14 August 2009

Chile's Falabella Profit Falls 48% on Sales Drop, Currencies

By James Attwood and Nathan Gill
Aug. 14 (Bloomberg) -- SACI Falabella SA, Chile’s biggest retailer by market value, reported a 48 percent slump in second-quarter profit because of a drop in sales and foreign-exchange rate losses.

Net income fell to 33.4 billion pesos ($60.5 million) from 63.7 billion pesos a year earlier, the Santiago-based retailer said today in an e-mailed statement. That missed the
53.3 billion-peso average estimate of four analysts surveyed by Bloomberg News.

Revenue fell 7.8 percent, hurt by sales declines at Falabella’s home-improvement stores after a slowdown in construction and real estate. Exchange losses totaled 14.5 billion pesos after currency moves reduced income from stores in Colombia, Peru and Argentina under Chilean accounting rules.

“The fall in profits was much stronger than expected,” Amelia Gonzalez, an analyst at Euroamerica Corredores de Bolsa SA, said today in a telephone interview. “The impact in monetary correction and the exchange rate difference wasn’t expected by the market.”

Falabella shares slipped 0.8 percent to 2,250 pesos at 3:15 p.m. New York time in Santiago trading.