Fitch: Weak Consumer Demand Has Set Retailer's Growth on Hold

SANTIAGO, Chile--()--Fitch Ratings expects very limited downgrades for Latin American retailers during 2015, despite weakening consumer spending and sluggish economic growth. Companies in Chile and Brazil will be challenged to grow revenues in an environment where demand has been hurt by weakening consumer confidence due to a slowing economy. Retail in Mexico will continue to grow through credit sales. Opportunities exist in Peru and Colombia due to the low penetration of large retailers.

Fitch expects the weakest retailers to reduce expansion plans if needed to adjust to sluggish growth in cash flow from operations. FCF will remain weak-to-negative for large regional retailers such as Falabella, Cencosud and El Puerto de Liverpool, thus they will continue to rely on debt issuing to fund expansion. In contrast, food retailers in Brazil, Colombia and Mexico have largely shown positive FCF generation, as they continue to be resilient to macroeconomic downturns.

The leverage of most retailers in the region as measured by Total Adjusted Debt / EBITDAR was in the 3x to 4x ranges during 2014, and is expected to gravitate slowly upward in 2015.

The full report '2015 Outlook: Latin American Retail - Weak Consumer Demand Has Set Retailer's Growth on Hold' is available at www.fitchratings.com or by clicking on the link.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: 2015 Outlook: Latin American Retail (Weak Consumer Demand Has Set Retailers' Growth on Hold)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=833528

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Contacts

Fitch Ratings
Andrea Jimenez
Associate Director
+56 (2) 2499 3322
Alcantara 200 of.202, Las Condes
Santiago, Chile
or
Indalecio Riojas
Associate Director
+52 81 8399 9108
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings
Andrea Jimenez
Associate Director
+56 (2) 2499 3322
Alcantara 200 of.202, Las Condes
Santiago, Chile
or
Indalecio Riojas
Associate Director
+52 81 8399 9108
or
Media Relations:
Elizabeth Fogerty, +1 212-908-0526
elizabeth.fogerty@fitchratings.com