What: Fitch Ratings anticipates an improvement in Falabella's credit profile following better-than-expected operating performance in the first quarter of 2024.

Why it is important: Falabella's financial performance and strategic initiatives, such as reducing debt and improving liquidity, are expected to enhance its credit standing.

Fitch Ratings has updated its forecast for Falabella, indicating a potential improvement in the Chilean company's credit profile. The company showed a 5.2% revenue growth and an EBITDA margin of 9.5% in the first quarter of 2024, significantly up from the 4.5% margin in the same period of 2023. With improved liquidity, including $967 million in available cash and $583 million in short-term debt, Falabella is well-positioned to meet its bond maturity in January 2025. Fitch projects that continued positive performance and strategic debt reduction could bring the company's Ebitdar net leverage to around 4.5 by the end of 2024. However, Falabella still faces a competitive market and must remain agile to adapt to consumer preferences and maintain its financial health.

Fitch Ratings foresees an improvement in Falabella's credit profile