(Corrects headline to say company plans to boost sales 63 percent by 2014.)
Empresas La Polar SA (LAPOLAR), the Chilean retailer seeking to avert a second bankruptcy in 13 years, gained for the first time in eight days after saying it plans to use cash from a share sale to overhaul brands and renovate stores in a bid to almost double sales by 2014.
La Polar advanced 10.2 percent to 181.8 pesos at 1:57 pm in Santiago trading, the biggest intraday gain since Aug. 21.
Chile’s fourth-largest department store operator will develop private labels and refurbish existing locations to help it boost sales to 462 billion pesos ($975 million) by 2014 from an estimated 284 billion pesos this year, Chief Executive Officer Patricio Lecaros told reporters in Santiago yesterday.
“We will completely revamp our brands and products, change our stores and seek new customers,” Lecaros said. “Some analysts doubt that we’ll be able to do it, but I don’t care.”
La Polar plans to raise about 120 billion pesos by selling 750 million new shares, according to a company presentation. The offering is part of new executives’ effort to shore up the retailer’s finances after the discovery last year of accounting irregularities led to the dismissal and trial of some previous managers. The new shares will be sold before Oct. 29 as part of an agreement with creditors.
The Santiago-based company said in June 2011 that it had been secretly restructuring terms of clients’ past due loans as a way to cap provisions and boost profits.
About 100 billion pesos from the share sale will be used to refurbish stores and fund consumer loans in Chile and Colombia, and 20 billion pesos will go toward compensating customers affected by the irregularities, according to a presentation on the company’s website.
La Polar will seek to cater to a wider variety of clients instead of only middle and lower income segments, Lecaros said. “We want to take a little bit of market share from each of the three bigger players, but not too much to make them mad,” Lecaros said. The biggest department store operators in Chile are SACI Falabella (FALAB), Cencosud SA and Ripley Corp SA. (RIPLEY)
The company will open its fifth store in Colombia in November. Its strategic plan doesn’t include any new openings as it already operates 42 stores in Chile, Lecaros said.
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