Falabella's earnings rise despite slowdown in core Chilean market

miércoles 12 de noviembre de 2014 09:17 GYT

SANTIAGO Nov 12 (Reuters) - Latin American retailer Falabella reported earnings up around 6 percent in the third quarter, in line with forecasts, as a diversified portfolio allowed it to overcome weakness in its core Chilean department store operations.

Net profit in the three months to end-September was 81.5 billion pesos ($136 million), the company reported late on Tuesday. That compared with 77.6 billion pesos a year ago, and forecasts for 84.5 billion, according to a Reuters survey.

Revenues rose around 10.5 percent to nearly $3 billion.

Falabella has cushioned its core Chilean department store operations against a worsening local economy by diversifying into the home improvement business and fast-growing markets like Colombia.

In September, it bought leading Peruvian home improvement chain Maestro for $490 million.

However, the 125-year-old company still makes more than half its profits in Chile, where retail sales growth has cooled sharply in the last year as a slowdown that began in the mining sector has spread to the wider economy.

Chilean department same-store sales slipped 4.5 percent in the third quarter, held back by the slowdown as well as the effect of the soccer World Cup in June and July.

Shares in Falabella, the largest company by market capitalization on the Santiago bourse, hit a more than four-year low last month, weighed down by macroeconomic worries. However, its stock has recovered around 6 percent in the last two weeks and rose 1.4 percent to 4,350 pesos in early trade on Wednesday, outperforming the wider IPSA index.

Analysts at BICE Inversiones said the "current challenging scenario" was mostly priced in.

With a forward 12 months price-earnings ratio of around 19 times, according to Reuters data, the stock is valued relatively cheaply compared to many Latin America consumer peers. (Reporting by Rosalba O'Brien Editing by W Simon)