GuruFocus -
- Consolidated Revenue Growth: 7% year-over-year.
- Home Improvement Revenue Growth: 9% year-over-year.
- Retail Revenue Growth: 12% year-over-year.
- Plaza Revenue Growth: 11% in Chile, 7% in Peru.
- E-commerce Sales Growth: 20% increase in home improvement, 21% growth among sellers.
- Consolidated NPL Ratio: 3.6%, a decrease of 62 basis points from the previous quarter.
- Net Interest Income Growth: 1.4% year-over-year increase.
- Payment Methods Increase: 14% year-over-year.
- Gross Profit Expansion: 20% year-over-year.
- EBITDA Growth: 1.8 times year-over-year, reaching $368 million.
- Net Profit: $97 million, compared to a $5 million loss in the previous year.
- EBITDA Margin: 11.6%, the highest since 2021.
- Cash Position: $1.5 billion, with $1.3 billion invested in mutual funds and term deposits.
- Leverage Ratio: Declined to 3.7 times, the lowest since Q2 2022.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Falabella SA (XSGO:FALABELLA) reported a year-over-year consolidated revenue growth of 7%, with notable increases in home improvement (9%), retail (12%), and Plaza's revenue in Chile (11%) and Peru (7%).
- E-commerce sales showed significant growth, with a 20% increase in home improvement sales and a 21% growth among over 20,000 sellers, reflecting the success of their e-commerce strategy.
- The company achieved an EBITDA growth of 1.8 times year-over-year, reaching $368 million, with a margin of 11.6%, the highest since 2021.
- Falabella SA (XSGO:FALABELLA) improved its leverage ratio to 3.7 times, the lowest level since the second quarter of 2022, indicating stronger financial health.
- The company reported a net profit of $97 million, a significant improvement from a $5 million loss in the third quarter of 2023, marking the highest performance since 2021.
- Colombia's revenues were negatively impacted by a non-recurrent effect, affecting overall regional performance.
- The financial services segment saw a contraction in the consolidated loan book, although risk levels improved.
- Banking revenue decreased due to a lower level of loan book and lower interest rates, impacting overall financial performance.
- Despite improvements, retail operations are still growing below historical and potential levels, indicating room for further recovery.
- The company is facing challenges in maintaining profitability in certain segments, requiring continued focus on operational efficiency and inventory management.
A: Alejandro Gonzalez Dale, CFO, explained that all customer segments showed sales growth, with notable performance in outdoor furniture, housewares, and cleaning. E-commerce sales increased by 30% compared to the previous year. For Falabella Retail, the focus on fast fashion and improved inventory management helped increase same-store sales despite store closures.
Q: How much more room is there for reducing the cost of risk in the banking business, and what initiatives have been implemented to improve the loan portfolio in Chile?
A: Raimundo Monge, Head of Investor Relations, stated that they anticipate sequential growth in the loan portfolio in Chile due to improved risk metrics. The company has enhanced its consumer loan offerings and expects seasonal credit card purchase increases during the holiday season.
Q: Can you elaborate on the strategy for the online segment, particularly regarding own products versus third-party products?
A: Benoit de Grave, Chief Transformation Officer, highlighted that Falabella has differentiated its value proposition by format, focusing on apparel, beauty, deco, and electronics. The company leverages omni-channel capabilities and a strong logistics network. The third-party (3P) offering has grown significantly, representing 26% of e-commerce sales in the third quarter.
Q: What are the sustainability prospects for the strong retail performance in Peru, and how are you managing the banking operations in Chile?
A: Alejandro Gonzalez Dale, CFO, noted favorable consumption trends in Peru, aided by pension fund withdrawals and a normal winter season. Raimundo Monge added that in Peru, the bank's NPLs have declined, and cost of risk metrics have improved due to better risk management and pension fund inflows.
Q: Regarding the Plaza transaction, has the equity raised been included in the consolidated cash position, and how will upcoming debt maturities be managed?
A: Juan Harrison, CFO, confirmed that the equity raised is included in the third-quarter financial statements. The company plans to use its cash position to manage upcoming debt maturities, including a $200 million bond due in January 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.