Analysis of Results

The consolidated revenue for the year reached CLP 7,562,799 million, representing a 13.6% increase when compared to 2013. This growth is mainly due to the opening of 31 new stores during the year, and the acquisition of the Maestro home improvement chain in Peru which added another 30 stores.

The consolidated loan portfolio exhibited a positive trend in the period, growing 12.8% when compared to the previous year, reaching a total of CLP 3,847,436 million as of December 31st, 2014. This growth was driven by Banco Falabella in Chile, Peru and Colombia, which grew 11.9%, 21.6% and 26.8%, respectively (in local currencies).

The gross margin for the fiscal year was 35.2%. The gross profit reached CLP 2,665,821 million, representing 13.7% annual growth. The increase in the gross profit margin was primarily attributable to the performance of the operations in Colombia, the financial business in Chile, and department stores in Chile.

Sales and administrative expenses ascended to CLP 1,854,698 million, equal to 24.5% of revenues, representing an increase of 30 basis points compared to 2013. The increase can be largely attributed to pre-opening expenses related to the upcoming launch of the first Sodimac stores in both Brazil and Uruguay, as well as extraordinary expenses related to the acquisition of Maestro in Peru. In addition, the slowdown in consumer demand observed in Chile and Peru resulted in lower dilution of fixed expenses in those operations, particularly in the department store business.

Consequently, consolidated EBITDA for the year reached CLP 1,015,565 million, with an EBITDA margin of 13.4%. Consolidated net income reached CLP 464,729 million, with a 6.1% net income margin. It is important to note that net income does not consider the revaluation of assets of the Falabella Group’s property investments, as the Company adopted the historical cost accounting method which does not impact income, in 2009.

Two shopping centers were opened in 2014: Mall Plaza Copiapó and Open Plaza Puente Alto, both in Chile. Additionally, 31 new stores were inaugurated across the region: Falabella opened eight department stores (two in Chile, three in Peru and three in Colombia), Sodimac opened nine home improvement stores (two in Chile, two in Peru, two in Colombia, one in Argentina and two in Brazil), while Tottus opened 14 supermarkets (five in Chile and nine in Peru).