Growth

Since it began operations, the Falabella Group has always been characterized by its responsible growth strategy, and 2014 was no exception. Although the year presented a challenging environment, with slower economic growth in several of the markets in which it operates, the Group nonetheless reported US$12,464 million in revenues, a 13.6% increase year over year, thanks to the balance achieved between organic and inorganic growth.

The Company’s most important milestone in the year took place in the home improvement division, with the acquisition of the Maestro chain in Peru, which added 30 stores, significantly expanding the Company’s presence in that country and contributing to the market’s development. With this step, Sodimac continued to strengthen its regional leadership.

In 2014, the Group opened 31 stores in the region, thus slightly exceeding the growth plan presented at the beginning of the year. Falabella opened eight department stores in the region, marking a milestone in its international expansion now that it has 50 stores outside of Chile. In 2014, three stores were opened in Colombia, in the cities of Ibague, Cali and Bucaramanga. Three stores were opened in Peru, in the city of Iquitos with the Expo format, in the Real Plaza Salverry shopping center in Lima and in the city of Huánuco. Lastly, two stores were opened in Chile, one in San Fernando, which replaced the expo that operated in that same city, and another in Mall Plaza Copiapo, in the northern part of the country.

The Group opened nine home improvement stores, in different formats, across the region. In Chile, the Company opened a new Homecenter in Quillota and a Homy in Mall Plaza Egaña. In Peru, the Group opened a Homecenter in the Villa El Salvador district in Lima and another in the Open Plaza shopping center in Cajamarca. In Colombia, the first Sodimac Constructor in the country was opened in Bogota and a Homecenter was opened in the Tintal neighborhood in Bogotá. In Argentina, Sodimac inaugurated a store in the city of La Plata that, in a few months, became one of the chain’s top stores in terms of revenues in the country. Lastly, two Dicico stores were opened in Brazil, in the cities of Sumare and Sao Paulo.

On the supermarket front, the Group opened 14 new stores in the region in 2014. In Chile, four supermarkets were opened in Concon, Santiago, Reñaca and the Chamisero neighborhood in the city of Colina, and one hypermarket in Mall Plaza Copiapo. In Peru, five supermarkets were opened in the districts of San Luis and Miraflores in Lima, and in the cities of Ica, Chepén and Huanuco. There were also two hypermarkets opened in Peru, one in the Open Plaza Cajamara shopping center and another in the San Hilarión district in Lima. Additionally, the new Hiperbodega Precio Uno format began operations in 2014, with two store openings in Lima, in the districts of Puente Piedra and Huaycan. This new format will help accelerate the Company’s growth in Peru, as this supermarket format is well suited to emerging middle-class consumer neighborhoods where formal retail penetration is low. The new format also helps position the Group’s Precio Uno brand.

While the Group works to incorporate new stores and formats, it is equally important to continue to development the online channel in order to adapt to new consumer habits. In 2014, the Group launched the e-commerce sites for Sodimac and Tottus in Peru. In addition, Falabella stores in Chile implemented a new delivery system for online sales, in which customers can retrieve their purchases from lockers. The locker system expands the coverage of online delivery and provides the customer with greater convenience.

The specialty stores allow the Group to continue diversifying the way it reaches its customers. During 2014, the Group opened 21 specialty stores in Chile, Peru and Colombia. These stores represented the following exclusive brands: Call it Spring, Mango, MAC Cosmetics, La Martina, Aldo, Americanino, Mossimo, Clarks, Desigual and HE by Mango. This last brand is one of the international brands represented exclusively by Falabella, which the Group added to its portfolio in 2014, together with Etam, Mango Kids and Aristocrazy.

Falabella Financiero continued demonstrating sustained growth across its different business areas. The division reported an important increase in revenues, especially in financial products associated to the CMR card, which grew 15% year over year, and in the use of the CMR card for third-party purchases, which increased by 12% compared to 2013. Meanwhile, consumer loans exceeded US$ 6 billion in 2014, a 14.5% annual increase. This achievement was partially due to the growth in new customers, which increased 6% during the year, further supporting CMR’s leadership in the region in credit cards, as its card with a balance reached 4.6 million. The CMR Points loyalty program should also be recognized, as customers realized over one million point exchanges in the year.

Banco Falabela’s passive products also exhibited sustained growth. Checking and deposit account openings increased by 23% and 38%, respectively, reaching a total of 1.4 million passive accounts. Sales associated to the debit card, meanwhile, grew by 69% in comparison to the previous year, once again leading the region in growth. Additionally, new points of service were established with customers, responding to their interest for improvements in the level of service, focusing on transparency, convenience and simplicity. The Group’s client service network increased, to include over 580 ATMs in the countries where Banco Falabella is present, 270 bank branches across the region and 800 electronic customer service centers.

Regarding Viajes Falabella, more than 400 thousand passengers in the region booked their travel plans through the agency and revenues increased by 6% year over year. Contributing to the comprehensive offering of Financial Services, this was the first year of operations for Móvil Falabella, which was preferred by more than 225,000 customers through its Prepaid and Controlled Charging services.

Regarding the Real Estate division, Mall Plaza Copiapo was inaugurated in Chile, becoming the first shopping center in the Atacama Region, which allowed the Group to introduce new stores and brands to the residents of that region. Additionally, Open Plaza opened a new shopping center in Puente Alto. These openings are in addition to the inauguration of new Aires and Laguna spaces in Mall Plaza Oeste, which revitalized this important shopping center in Santiago, creating a new social and entertainment center for the families in that neighborhood. These projects widen the mix of brands available in these areas, thanks to the arrival of new fashion and international culinary trends. Another novelty was the expansion of the Food Court of Mall Plaza Trébol in Concepcion, which increased its leasable square meters by 21%. Finally, Mall Plaza Egaña consolidated its presence this year with a wide range of products and services, including the new area dedicated to sports called Pro Sport, the Casa Maroto culinary and cultural center and a diverse offering of specialty stores.

In Peru, Mall Aventura Plaza Bellavista and Mall Aventura Plaza Trujillo also underwent expansions, which increased leasable square meters by 14% and 21%, respectively. Additionally, Medicentro-Clínica Internacional medical attention centers were incorporated in all Aventura Plaza shopping centers, thus taking a significant step in transforming them into genuine urban centers, with services and new entertainment options that improve the customer experience. Important steps were also taken in consolidating the Open Plaza brand, which defined a single logo for Chile and Peru this year.