Hites Tumbles in Chile as Store Credit Card Fees FaultedEduardo Thomson
Empresas Hites SA, a department store operator, dropped the most on Chile’s Ipsa index as the government accused it of overcharging for credit cards.
Shares retreated 9.3 percent to 464.65 pesos at the close of trading in Santiago, extending its two-day drop to 16 percent, the biggest since August 2010. Hites rallied 37 percent in the first quarter, making it the best Ipsa performer.
Chile’s consumer agency Sernac accused Hites of including abusive clauses in credit card contracts. The company may be forced to pay 2 million pesos ($4,236) per infraction and compensate customers, Sernac said in a statement posted on its website April 12. Hites said in a statement that it hasn’t been formally notified of the accusations and its credit agreements are in line with regulations.
“Although it’s too early to assess the effect of potential fines, it’s good to bear in mind that among the retailers we cover, Hites has the highest exposure to the financial business,” Veronica Perez, an analyst at Banco de Credito e Inversiones, said in an e-mailed report today.
Sernac said Hites and other department store operators including Multitiendas Corona SA had wording in their contracts that allowed them to charge special commissions when their cards were used to buy items in installments. The contracts also allowed the companies to charge management commissions twice, according to Sernac.
Hites’s credit card business accounted for 71 percent of its earnings before interest, tax, depreciation and amortization last year, according to calculations done by Bloomberg based on the company’s most recent annual filing to Chile’s securities regulator.
Gonzalo Irarrazaval, Hites’s head of management and finance, wasn’t immediately available to comment, an assistant said by phone today.