- Consolidated Revenue: $1.1 billion for Falabella Retail in Q4 2024.
- Home Improvement Revenue: $1.4 billion, a decrease of 9% year-over-year.
- Supermarket Revenue: $695 million, a decrease of 4% year-over-year.
- Mallplaza Revenue: $122 million, highest operation level in the last 4 years.
- E-commerce GMV: $2.8 billion over the last 12 months.
- 3P Online Sales Growth: 7%, representing 28% of total online GMV.
- Cash Position Increase: 73% year-over-year.
- Inventory Levels: Decreased by 21% year-over-year.
- SG&A Decline: Year-over-year decline due to operational leverage plan.
- Cost Related to Revenue: Decreased 6% year-over-year.
- Gross Profit: Decreased 1% year-over-year.
- EBITDA: Increased 30% year-over-year, reaching $333 million.
- Net Profit: $80 million, 9.2 times higher than Q4 2023.
- Net Financial Debt: Decreased by 12%.
- Net Debt-to-EBITDA Ratio: 6.5%.
- Investment Plan Reduction: 24% decrease versus 2023 plan.
- Store Openings: 1 new department store in Iquitos, Peru; 10 new stores planned by year-end.
- Loyalty Program Participants: Nearly 19 million.
Release Date: February 27, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Falabella SA (XSGO:FALABELLA, Financial) reported a significant increase in cash position, up 73% year-over-year, enhancing financial stability.
- The company achieved a 30% year-over-year increase in consolidated EBITDA, reaching $333 million.
- Falabella's e-commerce platform achieved $2.8 billion in GMV over the last 12 months, with 3P online sales growing by 7%.
- The loyalty program has successfully reached nearly 19 million participants, boosting customer retention and transaction levels.
- The company has reduced inventory levels by 21% year-over-year, which is expected to improve future margins.
Negative Points
- Falabella SA (XSGO:FALABELLA) experienced a slowdown in consumption trends, impacting operations, particularly in Home Improvement and Retail sectors in Chile and Peru.
- Supermarket revenue decreased by 4%, and Home Improvement revenue fell by 9%, influenced by the construction sector downturn.
- Gross profit decreased by 1%, with significant declines in the Home Improvement and Retail segments.
- The company was downgraded below investment grade in the last quarter of 2024, affecting its financial outlook.
- High inflation and interest rates have led to increased risk costs and restricted credit origination, impacting revenue.
Q & A Highlights
Q: Can you provide an update on your asset sales, specifically regarding the shopping malls in Peru, and how this will impact Falabella's leverage?
A: Alejandro Arze Safian, CEO of Home Improvement, explained that the process is advancing as expected, with legal requirements being met. The transaction aims to create value by consolidating assets under Plaza's management, which has shown operational success. The impact on Falabella's leverage will depend on market conditions at the time of execution. Benoit De Grave, CTO, added that the asset monetization plan aims to raise $800 million to $1 billion, with progress being made in various processes.
Q: What is the plan for the $200 million bond maturing in January 2025?
A: Alejandro Arze Safian stated that Falabella holds sufficient cash to cover the bond maturity without any issues. The company is analyzing options but is prepared to meet the obligation with its current liquidity, which is before any asset monetization success.
Q: Have you observed any changes in retail trends in Chile, and is there a need for further inventory adjustments?
A: Alejandro Arze Safian noted that trends are improving, with better margins despite lower sales. Inventory levels have normalized, which should help maintain margins. Francisco Irarrazaval, CEO of Falabella Retail, added that the focus is on reducing buying cycles for seasonal merchandise, which should lead to better inventory management and a stronger value proposition.
Q: Are you seeing a recovery in retail sales, particularly in hard goods and fashion, and how are FX levels affecting gross margins?
A: Francisco Irarrazaval confirmed a recovery in garment sales, while electronics remain depressed. The company has a coverage policy to mitigate short-term FX impacts and is less exposed due to reduced inventory cycles. Alejandro Arze Safian emphasized operational hedging through local suppliers and shorter buying cycles to manage FX risks.
Q: Can you elaborate on the gross margin pressure in the Home Improvement sector in Chile and the reduction in logistics expenses?
A: Alejandro Arze Safian attributed margin pressure to a mix effect, with lower margins in the professional segment and non-imported products. Benoit De Grave explained that logistics costs were reduced by 24% due to increased Click & Collect penetration, warehouse optimization, and logistics network efficiencies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
