It even hired Pawn Stars reality television personality Rick Harrison as part of an advertising campaign to relaunch the brand.įalabella’s balance sheet also ballooned as a result. Then the next year, it allocated more than 50% of its capital budget to online operations and logistics. In 2020, Falabella restructured Linio under the brand amid criticism it overpaid for the company. Chile’s social unrest in 2019, the Covid pandemic and the economic slowdown that followed have eroded revenue and profits. The company acquired online operator Linio that year and announced a $800 million capital increase to fund its expansion, as well as the joint venture with Ikea. Named to the top job in 2018, he oversaw Falabella’s push into e-commerce. This means the market is already incorporating a potential move to junk, and news of Gaston Bottazzini’s resignation as chief executive officer on Sept. The retailer’s notes are trading at spreads far above those of other BBB bonds and more in line with companies rated BB, according to data compiled by Bloomberg. Recent moves in the bond market suggest Falabella debt is heading for a junk rating, with traders trying to get ahead of it. The Santiago-based company’s market value is now about a third of what it was at its peak, and last week it announced the departure of its top executive.įalabella “seems to have lagged behind in its competition with MercadoLibre and it hasn’t been able to capitalize on its strength in physical retail,” Carolina Ratto, an equity analyst at Credicorp Capital, said in a report to investors. and MercadoLibre Inc., which ramped up just as consumer spending in the region plunged, has marred its balance sheet. But its attempt to compete with online giants Inc. (Bloomberg) - What was once one of the biggest retail groups in Chile faces a potential credit downgrade after spending big on a push into e-commerce.įalabella SA operates in seven countries and helped bring furniture store IKEA of Sweden AB to Latin America.
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