In 1970, Enrique Coppel Tamayo introduced a credit card that allowed his working-class customers to buy clothing and furniture at a handful of retail stores he owned in Culiacan, Mexico.
Four decades later, his five billionaire sons have leveraged that idea into a countrywide network of 1,000 emporiums, where low-income shoppers buy goods such as smartphones, washing machines and Lacoste perfumes on credit. They often opt to pay interest rates of as high as 60 percent -- more than 13 times the central bank’s benchmark -- to stretch their purchases over multiple installments.
Closely held Coppel SA generates $4.6 billion in annual sales and has the widest profit margin of any major Latin American retailer, according to data compiled by Bloomberg. Through their holding company, Grupo Coppel, the brothers -- Agustin, Enrique, Ruben, Alberto and Jose Coppel Luken -- also have interests in a bank, a retirement-fund manager and real estate. Together, they control a combined fortune worth $15.9 billion, according to the Bloomberg Billionaires Index. None of them has ever appeared on an international wealth ranking.
“They’re less visible than a comparable company on the exchange,” said Miguel Guzman, associate director for Latin American corporate debt for Fitch Ratings in Monterrey. “But they shouldn’t be underestimated. They’ve realized that the low-end market doesn’t mean that the people don’t want good service, good products and all of that.”
With Mexico’s economy rebounding from the 2009 recession, and unemployment declining, the country’s consumers have more cash to spend on household goods. Coppel’s department stores across the country give the poorer among them the chance to buy a sofa-bed or an iPhone in small payments over six to 18 months. The Coppel empire has expanded despite the surge in violence in their native state of Sinaloa, home to the cartel of Joaquin “El Chapo” Guzman, Mexico’s most-wanted druglord.
In a Nov. 13 telephone interview, Agustin Coppel, the 51-year-old current chairman and chief executive, said he disagrees with Bloomberg’s calculation of his family’s net worth. He declined to elaborate, and turned down additional interview requests.
Coppel’s founder, Enrique Coppel Tamayo, passed his shares to his five sons years before his death in 2007, said Alberto Martinez, a company spokesman, by phone on Nov. 12. As of 1999, Agustin had 17 percent of the company, Enrique held 25 percent, Ruben had 20 percent and Alberto Coppel owned 19 percent, according to a convertible bond prospectus published at the time. Jose’s 19 percent stake is accounted for by holdings in his wife’s name and an anonymous fund in the prospectus. The family declined to comment on whether the stakes have changed since then.
The company’s retail operation generated 60.8 billion Mexican pesos ($4.6 billion) in sales, 11.9 billion pesos in earnings before interest, taxes, depreciation and amortization and 8.3 billion pesos in profit in the 12 months ending Sept. 30, with net debt of 11.4 billion pesos, according to annualized results from financial statements published on the Mexican stock exchange’s website.
Coppel’s 20 percent Ebitda margin and 14 percent profit margin are the biggest of any Latin American retailer with a market value of at least $1 billion, data compiled by Bloomberg show. Its closest competitor is Grupo Elektra SAB, controlled by fellow-Mexican Ricardo Salinas, who holds 83rd place on Bloomberg’s index with a fortune of $10.7 billion. Agustin, the youngest Coppel brother, is worth $2.7 billion, while Enrique, the oldest, is worth $4 billion. Jose and Alberto both have a fortune of $3 billion, while Ruben’s is $3.2 billion.
The retailer had the equivalent of $2 billion in outstanding loans to customers at the end of the third quarter. Customers were late on 26 percent of that amount, according to the company.
Coppel’s retail operation is valued at $14.4 billion, according to data compiled by Bloomberg, when comparing its results to the average enterprise value-to-Ebitda and price-to-earnings multiples of five Latin American peers: Mexico’s Elektra and El Puerto de Liverpool SAB, Colombia’s Almacenes Exito SA, Chile’s SACI Falabella and Brazil’s Lojas Americanas SA. Enterprise value is defined by the Bloomberg ranking as market capitalization plus total debt minus cash.
BanCoppel SA, the family’s bank, generated a profit of 350 million pesos in the 12 months ending Sept. 30, with stockholder equity of 2.3 billion pesos. It’s valued at $390 million when comparing the results to the average price-to-earnings and price-to-book multiples of five peers: Mexico’s Grupo Financiero Banorte SAB and Compartamos SAB, Bancolombia SA, Scotiabank Peru SA and Chile’s Banco de Credito & Inversiones.
The family’s retirement-fund unit, Afore Coppel SA, managed at least 60 billion pesos as of September and charged an annual fee of 1.59 percent, according to data from the Mexican retirement-fund agency, known as Consar. The resulting annual revenue of 955 million pesos was compared to the average price-to-earnings multiple of Chile’s AFP Provida SA and AFP Habitat SA and Colombia’s AFP Proteccion SA, giving it a value of $370 million.
In 2011, Coppel stores paid 1.4 billion pesos in rent for the properties owned by the brothers’ Sakly SA. The company is valued at $450 million when comparing its revenue to the average enterprise value-to-Ebitda multiple of two peers: Mexico’s Inmuebles Carso SAB and Brazil’s Cyrela Commercial Properties SA.
The family reinvested all of the retailer’s profits from 2002 through 2008, according to a statement with Mexico’s exchange. Based on reported dividends since then, after subtracting reinvestments in their bank and accounting for market performance, the brothers probably control a combined investment portfolio of more than $275 million.
In a telephone interview Nov. 12, investor relations director Edith Pena confirmed Grupo Coppel is controlled by the Coppel brothers. That holding company owns 87 percent of the retail business, after accounting for the outstanding bonds that will be converted into shares, and at least 99 percent of the family’s three other units. The retailer’s 2010 report also said the brothers are its main shareholders.
The family’s philanthropy is private, said Gisela Casarin, a company spokeswoman. In February 2009, Yolanda Luken de Coppel, the patriarch’s widow, attended the inauguration of the Enrique Coppel Tamayo track at the Culiacan Equestrian Club, according to the local Noroeste newspaper. The following month, the paper reported that the Coppels had funded the construction of three churches in Sinaloa state.
The Coppel empire traces back to the 1930s, when Enrique Coppel Tamayo, a descendant of Polish immigrants, started a gift shop in the coastal Mexican town of Mazatlan with a 5,000-peso loan from his mother. In 1941, he moved his business to nearby Culiacan, capital of Sinaloa. He traveled to Dallas to buy goods, branching out into foodstuffs, bicycles, furniture and electronics. Early on, he started extending credit to his customers, who were often poor. That model sustains the company today. In 1970, he created the Coppel card for purchases at his stores.
In the 1980s, with a dozen stores built around Culiacan, he passed the reins to his oldest son, Enrique Coppel Luken, who expanded to cities across Mexico while also broadening their product offering. By 1990, his son had grown the company to 30 stores; by 2001, the family had 143, according to a 2003 doctoral thesis on the company presented at Mexico City’s Universidad Autonoma Metropolitana.
The patriarch died in 2007. The next year, Agustin took the helm of the retailer so that Enrique could focus on the retailer’s international expansion and their recently acquired financial interests. Since then, Coppel has opened eight stores in Brazil and another eight in Argentina. Earlier this month, they opened their 1,000th Mexican store in Teotihuacan. Much of the family is still based in Culiacan, where the company is headquartered.
When contacted by Bloomberg News by phone on Nov. 14, a worker at a Coppel store in Atizapan de Zaragoza, near Mexico City, said that the company card allows a customer to purchase an electric oven or furniture in biweekly payments over 12 months at a 33 percent annual interest rate, or over 18 months at a 60 percent rate.
“Change has been a constant at Coppel,” Enrique Coppel Luken once said, according to the doctoral thesis. “But also the constant effort to really put into practice -- on the sales floor, in our contact with the customer -- everything we see that will help us attend to the customer better.”