Ratings company affirms: Unicomer outlook stable
Written by Ryan Hamilton-Davis on December 5, 2024
GLOBAL ratings agency Fitch gave Unicomer, parent company of Courts and Dollar Value, high marks last week.
Unicomer received a long-term local and foreign currency issuer default rating of “stable.”
“Unicomer’s ratings incorporate its leading business position in most of its operations and the solid financial position of its shareholders,” a media release on Fitch’s website said.
“Fitch expects profitability to gradually recover during the next 12-18 months, due to a number of ongoing initiatives. A failure or delay in improving profitability margins and leverage within 12 months may result in negative rating actions.”
Fitch said the company is carrying out several initiatives to improve margins, including focusing on profitable product categories and credit services and redesigning the organisation’s structure.
“Fitch believes this plan should drive margin recovery during the next two years. Nonetheless, there are risks associated with the implementation and execution of these initiatives and Fitch will consider negative rating actions should margin improvement trends fail to materialise.”
Unicomer operates in 21 countries across Central America, South America and the Caribbean, with over 23 years in consumer durables sales.
“This enables it to develop long-term relationships with suppliers. These relationships provide competitive advantages in terms of store locations within small countries, where prime retailing points of sale are very limited,” Fitch said.
It added that the company maintains a leading business position in the retailing of consumer durable goods, supported by proprietary financing services and economies of scale in terms of purchasing power and logistics.
During the last three years, the company was affected by higher working capital requirements related to the resumption of portfolio growth and higher inventory levels to address supply disruptions.
It also said it had strong support from its shareholders, Milady Group and El Puerto de Liverpool, each of which owns 50 per cent of the company.
“Liverpool has a proven track record in retail since 1847 in Mexico. In Fitch’s view, the shareholders’ solid credit profiles give flexibility to Grupo Unicomer, as the shareholders’ financial positions do not rely on Unicomer’s dividend payments,” Fitch said.
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