital Transformation

InTo advance our digital transformation and expand our investment in technology, in 2018, we acquired the delivery app James, a multiservice platform for ordering and delivering our products, connecting customers, deliverers and establishments and, in 2019, we acquired Cheftime, a Brazilian company focused on ready-to-eat and cook-it-yourself meal kits. Also in 2019, we and Raia Drogasil S.A., or RD, createdformed Stix, Fidelidade S.A., or the legal entity that operates the Stix Fidelidade in which we hold 66.7% equity interest and RD holds 33.3%. Stix Fidelidade is responsible for the development of a loyalty program. The loyalty program in whichwas developed to better adapt to our customers’ demand for delivery and e-commerce services. In addition, the program allows its users to earn points called Stix Fidelidade on purchases made on affiliatedassociated retailers’ websites and stores, including us and Raia Drogasil, to bewhich are redeemable for products, or services, available at the Stix Fidelidade platform, in addition to discounts and other benefits that might be available from time to time. benefits. Stix Fidelidade also has Banco Itaú as a strategic partner responsible for enabling Banco Itaú providing for the’s clients to acquire points under Stix Fidelidade under certain terms under which Banco Itaú clients may transfer points accumulatedand conditions.

For more information on Banco Itaú credit cards to the Stix Fidelidade platform or acquire Banco Itaú credit cards that will grant them automatic Stix Fidelidade points upon certain circumstances. In February 2020 we announced the approval of Administrative Council of Economic Defense, or CADE, confirming that the closingour digital transformation, see “Item 5A. Operating Results—Overview of the transaction has occurred. The Stix program was launched in October 2020 as the first retail coalition in BrazilFiscal Year Ended December 31, 2021” and its opt-in platform reached more than one million customers at the end of the year. From all the rewards distributed, 80% were activated and 30% of Stix customers have earned points through more than one brand that is part of the program (Pão de Açúcar, Extra, Raia or Drogasil).“Item 5D. Trend Information.”

Repositioning our Private Label

In 2018, we started to focus on repositioning our private label portfolio, with a priority on improving quality and price competitiveness as an important process for building client loyalty in the markets in which we operate. As part of this initiative, we have started working more closely with suppliers, entering into long-term partnerships and ensuring higher production levels, which allow us to maintain our product launch rates and reach better margins. The portfolio underwent a renovation process and new products were launched, representing the entry in new categories. In 2020, the penetration of

For more information on our private label in the food category sales reached 20%.

Sendas Spin-Off

On December 14, 2020, our board of directors approved a corporate reorganization to carry out the separation of the cash and carry business through a spin-off of our then wholly owned subsidiary Sendas, which operates under the banner Assaí.

On December 31, 2020, the shareholders of CBD and Sendas at extraordinary general shareholders’ meetings of both companies approved the Sendas Separation and Sendas Spin-off.

The Sendas Spin-Off refers to the distribution of substantially all of the issued and outstanding Sendas common shares to holders of CBD common shares, including the CBD ADSs, on a pro rata basis for no consideration.

On the same date, CBD completed a corporate reorganization pursuant to which Sendas transferred all of its equity interest in Éxito, which included Éxito’s international retail businesses in Colombia, Uruguay and Argentina, to CBD. We collectively refer to the series of the corporate transactions that CBD completed as the “Sendas Corporate Reorganization”:

In addition, on December 14, 2020, we entered into a Separation Agreement with Sendas, which provides a framework for our relationship with Sendas following the Sendas Separation and the Sendas Spin-Off. For further information on the Separation Agreement,labels, see “Item 7. Major Shareholders and Related Party Transactions—7B. Related Party Transactions—Agreements with Sendas.4B. Business Overview—Private Label Products.” Pursuant to the Separation Agreement, CBD will recognize certain assets and liabilities related to contingencies and their related judicial deposits for which the parties have agreed to be responsible following the Sendas Separation, in a net amount of R$111 million.

Set forth below are simplified structure charts showing CBD and its relevant subsidiaries, including Sendas and Éxito, and equity interests: (1) immediately prior to the Sendas Corporate Reorganization; and (2) immediately following the Sendas Corporate Reorganization.

Pre- Sendas Corporate Reorganization

Post-Sendas Corporate Reorganization

Set forth below is a structure chart showing CBD and Sendas and their relevant subsidiaries immediately following the Sendas Spin-Off:

Post Sendas Spin-Off

On February 26, 2021, our shareholders received shares issued by Sendas, in proportion to their respective holdings in the capital stock of CBD, on a pro rata basis for no consideration. The distribution occurred after the listing of Sendas common shares on the Novo Mercado segment of B3 and after the approval of listing of ADRs representing Sendas common shares on the NYSE. Upon consummation of the Sendas Spin-Off, Sendas has become an independent and publicly traded company. The goal of the Sendas Spin-off was to unlock the full potential of the Company’s cash and carry and traditional retail businesses, allowing them to operate on a standalone basis, with separate management teams, and focusing on their respective business models and market opportunities. Additionally, the Sendas Spin-off is expected to provide each of the businesses with direct access to the capital markets and other sources of funding, hence allowing them to prioritize investments according to each company’s profile, thus creating more value for their respective shareholders.

Capital Expenditures and Investment Plan

As part of our capital expenditures and investment plan, we have invested R$7.66.5 billion in our consolidated operations in the three years ended December 31, 2020. While the Brazilian economy was still under a downturn as2021. As a result of the COVID-19 pandemic,discontinuation of the operations of Sendas, we decreased our capital expenditures in our continuing operations by 10%49.1% from R$2.8 billion in 2019 to R$2.5 billion in 2020.2020 to R$1.3 billion in 2021.

Our capital expenditures and investment plan in 20202021 aimed to foster (i) the opening of new stores and store conversions; (ii) store renovations; (iii) improvements to information technology; and (iv) improvements to distribution facilities. We have historically financed our capital expenditures and investments mainly with cash flow generated from itsour operations and, to a lesser extent, funded by third parties. We plan to continue financing our capital expenditures and investments principally with cash flow from our operations.operations and the cash flow from the sale of Extra Hiper stores. For more information on the sale of Extra Hiper stores, see “Changes in Our Business—Discontinued Operations for the Year Ending December 31, 2022—Extra Hiper Stores.”

Our investments in the last three years ended December 31, 20202021 have included:

Opening of new stores and store conversions – In the Brazilian retail sector, we seek to rent real estate properties when there is an opportunity to open new stores under one of our banners or local supermarket chain acquisition opportunities that suit one of our formats.

In 2020, 41 stores werethe first semester of 2021, we converted fromsix Extra SuperSupermercado tostores into Mercado Extra stores, concluding the process of conversion of all Extra Supermercado stores into Mercado Extra and fourCompre Bem stores, and opened 14 stores, of which 12 were opened: one Mini Extra, one Minuto Pão de Açúcar and two gas stations. In addition, to adjust our portfolio of stores, we closed nine Extra Hiper, of which three closed, three were converted to Assaí stores and three are in the process of being converted into threeone was a Pão de Açúcar, six Extra Super, three store and one was a Mini Extra store.

In addition, as a consequence of the Real Estate Properties Assignment Transaction, we discontinued 31 Extra Hiperstores and concluded the sale of 20 drugstores. of these stores to Sendas, in 2021.

In the international retailGrupo Éxito segment, 1957 stores were inaugurated among openings and conversions, with 17 stores in Colombia,51 of which two consistwere located in Colombia. Of the 51 stores that were inaugurated in Colombia: (i) nine consisted of Éxito; (ii) eight consisted of Éxito WOWstores, one hypermarkets, which operate under the Éxito banner; (iii) 15 consisted of Carulla; (iv) eight consisted of Carulla FreshMarketFresh Market, fourwhich operate under the Carulla banner; (v) two consisted of Surtimayorista, three; (vi) 18 consisted of Super Inter Vecinos; and (vii) seven consisted of Surtimax stores. Another 16 stores were closed in Colombia (five Éxito Express, two Carulla, two Surtimax and seven Super Inter stores).

Six stores) and two were inaugurated in Uruguay (one(two new Devoto stores and four Disco and one FreshMarket store). Another 25 stores were closed, 24 in Colombia (seven Éxito, three Carulla, 13 Surtimax and one Super Inter store) and one in Uruguay (Devoto) stores that were reformed to the Fresh Market format).

Renovation of existing stores – We usually remodel a number of our stores every year. Through our renovation program, we updated refrigeration equipment in our stores, created a more modern, customer-friendly and efficient environment and outfit our stores with advanced information technology systems.

Improvements to information technology – We view technology as an important tool for efficiency and security in the flow of information among stores, distribution centers, suppliers and corporate headquarters. We have made significant investments in information technology, totaling R$419.0522 million from 20182019 through 2020.2021. For more information on our information technology, see “—Item 4B. Business Overview—Information Technology.”

Improvements to distribution facilities and others – We own and lease distribution centers and warehouses. The improvement in storage space enables us to further centralize purchasing for our stores and, together with improvements to our information technology, improve the overall efficiency of our inventory flow. We have invested R$1.0 billion929.0 million in our distribution facilities from 20182019 through 2020.2021.

The following table provides a summary description of our principal capital expenditures for the periods indicated:

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(1) The total of capital expenditures presented in the table for the years ended December 31, 2020 2019 and 20182019 include capital expenditures that we made in Sendas during the period until the Sendas Spin-Off that occurred on December 31, 2020. The capital expenditures related to Sendas totaled R$948.0 million, R$1,329.0 million and R$1,305.0 million in 2018, 2019 and 2020, respectively. The table also includes total capital expenditures made in Via Varejo during the year ended December 31, 2018 and until June 2019 when we completed the sale of all our equity interest in Via, Varejo, which totalled R$621 million andtotaled R$216 million in 2018 and 2019, respectively.the year ended December 31, 2019. For additional information on the Sendas Spin-Off and Via Varejo sale, see “—Changes in Our Business—Sendas Spin-Off of Cash and Carry Operating Segment,” and “—Changes in Our Business—Via Varejo Sale of Home Appliances Operating Segments,” respectively.

We believe that existing resources and operating income will be sufficient for our capital expenditures and investment plan and to meet our liquidity requirements. However, our capital expenditures and investment plan isare subject to a number of contingencies, many of which are beyond our control, including the continued growth and stability of the Brazilian economy includingand the continuing effectseconomies of the COVID-19 pandemic on the Brazilian economyother Latin American countries where we operate, and our business and operations.operations as well as the conclusion of the Real Estate Properties Assignment Transaction. We cannot assure you that we will successfully complete all or any portion of our capital expenditures and investment plan. In addition, we may participate in acquisitions or divest asset that are not budgeted in the capital expenditures and investment plan and we may modify the plans.

For information on our (i) contractual obligations, see “Item 5B. Liquidity and Capital Resources—Contractual Obligations,” (ii) off-balance sheet arrangements, see “Item 5B. Liquidity and Capital Resources—Off Balance Sheet Arrangements,” (iii) costs relating to the discontinuation of the Extra Hiper stores, including costs relating to the termination of employment agreements, see note 1.1. to our audited consolidated financial statements.