SANTIAGO, Chile--(BUSINESS WIRE)--The consolidated financial results delivered by Cencosud for the first quarter of 2023 demonstrated solid performance, despite a challenging economic environment and a high comparison base. The Company closed the period with a total of 161 million tickets, representing an increase of 18.1% compared to the same period of the previous year. The gross leverage was 3.29x, compared to 3.25x as of December 2022.
The Company recorded consolidated revenues of US$4,352 million, which is a 17.9% increase compared to the first quarter of 2022. Meanwhile, the Company's Adjusted EBITDA reached US$ 458 million, translating into an Adjusted EBITDA margin of 10.5% during the period.
According to the Company, the increase in Adjusted EBITDA margin -double-digit for the 10th consecutive quarter- demonstrates the business's resilience in a challenging economic environment and intense promotional activity in retail. The Company's market share gains in Supermarkets in Chile, Argentina and Brazil, were also maintained during the period. In addition, the consolidation of The Fresh Market and GIGA Atacado contributed to this positive performance.
In detail, the high levels of profitability obtained in these 10 quarters have been possible thanks to solid measures implemented, such as the C-Transforma project, which has managed to automate more than 1 million hours of work. Likewise, changes have been made to improve store efficiency, such as the implementation of self-service checkouts and the "Mi Local" app, which allows for comprehensive management of store operations.
It is important to highlight that, during this quarter, the Company opened 4 new stores and transformed 9 others, with 8 flag changes from Bretas to Bretas Atacarejo -from Supermarkets to Cash&Carry in Brazil-. In addition, Cencosud also remodeled 10 stores during the period, 7 in Chile and 3 in Argentina, which demonstrates its continuous progress in the store remodeling plan aimed at providing the best shopping experience to customers.
For the leadership in E-Grocery throughout the region
The Company emphasized its sustained growth and penetration in E-Commerce during the quarter, achieving a 9.1% penetration rate compared to the same period of the previous year. This achievement is particularly notable given the more normalized growth in physical store sales. Additionally, the Company continued to strengthen its online presence, as online penetration in Latin American Supermarkets increased 20 bps YoY to 8.2% in 1Q23.
Likewise, Cencosud strengthened its digital capabilities in both Brazil and the United States, establishing a new partnership with iFood, the leading food home delivery in Brazil, while in the United States the renewing agreement with Instacart, the top online food sales provider in North American. Additionally, the number of Jumbo Prime subscribers in Chile increased by 43.0% in March 2023 compared to the same period of the previous year, demonstrating the ongoing success of the subscription model.
Cencosud also indicated that in 1Q23, sales through the Marketplace increased by 8.7% compared to the previous year, highlighting Easy, the Home Improvement brand, as the largest seller on the Paris.cl platform, consolidating its presence and contributing to sales growth.
"We continue to move towards our goal of becoming E-Grocery leaders in the region, focusing on providing the best mobile experience and continuously improving our last mile. It is for this and other reasons that we continue to drive efficiency measures, investing in the businesses and formats preferred by our customers, and leveraging omnichannel as a complement to our strength and physical presence in the region," explained Matías Videla, CEO of Cencosud.
Results by country
When analyzing the results by country, revenues in Chile grew 1.7% compared to 1Q22, mainly explained by the increase in sales in both Supermarkets and Shopping Malls, which have shown resilience in an inflationary environment and lower consumption dynamism. This was partially offset by the Department Stores and Home Improvement businesses, which had lower revenues YoY as a result of a challenging comparison base and economic environment. Adjusted EBITDA fell 30.2% compared to 1Q22 due to higher promotional activity and CPI-adjusted expenses.
During the quarter, Cencosud's revenues in the United States reached CLP 400,058 million, with online sales contributing 5.5% of total revenues. The penetration of Private Label products reached 30.7%. In March 2023, the process of commercial synergies with the rest of the operations began, which involved sending Private Label products to Jumbo Chile stores. The commercial strategy was also adjusted to improve price perception in a market marked by high food inflation. From the digital strategy standpoint, the Company renewed its alliance with Instacart in the first months of the year, and also promoted commercial initiatives through the liveshopping platform, Firework.
In Argentina, revenues increased 101.5% in Argentine pesos and 12.1% in Chilean pesos. The growth can be attributed to the high level of consumption in the country, particularly in Supermarkets and Shopping Malls. Meanwhile, there was a significant increase in online sales of 216.7% in local currency and 88.7% in total sales for the Home Improvement business. Adjusted EBITDA reported growth of 148.1% in Argentine pesos and 38.0% in Chilean pesos, resulting in an expansion of 283 bps of the Adjusted EBITDA Margin, which was mainly due to efficiency measures, logistics costs reductions, and the impact inflation on inventories.
In Brazil, the increase in revenues during the quarter was 20.0% in local currency and 21.2% in Chilean pesos, mainly explained by the acquisition of GIGA Atacado, the growth in revenues from the Cash&Carry format stores and the increase in market share in Bretas. On the other hand, the Convenience format continues to grow with the opening of 2 new Spid stores, reaching a total of 9 stores of this type in the country. The Adjusted EBITDA Margin did not present significant changes compared to the previous year, explained by the 66 bps increase in the Supermarkets result in the country, offset by the reduction in Retail Financial EBITDA due to the higher risk in the quarter.
In Perú, revenues increased by 4.6% in both Peruvian soles and Chilean pesos, driven by the growth in Supermarkets and Shopping Malls revenues, despite the challenging economic and social environment. The Cash&Carry format has also demonstrated its resilience despite the impact of social disruption and floods. However, the drop in Adjusted EBITDA of 1.8% in PEN and 1.7% in CLP was due to higher promotional activity and increased costs of basic services.
Finally, in Colombia, revenues decreased by 0.6% in local currency and 18.0% in CLP compared to the first quarter of 2022, which was mainly due to lower sales of durable goods, especially electronic products, resulting from the high comparison base caused by the VAT-free day in Colombia in 2022, which impacted Easy the most. From an online perspective, Supermarkets experienced a growth of 35.2% in local currency, driven by the increase in Jumbo Prime subscribers and the rise in food sales through digital channels. Adjusted EBITDA fell by 37.0% in Colombian pesos and 47.7% in Chilean pesos due to the increase in inflation-related expenses and a lower dilution of expenses over revenues during the period.
About Cencosud
Cencosud is one of the largest and most prestigious retailers in the Americas, with operations in Argentina, Brazil, Chile, Peru, Colombia, and the United States -in addition to a commercial office in China and a technological Hub in Uruguay- where it develops a successful multi-format strategy that today employs more than 122 thousand people. Its operation encompasses several business lines, such as Supermarkets, Home Improvement, Department Stores, Shopping Centers and Financial Services.
Additionally, Cencosud operates complementary businesses such as Cencosud Media and Cencosud Ventures, all of which are known for their quality, excellent level of service, and focus on customer satisfaction. For more information, please visit www.cencosud.com
Contacts
Beatriz Monreal
beatriz.monreal@cencosud.cl
