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B2W Surges on Bets Holiday Sales to Fuel Earnings Turnaround

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Dec. 12 (Bloomberg) -- B2W Cia. Global do Varejo, Brazil’s biggest online retailer, rose the most on the Bovespa index on speculation holiday sales will fuel an earnings recovery.

Shares jumped 7.1 percent to 19 reais at the close of trading in Sao Paulo, extending its four-day gain to 27 percent. Trading surged today to almost three times the average volume in the past three months. The benchmark stock index slid 0.3 percent.

B2W reported that third-quarter sales rose 17 percent to 1.23 billion reais ($590 million), beating analyst estimates for the first time since the first quarter of 2011, data compiled by Bloomberg show.

“B2W’s operational results improved in the third quarter,” Marcelo Varejao, an analyst at Socopa Corretora, said by phone from Sao Paulo. “Investors expect its year-end sales to grow more than other big retailers in Brazil because its rivals don’t seem to be investing much.”

After delivery delays led to losses during the holidays in the past two years, B2W opened four distribution centers in the states of Sao Paulo, Rio de Janeiro, Minas Gerais and Pernambuco to accelerate deliveries. The company previously shipped products only from its facilities in Sao Paulo.

Analysts led by Robert Ford at Bank of America Corp. on Nov. 28 recommended buying the stock, betting that the new distribution infrastructure will cut costs. The company “appears to be in the cusp of a turnaround,” the analysts wrote.

B2W’s share price has more than doubled this year, making it the best performer on the Bovespa index. The benchmark index climbed 4.8 percent in the period.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

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

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