FINANCIAL RESULTS

S e c o n d Quarter 2023

HIGHLIGHTS FOR THE PERIOD / 2

1 Main indicators 2Q23 US$

36 MM

$3.354 MM

$176 MM

$61 MM

Ecosystem Customers

Revenue (-13% YoY)

EBITDA (5,2% margin)

Net Profit (1,8% margin)

18.6 MM

526/46

$7.9 BN

$802 MM

Loyalty Program Participants

Stores / Malls

Loan portfolio (-9% YoY)

GMV Online (-15% YoY)

2 Comments from the CEO

Gaston Bottazzini

We have intensified restoring our profitability and expanded the initiatives in the efficiency plan launched in 2022

2

  • During the quarter, we have continued normalizing our inventory levels (-22% vs June 2022 and -6% vs March 2023), which has allowed us to improve gross margins within the non-bankingbusinesses due to lower levels of markdowns (30.9%% vs 29.7% in March 2023). This, despite falling consumption and lower revenue (-13% YoY).
  • Within the Company's plan to strengthen its financial situation, we highlight that there are no relevant debt repayments until January 2025. We have successfully completed the execution of the efficiency plan launched in October 2022. However, in a more challenging than anticipated environment, we have intensified the efforts towards restoring our profitability by adding new initiatives to the plan. This has paid off, as we have reduced our consolidated expenses by 8% YoY, (~15% in real terms), despite high inflation and the costs of implementing the efficiency plan, which amounted to US$ 15 million during the quarter. This achievement reflects the hard work and commitment of our teams.
  • In order to focus our efforts, we will stop operating the Fpay app and its functionalities will be integrated into the Banco Falabella application, this to provide our customers with a better financial and payment solution.
  • Despite the challenges, we continue strengthening our physical-digital ecosystem proposal. In the physical world, the flow of visitors to our malls grew by 6% YoY, while in July we opened our thirteenth store in Mexico. Our digital bank has more than 7.3 million active customers (+7% YoY). There are 18,000 Sellers in our Marketplace, who complement the offer from our retailers.
  • This quarter we have adopted a fair value valuation model for our investment properties, which had a net impact of US$ 108 million on Falabella. We believe that this will more appropriately reflect the equity and economic situation of our real estate businesses and, therefore, of Falabella.
  • Given all of the above, we closed the quarter with a profit of US$ 61 million.

2

HIGHLIGHTS FOR THE PERIOD / 3

3 Explanations for 2Q23 results (US$ million)1

2Q22

% revenues

2Q23

% revenues

Var (%)

Total sales

Total sales

3.973

3.540

-11%

GMV Online

939

802

-15%

GMV own products (1P)

743

602

-19%

GMV third-party products (3P)

196

200

2%

Total sales of physical stores

3.034

2.737

-10%

TPV

805

761

-5%

Financial Results

Non-Banking Revenue

3.267

85,2%

2.769

82,6%

-15%

Financial Services Revenue

567

14,8%

584

17,4%

3%

Total Revenue

3.834

100%

3.354

100%

-13%

Gross profit

1.253

32,7%

1.035

30,9%

-17%

SG&A expenses

(1.086)

-28,3%

(1.000)

-29,8%

-8%

Operational income

167

4,3%

34

1,0%

-79%

EBITDA

305

8,0%

176

5,2%

-42%

Non-operating profit

23

0,6%

115

3,4%

393%

Net (Loss) Income

123

3,2%

61

1,8%

-50%

Balance Sheet

Cash (non-banking)

682

503

-26%

Gross Loan Book

8.635

7.895

-9%

Total Net Debt (Exc. Banking)

4.824

4.971

3%

Consolidated •

Consolidated revenue decreased (-13% YoY), mainly due to decreases at Home

Revenue

Improvement Chile (-24% YoY), Department Stores Chile (-17% YoY) and

Department Stores Colombia (-34% YoY, -22% in local currency).

Gross profit

•

Gross profit decreased (-17% YoY) due to:

•

Home Improvement Chile (-22% YoY): despite higher gross margins (+70bp vs

2Q22), the decrease is explained by lower revenue (-24% YoY), mainly due to

•

decreases in categories associated with construction,.

Department Stores (-24%YoY): mainly due to lower revenue in the region (-

18% YoY), coupled with a decrease in gross margins in Peru (-648 bps YoY)

and Colombia (-277 bps YoY), partially offset by an improvement in Chile (+44

•

bps YoY).

Banking Business (-28% YoY, -1,319 bp margin): due to the increase in risk

exposure (+44% YoY) and funding costs (+33% YoY), mainly from the banking business in Colombia. The Bank's margins in Chile improved compared to 1Q23 (506 bps vs. 1Q23).

Consolidated

EBITDA

  • EBITDA fell by 42% YoY to US$ 176 million.
  • Our sales and administrative expenses decreased by 8% YoY, despite high inflation across the region:
    • Decreased expenditure on logistics (-24% YoY)
    • Optimized marketing and customer loyalty campaigns (-20% YoY)
    • Limited employee related expenses excluding severance compensation (-0.3% YoY)

1 Values are in the functional currency of Chilean pesos converted to US dollars at constant exchange rates.

HIGHLIGHTS FOR THE PERIOD / 4

4 Progress in businesses / platforms

Retailers & Malls

Revenue - Department Stores

US$ million

Revenue - Home Improvement2

US$ million

Revenue - Supermarkets

US$ million

Business partners' sales - Malls

US$ million

2Q22

1,086

1,790

662

1,772

2Q23

887

1,408

633

1,708

Var %

-18%

-21%

-4%

-4%

Retailers &

Malls

  • Home Improvement: We are strengthening our proposal in Mexico, and we opened our thirteenth store during July (Interlomas). The Specialists Circle, which is a benefits program focused on the professional segment, reached 1.5 million customers across all our countries.
  • Department Stores: Following our strategy to enhance the profitability of our stores and improve the experience, we transformed the layout of 10 Department Stores in Chile, which increased exposure to apparel categories. We closed the Mallplaza Alameda store in May 2023 and announced that we will close the Mallplaza Sur store in October 2023. We also continue to promote the physical-digital experience in stores, with +3.2MM digital interactions, including price checks and mobile payment with scan and pay.
  • Supermarkets: Seeking to improve our customers' shopping experience and streamline our operation, we relaunched the on-demand delivery App "Fazil" under the name "Tottus App", which will be fully focused on the group's supermarket deliveries.
  • Mallplaza:Visits to our shopping centers reached 68 million (+6% YoY). The gastronomy and entertainment vertical represents 14% of GLA, which strengthens our proposal to market our urban centers as dinamic spaces.

Digital Businesses

Total Online GMV

US$ million

3P Online GMV

US$ million

TPV

US$ million

Loans2

US$ million

Debit and credit card purchases2

US$ million

Consolidated NPL (+90 days)2

%

2Q22

939

196

805

8,635

5,586

2.4

2Q23

802

200

761

7,895

5,797

4.7

Var %

-15%

+2%

-5%

-9%

+4%

+233pb

  • Despite the slowdown in the online channel, our Marketplace proposal continues to

make progress. We now have +18,000 Sellers and their third-party sales are up +2%

YoY, accounting for 25% of Online GMV.

Marketplace

  • Our Falabella Seller Center platform has already been fully implemented in Chile, Peru and Colombia. It includes new functionalities and integration that will improve our Seller's experience of both the on-boarding process and the logistics solutions fulfilled by Falabella, and also improves mass SKU uploading processes.

2 Includes Sodimac Colombia and Mexico, and Financial Services in Mexico that are not consolidated in the financial statements.

HIGHLIGHTS FOR THE PERIOD / 5

4 Progress in businesses / platforms

Digital Banking

Payments

Digital Businesses (cont.)

  • Despite a challenging macro environment, our digital banking proposal is gaining traction and we reached 7.3 million active customers (+7% YoY) and US$ 5.8 billion in purchases using our payment facilities. This reflects our customers' preference for our value proposal, due to digitalization and the benefits of our loyalty program. We highlight that in the case of Chile, our bank reached second place in credit card purchases and fourth place in debit card purchases.
  • During the quarter, more than 325,000 credit cards were opened (which was an all- time record for Mexico, country that represented 24% of the opening of the quarter) and more than 375,000 transactional accounts were opened. Over 50% of these openings in Chile, Peru and Colombia were processed online.
  • The delinquency levels of our portfolio is stabilizing in Chile, as a result of more restrictive origination policies and improved collection management.
  • In order to simplify and provide a better financial and payment solution to our customers, the functionalities of our Fpay digital wallet will be integrated into the Banco Falabella application.
  • On the other hand, we will focus the Fpay merchant business on processing our e- commerce payments (~90% approval rates and <1% fraud rates), and on financing Falabella.com's +18,000 Sellers. Accordingly, we continue strengthening our role in the ecosystem by granting loans to +1,300 Sellers that totaled US$ 14 million (2x YoY).

Enablers

Active Loyalty Participants

# million

Packages delivered

# million

2Q22

17.6

10.0

2Q23

18.6

9.0

Var %

+6%

-9%

• Regional adoption is increasing, and we now have 18.6 million participants (+6%

Loyalty YoY).

  • It is one of the most popular programs in the region with +3.4 million customer redemptions (+14% YoY), where 28% were online.

Home

Delivery

  • In line with our omni-channel strategy, ~35% of the deliveries in the region were made through Click & Collect.
  • With the launch of two transfer centers in Arica and Punta Arenas during July, our Marketplace consolidates its infrastructure expansion in Chile.

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Falabella SA published this content on 29 August 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 August 2023 23:19:12 UTC.