Falabella (FALABELLA) Q2 2024 earnings summary

Executive summary

• Net profit and EBITDA more than doubled year-over-year in 2Q24, with EBITDA margin reaching 11.2%.

• Revenue grew 8% year-over-year to $3,074 million, with all three Chilean retail segments returning to growth for the first time since 1Q22.

• Gross margin expanded by 499 bps, driven by improved value proposition, lower inventory, and better banking risk levels.

• Strategic asset monetization included the $200 million sale of Open Kennedy and other non-core assets, reinforcing focus on core businesses.

• Financial strengthening plan advanced, reducing non-banking leverage to 4.7x from 5.7x in 1Q24.

Financial highlights

• Consolidated revenue: $3,074 million (+8% YoY); gross profit: $1,102 million (+25% YoY); EBITDA: $344 million (+131% YoY); net income: $122 million (+135% YoY).

• EBITDA margin improved to 11.2% from 5.2% in 2Q23, the highest since 2021.

• Online GMV: $682 million (+7% YoY); third-party GMV: $169 million (+12% YoY); home improvement online GMV up 17%.

• Cash position (non-banking): $1,041 million (+144% YoY); net financial debt (non-banking): $3,538 million (-13% YoY).

• SG&A expenses decreased 2% at constant FX, reflecting operational efficiencies.

Outlook and guidance

• Expectation of loan portfolio growth in Chile from 2H24, with risk levels stabilized and NPL at 3.2% in June.

• Retail sales growth remains below historical levels, with macroeconomic challenges persisting in Chile and Colombia.

• 2024 investment plan targets a 24% reduction in capex versus 2023, with capex down 17% and opex down 39% year-over-year.

• Continued focus on digital banking expansion, new insurance products, and omnichannel retail growth.

• September anticipated to be a slow month for retail in Chile due to extended holidays.