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Forus Rises as BCI Says Buy on Lack of Lending

Forus SA, a Chilean seller of Columbia-brand clothes, posted its biggest two-day gain since March as Banco de Credito e Inversiones said the retailer’s lack of consumer lending protects it from regulatory changes.

The shares increased 1.9 percent to 2,752.1 pesos at 3:01 p.m. in Santiago, extending their gain over the past two days to 5.4 percent. The benchmark IPSA index fell 1.3 percent.

BCI initiated coverage of Santiago-based Forus with an “overweight” recommendation, the equivalent of buy, and a year-end 2014 target price of 3,480 pesos. The bank cited growing profits and expectations that Forus will increase store surface area by 30 percent by 2015, analysts Veronica Perez and Marcelo Catalan said in an e-mailed note to clients today.

“Unlike its peers, Forus doesn’t have a consumer-lending arm, a sector that has been under scrutiny by regulators,” BCI said. “It’s not exposed to the volatility that has affected other retail stocks.”

Chile’s Congress is due to vote on limits to consumer-lending interest rates, BCI said in the note. In May, Cencosud SA, Chile’s largest retailer by sales, said it would set aside $40 million in provisions after Chile’s Supreme Court ordered the company to compensate clients for what consumer-rights advocates said were abusive clauses in credit-card contracts.

Forus has gained 38 percent in the past 12 months, the best performance among IPSA members. The index has retreated 12 percent during the period.

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