Monday , April 19 2021

Retail weakness weakens Falabella from rebounding in stock market

Market agents argue that there is also uncertainty about the strong entry of e-commerce.

At the end of July, Falabella shares were traded close to $ 6,000. However, after the announcement of the acquisition of Linio and the capital increase that the company would make to finance this and other investments, the stock sank and, from there, could not recover.

Even after the placement of shares under the capital increase, on October 19, the price of paper still failed to recover.

At the end of Friday, at $ 5,215.8, the stock accrues a loss of 1.35% from the stock market placement. Since the day before the announcement of the operation, the fall comes to 12.05%.

The purchase of Linio and the announcement of an alliance with Google to enter the electronic payment business were good decisions, according to local market agents, as they reinforce the company's position in the face of e-commerce. Why, then, the action failed to recover?

The market points to a poor overall performance of the sector. "The retail sector in general has shown a weak performance in Chile due to the scarce numbers of consumption and employment, which is not clear that they will recover significantly in 2019," explains María Luz Muñoz, market strategist at Nevasa, adding that this affected the results of Falabella and Cencosud. According to Rene Le Fort, analyst at brokerage MBI, the economic environment of the country did not sustain good results in the company. "Consumption has not gone well and affects the entire industry," he says, adding that the entire industry is affected by the "imminent danger of the Amazon."

This particular point still raises some doubts, operators say. While Falabella is actively preparing for international e-commerce players, questions remain about how retail dynamics will change with the arrival of Amazon and what it will mean for the company's bottom line. For Muñoz, in addition to quarterly reports under expectations, there are several sources of risk in the Falabella horizon. In addition to the uncertainty surrounding e-commerce, "there are short-term risks of integrating Linio and then Ikea."

The remainder

Last week ended the subscription period of the preferred option of the capital increase of the company, which ended with the capture of 12.3 million shares by the controlling shareholders.

Considering that 62.1 million securities were placed in the stock exchange auction and 84.3 million shareholders were approved, the remainder to be placed adds 9.9 million shares. Although the market is expected to cause some price pressure, considering that this could mean an increase in Falabella's stock offering when it goes on sale, operators say it would not have a bigger impact.

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