(Reuters) – Chilean retailer Falabella posted a first-quarter net profit on Tuesday, reversing a year-ago loss boosted by operations in Peru.
The retail store operator and financial services company’s net profit was 58.50 billion pesos ($59.55 million) for the January-March period.
The result was driven by operating profit at the retailer’s Peru branch, while its branches in Chile, Colombia and Brazil reduced last year’s losses.
Revenues, meanwhile, rose 4% to 2.86 trillion pesos, largely explained by the exchange rate effect of the weaker Chilean peso against stronger local currencies.
Falabella saw an increase in visits to shopping centers and reduced inventories by 11% this quarter, CEO Alejandro Gonzalez said in a statement.
The loan portfolio increased by 1% year-on-year, although delinquencies also increased slightly to 4.4%.
Core earnings, or earnings before interest, taxes, depreciation and amortization (EBITDA), more than doubled to 296.95 billion pesos.
Falabella operates supermarkets, department stores and home furnishing stores, as well as delivery and financial services throughout Latin America, including Argentina, Brazil, Colombia, Mexico, Peru, Uruguay and its home market of Chile.
Earlier this year, Falabella said it planned to invest $508 million by 2024, with more than half of the amount earmarked for store openings and renovations, while other spending would be focused on e-commerce, digital banking and logistics .
At the time, the company said the spending plan would represent a decline of around a quarter compared to last year’s investments and was aimed at boosting profitability. Last year it also launched a plan to sell non-core assets, mainly real estate.
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Falabella has been working to reduce its gearing, defined as net financial debt to EBITDA, after losing an investment-grade rating late last year.
In the first quarter, the retailer’s debt ratio was 5.7x, compared to 7.3x a year ago.
($1 = 982.38 Chilean pesos at the end of March)
