Company To Watch: Cencosud/Chile


By Gordon Platt

Santiago, Chile–based Cencosud, the largest retailer in Chile by sales and the third biggest in Latin America, plans to issue up to $2 billion of new shares in the next three years to finance its regional expansion.

In addition to its extensive home-market presence, Cencosud operates stores in Argentina, Brazil, Colombia and Peru.

The retailer spent more than $800 million last year to buy Bretas, a supermarket chain in Brazil with 62 stores, 10 gas stations and three distribution centers in the northeastern part of the country. Cencosud is expected to focus its future expansion on the Brazilian market, which has a relatively low penetration by supermarkets. The company also intends to expand its Paris department stores into the Peruvian market. In March it won permission to open a bank in Peru.

In Chile, Cencosud operates the Jumbo and Santa Isabel supermarket chains, as well as Easy home-improvement stores and Paris-brand department stores. The Chilean market has become saturated, however, and Cencosud is looking for faster growth in neighboring countries.

Cencosud’s earnings rose 21.6% last year to $633 million on revenue of $12.2 billion. The company plans to spend about $1 billion on expansion this year.

UBS agreed in March to purchase a 38.6% stake in Cencosud’s Jumbo supermarket business in Argentina from other investors for $442 million. The agreement included an option for Cencosud to buy back the shares within two years. Meanwhile, the company will have additional flexibility to take advantage of any attractive acquisition targets that may come along.