CHILE: Cencosud shifts 2014 focus to consolidation

By Hannah Abdulla | 10 January 2014

Cencosuds 2014 aims will be to consolidate its existing assets

Cencosud's 2014 aims will be to consolidate its existing assets

Chilean retailer Cencosud has announced it will be investing less in expansion this year as it focuses on consolidating its Brazilian and Colombian operations.

The company said it will invest US$425m in South America in 2014. Last year's planned investment was $731m.

According to a report carried by Reuters, CEO Daniel Rodriguez said the company would continue to grow, "but at a different speed," confirming there would be no new purchases as the company focused on consolidation this year.

Cencosud's 2014 investment plan includes a $210m allocation for the opening of 51 new stores, $75m on the maintenance of existing stores and $100m on IT and e-commerce.

Cencosud has a presence in five countries and employs 140,000 employees.

Show the press release

SANTIAGO, ChileJan. 9, 2014 /PRNewswire/ -- Cencosud announces its investment plan for 2014 confirming the company´s focus in increasing profitability, through operational efficiencies and the consolidation of its operations in Brazil and Colombia and curb indebtedness.

Cencosud expects revenue of USD 20.4 - USD 21.3 billion in 2014. Adjusted EBITDA margin for the period is estimated between 7.3% - 7.5%. By year end 2014 indebtedness as measured by Net Debt/Adjusted EBITDA should come in below 3x.

The company has earmarked USD 425 million for organic expansion, maintenance and IT during 2014 to reach the mentioned sales target. This would entail selling space growth of approximately 135,000 m2. The plan includes USD 210 million to open 51 stores, a new distribution center in Argentina and the expansion of an existing one in BrazilUSD 40 million for environmental and traffic mitigation measures connected to Costanera Center and the completion of the two office towers. Maintenance capex for existing stores should stand at USD 75 million, while investments in world class IT tools to strengthen our operations and put greater focus on e-commerce would be at USD 100 million.

Please find below a breakdown of openings by country and business unit according to our 2014 plan:

Country

Supermarkets

HI

Department
Stores

Distribution
Centers

Total m2

Investment

Argentina

3

3

-

1

20,000

USD   25 MM

Brazil

10

-

-

1

23,000

USD   41 MM

Chile

15

2

2

-

39,000

USD   64 MM

Colombia

6

2

-

-

28,000

USD   38 MM

Peru

5

-

3

-

25,000

USD   42 MM

TOTAL

39

7

5

2

135,000

USD 210 MM

Original source: Cencosud

Sectors: Emerging markets, Financials, Retail

Companies: Cencosud

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