FINANCIAL RESULTS
F i r s t Q u a r t e r 2 0 2 3
HIGHLIGHTS FOR THE PERIOD / 2
1 Main indicators 1Q23 US$
+36 MM | $3,476 MM | $161 MM | -$76 MM |
Ecosystem Customers | Revenue (-6% YoY) | EBITDA (4,6% margin) | Net loss (-2,2% margin) |
+18.7 MM | 528/46 | $7,8 BN | $703 MM |
Loyalty Program Participants | Stores / Malls | Loan portfolio (+1% YoY) | GMV Online (-11% YoY) |
2 Comments from the CEO
Gaston Bottazzini
Challenging quarter, high comparative figures and a complex economic context
More than 90% of the initiatives in the efficiency plan are being implemented, controlling expenses and improving working capital
2
Comentarios de la Administración
- We experienced a challenging quarter, with high comparative figures, a complex economic context and decelerating consumption in our main markets. Our revenue declined 6% YoY, mostly due to our retail businesses in Chile, where revenue fell by around 20% in Department Stores and Home Improvement.
- We are bringing our inventories back to normal levels (-13% compared to March 2022), which will leave them better positioned for the remainder of 2023, and reduce the negative pressure on margins that we experienced in the second half of 2022. This has allowed us to improve in US$375 million the cash flow generation this quarter compared to the first quarter of 2022 (non-banking businesses).
- In Chile, we are seeing stabilization of our loan portfolio delinquency levels, due to more restrictive origination policies and to a better collection management. This will allow us to focus on achieving our objective of becoming the leading digital bank in the Andean region, where our banking revenue grew 22% YoY, and we opened 620,000 accounts and credit cards during the quarter.
- After the launch of falabella.com in Colombia, our Marketplace platform is now fully deployed in the Andean region. Our attractive value proposition for customers and sellers has kept 3P sales growing (+23% YoY), despite a contraction in online sales.
- Despite high inflation in each country (~11% yearly), our SG&A expenses grew less than 1% YoY. This partially reflects the results of our efficiency plan announced in October 2022. More than 90% of the initiatives in this plan are being implemented.
- Our leverage level, measured as net financial debt to EBITDA (non- banking), has deteriorated due to the temporary fall in the profitability of our businesses. The efforts to improve working capital and expenses aim to improve the trajectory of the leverage level in the medium-term.
2
HIGHLIGHTS FOR THE PERIOD / 3
3 Explanations for 1Q23 results (US$ million)1,2
1Q22 | % revenues | 1Q23 | % revenues | Var (%) | |
Total sales | |||||
Total sales | 3.984 | 3.621 | -9% | ||
GMV Online | 794 | 703 | -11% | ||
GMV own products (1P) | 653 | 530 | -19% | ||
GMV third-party products (3P) | 141 | 173 | 23% | ||
Total sales of physical stores | 3.190 | 2.918 | -9% | ||
TPV | 667 | 646 | -3% | ||
Financial Results | |||||
Non-Banking Revenue | 3.221 | 86,8% | 2.878 | 82,8% | -11% |
Financial Services Revenue | 490 | 13,2% | 598 | 17,2% | 22% |
Total Revenue | 3.711 | 100% | 3.476 | 100% | -6% |
Gross profit | 1.225 | 33,0% | 1.020 | 29,3% | -17% |
SG&A expenses | (1.008) | -27,2% | (1.017) | -29,2% | 1% |
Operational income | 217 | 5,9% | 3 | 0,1% | -98% |
EBITDA | 370 | 10,0% | 161 | 4,6% | -57% |
Non-operating profit | (112) | -3,0% | (100) | -2,9% | -11% |
Net (Loss) Income | 92 | 2,5% | (76) | -2,2% | -183% |
Balance Sheet | |||||
Cash (non-banking) | 446 | 664 | 49% | ||
Gross Loan Book | 7.776 | 7.834 | 1% | ||
Total Net Debt (Exc. Banking) | 4.186 | 4.886 | 17% |
- Given IFRS regulations, assets are not adjusted for inflation. However, financial liabilities are readjusted for the UF variation.
Consolidated • Consolidated operating revenue decreased (-6% YoY), mainly due to the declines in
Revenue Chile in the Home Improvement (-22% YoY) and Department Stores (-20% YoY) formats, which were partially offset by the banking businesses in Chile (+20% YoY) and in Peru (+40% YoY, +41% in local currency).
Gross profit | • Gross profit decreased (-17% YoY) due to: | |
• | Department Stores Chile (-36% YoY): lower consumption level and higher | |
• | promotional activities, particularly in apparel (summer seasonal markdowns). | |
Home Improvement Chile (-24% YoY): lower revenues (-22% YoY), mainly | ||
• | explained by the decline in the construction sector. | |
Banking Business Chile (-27% YoY) and Colombia (-74% YoY, -52% in local |
Consolidated
EBITDA
currency) due to an increase in risk costs (2.2x in Chile and 2.4x in Colombia) and in funding costs (+1.9x in Chile and +3.4x in Colombia) YoY in local currency, that exceeds the increase in revenue.
- EBITDA fell 57% YoY, reaching US$161 million.
- Our SG&A expenses grew les tan 1% YoY, despite an environment of high inflation in the region, mainly due to:
- Optimizing our marketing and customer loyalty program (-24% YoY)
- Normalization in the supply chain and integrating our last-mile logistics (-32% YoY)
- Values are in the functional currency of Chilean pesos converted to US dollars at constant exchange rates.
- Total sales are the total value of merchandise sold, including our own products (1P) and those of third parties (3P), through our omni-channel platform covering both physical and online stores. Includes value-added taxes. Calculated with neutral exchange rates.
HIGHLIGHTS FOR THE PERIOD / 4
4 Progress in business / platforms
Retailers & Malls
Revenue - Department Stores | US$Million |
Revenue - Home Improvement | US$Million |
Revenue - Supermarkets | US$Million |
Tenant's sales- Mall | US$Million |
1Q22
967
1,472
643
1,703
1Q23
806
1,207
648
1,722
Var %
-17%
-18%
+1%
+1%
Retailers &
Malls
- Our strategy is to offer the best products, brands and experiences to our customers.
- Home Improvement: We opened a new store in Maitencillo, bringing the total number of stores in Chile to 86. We re-launched the Specialists Circle, which is a benefits program focused on the professional segment, who represent 1.4 million customers across all our countries.
- Department Stores: +70% of Department stores in Chile have self-service checkout counters and our customers have +3.3 million monthly digital interactions with stores, such as price inquiries and size inquiries, which is aligned with our omni- channel strategy.
- Supermarkets: We continue optimizing inventories. We reduced them by 15 days in Chile compared to the same quarter in 2022.
- Mallplaza:We opened 200 new stores during the quarter, which was double the 1Q22 figure.
Digital Businesses | ||
Total GMV Online | US$Million | |
3P GMV Online | US$Million | |
TPV | US$Million | |
Loan portfolio | US$Million | |
Purchases with debit & credit cards | US$Million | |
Consolidated NPL (+90 days) | % |
1Q22
794
141
669
7,776
5,148
1.7
1Q23
703
173
646
7,834
5,780
4.1
Var %
-11%
+23%
-3%
+1%
+12%
+240bp
- Our Marketplace proposal is progressing. Despite the deceleration in online sales, our
Sellers (3P) sales continued to grow (+23% YoY), which represent 25% of Online Marketplace GMV.
- We now have more than 18,000 Sellers with increasing LTM sales, who now have a better experience with our Seller platform, as we are adding functionalities to make their lives simpler.
HIGHLIGHTS FOR THE PERIOD / 5
4 Progress in business / platforms
Digital Businesses (cont.)
Digital Banking
Payments
- We are progressing towards our objective of becoming the leading digital bank in the Andean region, and we now have 7.2 million customers (+11% YoY).
- Online account openings during the quarter represented 55% of credit cards and 54% of passive accounts.
- The deterioration in credit has led us to introduce restrictive origination policies, which have stabilized the NPL portfolio in Chile.
- We are strengthening our role in the ecosystem, by providing loans to our Sellers that total +US$ 11 million (3.5x YoY).
- We now have +1.4 million active users (+86% YoY) and +20,000 third-party points of sale in Chile and Peru (+43% YoY).
- We are strengthening our payment processing proposal by introducing Checkout Guest in Chile, which can process credit and debit card purchases from non-Fpay customers at non-Falabella merchants.
Enablers
Active Loyalty Participants | # Million |
Packages delivered | # Million |
1Q22
16.5
7.9
1Q23
18.7
7.7
Var %
+13%
-2%
• Regional adoption is increasing, and we now have 18.7 million participants (+13%
Loyalty YoY).
- It is one of the most popular programs in the region with +3.4 million customer redemptions (+24% YoY), where 36% were online.
Home
Delivery
- We are strengthening our logistical capabilities and we managed more than 7 million shipments, which leveraged our +1.9 million m2 dedicated to logistics.
- Close to 60% of deliveries in Chile took less than 48 hours and more than 25% of orders used the Click & Collect system.