What: Fitch Ratings has placed Falabella SA on a negative watch due to its deteriorating operating trends and limited visibility regarding debt reduction.

Why it is important: The negative rating highlights the company's operational and financial challenges, urging stakeholders to closely monitor its performance and debt reduction efforts.

The company's weak performance is attributed to a combination of internal and external factors, including high inflation, elevated operating costs, and sluggish consumer demand. While Fitch Ratings predicts that Falabella will have enough liquidity to manage its net leverage until 2025, it also anticipates improved operating results within the next 18 to 24 months as the operating environment stabilizes in Chile.

Fitch Ratings places Falabella one step below Cencosud, as Cencosud's retail formats are predominantly focused on the food and supermarket segments. Successful implementation of effective strategies and adaptability to changing market conditions will be crucial for Falabella to overcome its challenges, regain stability, and enhance its competitiveness in the retail industry.

Falabella receives a negative note from Fitch Ratings