MEXICO CITY — Mexican department store chain Coppel plans to open 250 stores by 2017 and is eyeing expansion in Brazil and Argentina, according to Mexico City-based analysts.

The chain, which caters to Mexico’s lower and middle classes, will roll out 50 stores a year to operate more than 1,000 in five years, they added.

With 876 shops spread throughout the country, Coppel is looking to open the department stores in Central and Southern Mexico, markets that archrivals such as Liverpool and Famsa are rushing to conquer.

Coppel targets Mexico’s consumer segment with incomes ranging from 1,500 to 2,000 pesos ($120 to $180) a month. It has built a large business by issuing “easy credit” to these consumers, who represent 70 percent of Mexico’s population.

“By giving credit to these people, and managing it well, they have built a great business,” said Sandra Tinoco, an analyst at Standard & Poors, which recently upgraded the company’s long-term credit rating to “mxA+” from “mxA.”

“These consumers can’t get credit in the informal market and Coppel has very good and supportive customer service for people who are late with payments,” Tinoco said.

She said this strategy, coupled with a lean and tightly controlled cost structure, has enabled Coppel to boast the industry’s highest earnings before interest, taxes, depreciation and amortization margins. They currently hover at 20 percent, compared with 17 percent for largest rival Liverpool and higher than many other Latin American department stores and retailers tracked by S&P.

Another Mexico City analyst, who requested anonymity, agreed that Coppel’s easy credit strategy has helped it win a loyal customer base. He added the company is also looking to expand in Brazil and Argentina.

“They don’t hassle people with payments, unlike other chains that are constantly sending letters or calling customers who are late,” he said. “Of course, they get their money back, but they have a more humane and patient way to deal with people who have late payments.”

Present in 275 Mexican cities, Coppel operates 550 Coppel department stores and 290 Coppel Canada footwear outlets. It sells private and multibranded apparel and shoes.

A Coppel spokesman confirmed the company has “ambitious” expansion plans in Mexico and Latin America, but declined to comment further.

However, analysts expect the chain’s growth to soften after 2017.

“Their growth will moderate to 5 percent a year, but they will still be profitable and because of their strong liquidity” remain in good stead, Tinoco said. She added Coppel will invest 1.5 billion pesos, or $120 million a year, to fund its expansion, but that the firm’s 5 billion peso, or $380 million, war chest will enable it to grow without compromising its financial health.

Analysts expect Coppel will roll out more multibranded stores than footwear ones as the former are more profitable.

Explaining the rationale behind the rating upgrade, Tinoco said: “Coppel’s profitability has surpassed our expectations. Plus, the company continues to show improvements in its main financial indicators….We expect Coppel to maintain them in the next three years.”

As of June 30, 2011, Coppel reported EBITDA of 9.2 billion pesos, or $828.8 million at current exchange, on sales that rose 11.8 percent to 47.52 billion pesos, or $4.28 billion.

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