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Hering Profit Beats Forecasts as Stores Expansion Boosts Sales

Cia. Hering (HGTX3)’s fourth-quarter earnings beat analysts’ forecasts as the company opened more stores than expected, boosting sales.

Net income rose 4.4 percent to 105.2 million reais ($61.3 million) from 100.8 million reais a year earlier, the Blumenau- based company said yesterday in a statement sent to the website of Brazil’s securities regulator. The result was above the 95.23 million reais average estimate for adjusted net income of nine analysts compiled by Bloomberg.

Hering’s same-store sales increased 8.1 percent in the last three months of 2011 from a year earlier, according to preliminary results released by the company Jan. 9. 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 on Jan. 10.

Same-store sales increased 13 percent in 2011 and the company finished the year with 432 stores after opening 85 new ones, 14 more than initially expected, the company said in its statement yesterday. Hering plans to open a total of 95 stores this year, including 20 Hering Kids stores. The company said on Jan. 9 it may 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’s note.

Hering rose 1.3 percent to 46.19 reais yesterday in Sao Paulo trading. The stock is up 42 percent since the beginning of the year, compared to a 16 percent jump in the Bovespa (IBOV) benchmark index.

To contact the reporter on this story: Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net

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