(Recasts with share reaction, analyst's comment, updates share prices)
By Gram Slattery and Gabriela Mello
SAO PAULO, Dec 26 (Reuters) - Shares of Brazilian appliance retailer Via Varejo SA fell as much as 6 percent on Wednesday after its CEO was unexpectedly replaced with the head of its controlling shareholder, which said it would sell its 31.7 percent stake over the next year.
GPA SA, the food retailer that controls Via Varejo, brought back Peter Paul Estermann, who was chief executive until Flavio Dias was appointed in February, after a year of disappointing results and a rocky stock performance.
Estermann will remain CEO of GPA as he takes on the same role at Via Varejo, the latter company's board said in a filing on Monday, noting that Estermann needed to quickly improve profitability.
Via Varejo board members had internally expressed frustration with management's offline and online integration efforts as early as September, according to two sources with direct knowledge of their thinking.
GPA and Via Varejo are ultimately controlled by French retailer Casino Guichard Perrachon SA, which has been trying to unload Via Varejo for almost two years reduce its hefty debt load.
GPA said it could sell its full stake in the appliance retailer through trades on the Sao Paulo stock exchange by the end of 2019, if it does not find a strategic buyer.
The first step will be the sale of a 3.86 percent stake through a block trade on Thursday. Via Varejo's shares pared losses to 4.5 percent, at 4.38 reais, in early afternoon trading.
Analysts at Guide Investimentos told clients in a note the news is "positive" for GPA, as it can use sale proceeds to reduce its debt. But GPA shares fell 4.4 percent in Sao Paulo.
Via Varejo's shares have tumbled 46 percent year-to-date, even as some of its e-commerce-heavy peers have registered significant gains.
Reporting by Gram Slattery Editing by Mark Heinrich, Steve Orlofsky and Richard Chang