Mexico's Soriana eyes rapid expansion

MONTERREY (Reuters) - Soriana, Mexico's No. 2 retailer, has aggressive expansion plans and will probably not pay a dividend this year, Chief Financial Officer Aurelio Adan said at the Reuters Latin American Investment Summit.

Mexico's economy is recovering from recession but consumer spending has remained sluggish and local supermarket chains, engaged in a fierce price war, have struggled amid rising prices for raw materials.

Still, Adan was upbeat about sales in the second quarter and said the chain expects growth at stores open more than a year could be almost double last year's levels.

To fuel sales growth, Soriana plans to add almost 200 stores in the next four years.

The supermarket chain, which ended 2010 with 508 stores, hopes to have 700 by 2014 and expects to spend 16 billion pesos ($1.3 billion) to reach this goal, Adan said on Wednesday.

"The expansion plan is still very aggressive," he said.

The retailer may also start to think about expanding outside of Mexico in the longer term.

"I don't want to fix a date, but I think that in about five years we will be thinking about going outside of Mexico," Adan said.

Soriana trails top retailer Wal-Mart de Mexico (WALMEXV.MX), which has more than 2,000 stores, including more than 500 in Central America, and has said it plans to open 445 new stores this year across the region.

DEBTS AND DIVIDENDS

The Monterrey-based company is planning to pay back between 2 billion and 2.5 billion pesos this year from its 7.7 billion outstanding debt, Adan said. Soriana will aim to pay off the remainder in the following two years.

The debt repayment plans, combined with the investment in new stores, means Organizacion Soriana (SORIANAB.MX) is unlikely to pay a dividend, Adan said, although he noted that investors will vote on that at the company's annual meeting at the end of April. (Reporting by Elinor Comlay and Gabriela Lopez, editing by Matthew Lewis)