MEXICO CITY — Falabella’s new chief executive officer Gaston Bottazzini is making good on his pledge to boost the South American department store network’s online footprint: On Wednesday, the Chile-based retailer revealed it would buy e-tailer Linio for $138 million.
At the same time, the firm said it will launch an $800 million stock offering to finance the acquisition and accelerate other logistic and technological expansions. Part of the funds will also back the roll out of Ikea stores in Chile, Peru and Colombia.
“With this acquisition, the company advances its goal of leading the region’s electronic commerce sector,” Falabella said. “Linio will boost Falabella Retail, Sodimac y Tottus,” becoming the de facto site for marketing the group’s department-store, home improvement and supermarket divisions, respectively. The units will continue to operate their own online stores, Santiago-based Falabella said.
With operations in Mexico, Peru, Argentina and Chile, as well as offices in the U.S. and China, Linio has annual sales of $137 million, making the acquisition a good deal for Falabella, at least on a book basis, analysts said.
Linio and Falabella could not immediately be reached for comment.
Under the catchphrase “Change Your Look,” Linio has 107,000 fashion products, most of which appear to be private label goods, according to a scan of its web site. It also stocks a range of local and international brands including Chamela and Under Armour, for both men, women and children.
Falabella has arrived late to the online game in Latin America, where sales grew 100 percent last year as a string of e-tailers spread their wings including from Mexico’s Grupo Axo, compatriot rivals Ripley and Tiendas Paris, and many boutique shops, according to analysts.
With 491 stores and 49 shopping malls, Falabella posted e-commerce sales of $769 million in 2017, up 36 percent.
The group’s shareholders are betting the Harvard Business School-educated Bottazzini will improve that, boosting growth for Falabella’s franchise, mainly present in Chile, Peru, Argentina and Colombia. The chain dipped its toes in Mexico recently by opening a Sodimac outlet.