By Nathan Gill
July 2 (Bloomberg) — Empresas La Polar SA, a Chilean department store operator, fell to the lowest in a month on concern higher-than-expected unemployment in the U.S. and Chile may crimp consumer spending at the company’s stores.
La Polar slid 2.6 percent to 1,910 pesos in Santiago trading, the lowest since May 27.
Employers in the U.S. cut more jobs than forecast in June and the unemployment rate rose to the highest in almost 26 years, according to U.S. Labor Department figures released today in Washington, adding to concern that a prolonged global recession will force Chilean companies to fire more workers as demand for the nation’s exports shrinks. Chile’s jobless rate rose 4.1 percent to 10.2 percent in May, the National Statistics Institute said June 30, higher than the 10.1 percent median forecast of 13 economists in a Bloomberg survey.
U.S. jobless data “signals that the recovery is going to be slower than what many thought,” Patricio Hernandez, an analyst at Banchile Inversiones, said in a telephone interview from Santiago. “The biggest part of Chilean retail companies’ earnings come from the financing side and this is affected when unemployment rises. We’ll continue seeing worse employment figures than what we’re seeing now.”
Investors also sold shares in reaction to the company’s rejection last week of supermarket chain Omega SA’s merger offer, Hernandez said. The stock had risen 24 percent from May 27 through June 26 after Omega, controlled by Southern Cross Latin America Private Equity Fund III LP, offered to merge its supermarkets with the retailer’s department stores.
The company’s shares have fallen 8.8 percent this week. Rival retailer Ripley Corp SA also fell in Santiago trading. Chile’s third-largest department store operator retreated 2 percent to 398 pesos, the lowest in a week.