Breaking News

Tweet TWEET

Hering Poised for One-Month High as Same-Store Sales Rise

Cia. Hering (HGTX3), Brazil’s second-largest clothing retailer by market value, headed to a one-month high after a smaller slowdown in same-store sales than some analysts predicted.

Hering (HGTX3) rose 2.9 percent to 37.85 reais at 4:30 p.m. in Sao Paulo. A close at that level would be the highest since Dec. 7. The Bovespa index gained 1 percent. The retailer has risen 17 percent this year, compared with the benchmark’s 5.2 percent advance.

Hering’s same-store sales increased 8.1 percent in the last three months of 2011 from a year earlier. While that was the third straight quarterly slowdown, it exceeded the 5 percent expansion Banco Santander SA had forecast and is “probably the strongest growth rate among Brazilian apparel retailers,” analysts including Tobias Stingelin wrote in a note to clients. Hering released the preliminary results in a filing late yesterday.

Fourth-quarter gross revenue rose 23 percent, Hering said in the filing. That was slower than the 36 percent pace in the third quarter, according to data compiled by Bloomberg.

“Despite this being the third consecutive deceleration, organic growth was still robust, especially in light of the recent worsening of the macroeconomic environment,” analysts led by Fabio Monteiro at Banco BTG Pactual SA wrote in a research note. Hering is the bank’s top pick among retailers.

Hering also said it will open 20 stores for children in 2012 as it expands its Hering Kids line beyond five pilot stores. The company said it has the potential to open as many as 200 to 250 youth-targeted locations. That could add as much as 3 reais a share to the stock, according to Santander.

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@bloomberg.net; Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.