El Puerto de Liverpool SAB de CV ((ELPQF)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for El Puerto de Liverpool SAB de CV painted a picture of both triumphs and trials. While the company celebrated significant growth in its Financial Services and Real Estate segments, along with robust digital channel performance, these achievements were tempered by challenges such as margin contractions, increased logistics costs, and inventory management issues. The overall sentiment was one of cautious optimism as the company navigates these operational hurdles.
Strong Revenue Growth in Financial Services
The Financial Services segment emerged as a key driver of revenue growth, boasting a 15.7% increase. This was fueled by a 13.3% expansion in the credit portfolio and a 6.5% rise in credit customers, underscoring the segment’s pivotal role in the company’s financial landscape.
Real Estate Division Performance
Liverpool’s Real Estate division reported a 7.3% revenue growth, attributed to improved lease spreads and the reactivation of operations at Galerías Acapulco. This performance highlights the division’s resilience and strategic importance in the company’s portfolio.
Digital Channel Expansion
Digital channels continued to thrive, with total GMV increasing by 22% year-over-year. Liverpool’s digital share reached 28%, while Suburbia’s GMV saw a remarkable 35% increase, reflecting the company’s successful digital transformation efforts.
Marketplace Growth
The marketplace segment experienced a 28% increase in GMV, driven by a 36% increase in SKUs and an 18% rise in active sellers. This growth underscores the expanding reach and influence of Liverpool’s marketplace platform.
Nordstrom Contribution
Liverpool’s investment in Nordstrom contributed MXN 1.1 billion, with sales up by 5%. This strategic interest highlights Liverpool’s commitment to diversifying its revenue streams and strengthening its market position.
Retail Margin Contraction
Despite positive revenue trends, the consolidated retail margin, excluding logistics, decreased by approximately 100 basis points year-over-year. Including logistics, the margin contracted by 223 basis points, reflecting the impact of increased logistics costs.
Increased Logistics Costs
Logistics expenses were notably high, with $299 million in one-time costs associated with the transition to the new Arco Norte facility. This significant expenditure highlights the challenges faced in optimizing logistics operations.
Inventory Levels Concerns
Inventory levels rose by 15.8% compared to the previous year, surpassing retail sales growth. This increase raises concerns about inventory management and the need for strategic adjustments.
EBITDA Margin Decline
EBITDA was reported at 6.4 billion, marking a 14.8% decrease from the prior year, with an EBITDA margin contraction of 300 basis points. This decline emphasizes the financial pressures faced by the company.
Net Profit Reduction
The consolidated net profit after tax stood at $4 billion, a 10.5% reduction year-over-year. This decrease highlights the impact of operational challenges on the company’s profitability.
Forward-Looking Guidance
Looking ahead, Liverpool provided comprehensive guidance, with consolidated revenue for the third quarter reaching 48.1 billion, a 4.4% increase year-over-year. The company anticipates continued growth in the Financial Services segment, with a 15.7% increase, and a 7.3% rise in Real Estate revenue. Despite challenges, the digital channels are expected to maintain strong performance. However, the company adjusted its expected EBITDA margin for the full year to a range of 15.5% to 16.0%, reflecting ongoing financial adjustments.
In summary, El Puerto de Liverpool SAB de CV’s earnings call revealed a mix of growth and challenges. While the company celebrates achievements in Financial Services and digital expansion, it remains cautious due to margin contractions and increased costs. The forward-looking guidance suggests a strategic focus on leveraging growth areas while addressing operational hurdles.