Chilean retailer Falabella reported a net profit for the first quarter, marking a significant turnaround from a loss in the same period last year. The company’s profitability was driven by its operations in Peru, with a net profit of 58.50 billion pesos for the January-to-March period. In addition, the retailer’s units in Chile, Colombia, and Brazil also contributed to trimming losses from the previous year.
Revenues for Falabella rose by 4% to 2.86 trillion pesos during the quarter, largely due to the foreign-exchange effect of the weaker Chilean peso compared to local currencies. CEO Alejandro Gonzalez noted increased visits to shopping centers and a reduction in inventories by 11% during the quarter. The company’s loan portfolio grew by 1% year-over-year, but delinquent payments also saw a slight increase to 4.4%.
Falabella’s core earnings more than doubled to 296.95 billion pesos during the quarter, driven by improved performance across its various business segments. The company operates supermarkets, department stores, and home improvement stores as well as delivery and financial services in several countries across Latin America.
Earlier this year, Falabella announced plans to invest $508 million by 2024 with a focus on store openings, remodeling e-commerce development and logistics improvements. The company aims to boost profitability through these investments after implementing a plan to sell non-core assets and reduce leverage. Falabella’s leverage ratio improved from 7.3x to 5.7x in the first quarter as it continues to work towards strengthening its financial position.
In summary, Falabella has achieved significant growth in profits and revenues due to various factors such as improved performance across its business segments and lower costs through reduced inventories and delinquent payments decrease.
The company is also investing heavily in different areas such as store openings, remodeling e-commerce development and logistics improvements with aim of boosting profitability while continuing reducing debt levels through selling non-core assets reduction of leverage ratio