April 10, 2017 / 10:15 PM / 3 years ago

UPDATE 1-Guararapes unit adds e-commerce division to offset Brazil recession

(Adds share performance, background throughout)

SAO PAULO, April 10 (Reuters) - Lojas Riachuelo SA plans to launch an e-commerce division later this month, signaling efforts by the Brazilian apparel retailer to revive sales amid the country’s worst recession on record.

In a statement on Monday, Riachuelo said it spent 28 million reais ($9 million) on the online commerce unit, which is expected to offer Riachuelo’s 15,000 items available across its brick and mortar stores. Riachuelo is controlled by Guararapes Confecções SA.

According to analysts, online channels have allowed rival Lojas Renner SA to outperform peers in recent years.

Riachuelo’s late arrival to e-commerce has allowed the company to design a business model more likely to succeed, online head Jonas Ferreira was quoted by the statement as saying, noting that e-commerce and the chain’s 291 stores will work hand in hand.

Common shares of Guararapes rose 2.5 percent to 82 reais on Monday, extending this year’s gains to 36 percent.

Online retailers have been outperforming traditional brick and mortar chains in Brazil, with sales rising 7.4 percent as order volumes were roughly flat, data from consultancy Ebit showed.

Sales volumes at traditional retailers fell 6.2 percent over the same period, according to national statistics agency IBGE.

$1 = 3.1359 reais Reporting by Paula Arend Laier; Writing by Tatiana Bautzer; Editing by Richard Chang and Sandra Maler

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