Feb 2, 2011
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Brazil shoe retailer Arezzo surges after IPO

Feb 2, 2011

SAO PAULO | Wed Feb 2, 2011 - (Reuters) - Shares of Arezzo Industria e Comercio SA, Brazil's largest women's shoe retailer, surged in their trading debut on Wednesday on optimism over a consumer boom in the country's economy.

Arezzo Fall Collection

Arezzo shares soared 13.7 percent to 21.61 reais and traded as high as 22.00 reais after the initial public offering priced at 19 reais, the top end of its proposed range. The offering late on Monday raised 565.8 million reais ($340.2 million).

Arezzo ARZZ3.SA is looking to capitalize on an economic boom that has pushed unemployment to record lows and lifted salaries in Latin America's largest economy.

With more money in their wallets and increasing bank credit, the bulging Brazilian middle class has gone on a spending spree in recent years, buying more clothes, appliances and consumer goods.

"There has been a structural change in the economy, which has benefited stocks linked with the domestic economy, consumption and retail," said Andre Querne, managing partner at hedge fund Rio Gestao de Recursos, which handles 210 million reais ($126.3 million) in stocks.

"Arezzo is a consumer bet, and the company has a very strong brand in the women's shoe segment."

Another 14 companies have filed to sell stock in Brazil in 2011, including seven through IPOs. Shopping mall operator Sonae Sierra Brasil SSBR3.SA raised a lower-than-expected 478.3 million reais in an IPO on Tuesday, while auto parts maker Autometal AUTM3.SA is pricing its offering on Thursday.

Arezzo plans to use 42 percent of the IPO proceeds to open new stores and expand existing ones, while 37 percent of the funds will finance takeovers. The company said 12 percent will finance its working capital and the remaining 9 percent will be used for "operational improvements."

($1=1.663 reais)

(Editing by Lisa Von Ahn)

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