Insatiable: Cencosud already is the third-largest retailer in South America, but it wants more.

Horst Paulmann, the German-born naturalized Chilean who controls Chilean retailer Cencosud, is often investing against the current. That's why it never crossed his mind to pull out of Argentina when the country was pummeled by the mid-1990s Mexican peso crisis, then later by Argentina's own move to freeze assets, known as the corralito. Instead, he doubled down, continued to grow through acquisitions. "You have to invest during a recession, because that way you will reap when the economy rises again," Paulmann told the audience at the World Economic Forum, held in late April in Santiago.

Since the opening of the first hypermarket in Santiago in 1976 under the Jumbo brand--the first of its kind in the country--Cencosud has evolved into a diversified group that includes the hypermarket chain Jumbo, supermarkets Santa Isabel, Disco and Vea, home goods stores Easy, the Paris department-store chain, a bank by the same name, credit cards and shopping centers. But his goals are as lofty as the 300-meter-high tower he's building in Santiago. The retailer has a presence in Chile, Argentina and Colombia, but Paulmann has got his sights set on Peru and wants to get into markets as large as Brazil and Mexico.

"By the year 2010 we believe Cencosud will be selling US$10 billion," says group CEO Laurence Golborne. The company reported sales of $5.85 billion in 2006 and it expects income this year of $6.80 billion in Chile and Argentina. With a projected earnings (before interest, taxes, depreciation and amortization) above 10%, Golborne maintains that Cencosud can shoulder investments of $1 billion a year.

It seems clear that the retail market in Chile is tapped out, so the company's best bets rest squarely on regional stability and in the recovery of buying power. Chile has been enjoying this boom for a while, producing solid retailers in the supermarkets sector--including D&S, which dominates the market with its Lider brand--as well department stores, led by Falabella, Ripley and Paris. At press time, Falabella and D&S merged, creating a $7.78 billion retail power house, second only to Wal-Mart de Mexico in the region

In early May, Cencosud realized a hoped-for landing in Colombia. It formed a joint venture with the French group Casino to develop its home goods stores Easy, with a joint investment of $200 million during the first five years. "We are continuously evaluating opportunities that can present themselves from Canada to Tierra del Fuego. In Latin America, we consider attractive Mexico, Brazil and Peru," says Golborne.

Earnings. Investors have not stopped rewarding Cencosud's stock since the company listed in 2004. Just in the last year, those who invested in Cencosud obtained a return of 67%. "It's one of the best-positioned companies to take advantage of the consumer boom, not only in Chile but also in Argentina," says Dario Lizzano, director of traded equities for Santander Investment in New York, who also praises the group's good management. "They have shown they're capable of generating growth in a sustained manner for a long time."

Among management's other achievements is having consolidated and adapted to Chile's and Argentina's reality a model that goes beyond offering shops or products. "The point is to solve people's problems, offering them different kinds of services. These companies know their clients through their databases and know they will demand many other services. That's why they're selling insurance or medicines," says Luis Alfredo Lagos, general manager of the marketing research firm Research International Cadem.

Smaller enterprises are copying Cencosud's one-stop-shop style. La Polar, the fourth-largest department store chain in Chile, is planning an international expansion. "We are looking at more than one country," says Pablo Alcalde, the company's general manager. La Polar has 31 stores and income of $569 million, and its growth strategy has also drawn interest. It went from owning 4% of the market in 1999 to 13% today.

As if it were Cencosud's star pupil, La Polar says it wants to expand beyond Chile. "I believe that if you enter a country, you must go in with more than just one store in order to penetrate correctly. I estimate that La Polar will be operating abroad in 2008," Alcalde says.

EDUARDO CORONADO * SANTIAGO