Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated revenue increased by 10.4% year-on-year, reaching MXN46 billion.
- Retail revenue grew by 9.7%, with double-digit growth in financial services and real estate.
- Net profit increased by over 11% year-on-year, aided by a favorable exchange rate.
- Liverpool's digital channel saw a 15% increase in GMV, with digital share growing to nearly 25%.
- The marketplace GMV grew 33% year-on-year, with a significant increase in SKUs and sellers.
Negative Points
- NPL ratio rose to 4.1%, 63 basis points above the previous year.
- Suburbia's same-store sales growth of 7.6% was lower than previous quarters.
- Operating expenses, including bad debt provisions, grew by 10.2%, driven by higher wages and new store costs.
- EBITDA margin decreased by 50 basis points compared to the prior year.
- Inventory levels increased by 20% due to early deliveries, raising concerns about potential overstocking.
Q & A Highlights
Q: How is El Puerto de Liverpool preparing for the holiday season given the recent sales deceleration and increased inventory levels?
A: Gonzalo Gallegos, CFO, stated that they are preparing for a strong holiday season with expected sales in the lower two-digit range. They have increased their inventory by 20% to ensure they are fully prepared, aiming to stabilize inventory levels by November in line with sales growth.
Q: Can you provide details on the potential Nordstrom acquisition and its impact on Liverpool's net leverage and financing strategy?
A: Gonzalo Gallegos mentioned that the investment is anticipated to be between $1.2 billion and $1.4 billion, which would increase net leverage to between 1.0x and 1.2x. They are considering various financing options, including international markets, but have not yet decided on a specific strategy.
Q: Could you explain the foreign exchange gains recorded and the instruments used?
A: The CFO explained that 60% of their cash is held in US dollars, generating FX gains as the peso depreciates. Additionally, their dollarized debt is fully hedged with cross-currency swaps, covering both principal and coupons, which also contributes to FX gains.
Q: What factors contributed to Liverpool and Suburbia's strong performance compared to peers, and how is the digital channel performing?
A: Liverpool saw significant growth in hardlines and cosmetics, driven by strong demand, promotions, and inventory management. Suburbia benefited from store renovations and inventory management. Digital growth has slowed but remains strong, with marketplace growth expected to be around 40% for the year.
Q: How did the mix of product categories affect gross margins, and did Suburbia benefit from competitors' disruptions?
A: The CFO noted that hardlines, which have lower margins, grew faster than softlines, impacting margins. They did not see significant benefits from competitors' disruptions. The cross-border regulations are expected to level the playing field by imposing the same rules on imports.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
