Éxito 1Q 2020 Sales Jump 12% Year-on-Year, Profits Rise Slightly

Medellin-based supermarket giant Grupo Éxito announced May 12 that its first-quarter (1Q) 2020 operating income jumped 12% year-on-year to COP$4.05 trillion (US$1.04 billion), not including peso/dollar exchange rate effects.

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) rose 4% year-on-year, to COP$262.8 billion (US$67.7 million) with an EBITDA margin of 6.5%.

Net profits also rose to COP$22 billion (US$5.67 million), up from a COP$13.6 billion (US$3.5 million) net loss in 1Q 2019 – but not comparable because of the sale of Brazil operations last year.

“Since the beginning of the Covid-19 health emergency, Grupo Éxito has made investments and activities framed in three areas: care and protection of employees and clients, preservation of employment and the promotion of solidarity to build [Colombia] together, as a way of strengthen the sustainability of the company in the medium and long term,” according to Éxito.

“We have also promoted sales on virtual channels and home deliveries with great dynamism — trends that are reinforced in the [quarantined] market,” the company added.

Colombia sales rose 10.4% year-on-year, to COP$3 trillion (US$773 million), while “sales excluding the Covid-19 effect grew by 6.3%,” according to the company.

“The result in Colombia was mainly leveraged by the positive results of the innovative formats and the omnichannel strategy that together contributed more than 50% to sales growth in the first quarter of the year, isolating the impact of Covid-19.

“Electronic commerce channels and direct home delivery in Colombia had an important performance and represented 5.2% of the company’s total sales, compared to 4.5% at the end of 2019, growing by 44.6%.

“Commercial efforts focused on expanding logistics and technological capacity to meet the growth of virtual channels and home deliveries, which increased the number of shipments by 36%,” the company added.

“Innovative formats such as ‘Éxito Wow,’ whose sales grew by 14.6% in the first quarter — more than twice what the rest of the brand’s stores grew — already represent 17.8% of total sales. Carulla ‘FreshMarket’ saw an increase of 24.7%, 11 percentage points above the rest of the stores, and represented 26.7% of the brand’s sales.

“Finally, sales at the ‘Surtimayorista’ cash- and-carry format stores grew by 13.3% and represent 4% of Grupo Éxito’s totals in Colombia,” according to the company.

Coronavirus Initiatives

During 1Q 2020, Exito installed thousands of acrylic shields in supermarkets and at its wholesale warehouses to avoid cross-infections between customers, checkout clerks, truck drivers, home-delivery transporters and others.

The company also installed “deep disinfection with manual spray equipment in 524 warehouses,” provided 1,300 thermometers at all stores for taking temperatures of employees, provided basic hygiene kits for employees including gloves, face masks, acrylic glasses and safe hydration, and installed antibacterial gel dispensers and disinfection processes for all supermarket carts and baskets.

The company also implemented a new “buy and collect” service at 366 wholesale warehouses “so that customers can make virtual or telephone market orders and receive merchandise at no [extra] cost,” with goods loaded directly into their vehicles.

The company also made advance payments totaling nearly COP$60 billion (US$15 million) to help some 867 small and medium-size vendors deal with liquidity issues during this crisis.

Besides producing more than 20 million cloth face masks in 50 of its private-label workshops, the company also relocated some 270 of its nearly 40,000 employees from “areas of the company that have restrictions to operate” to other stores.

In addition, Exito subsidized more than 600,000 bags of 12 basic food items – sold at cost — to poorer customers, while donating another COP$5.3 billion (US$1.37 million) of free foods for the Fundación Éxito early-childhood protection program.

Uruguay, Argentina Results

In Uruguay, Éxito saw a 12.8% growth in sales in local currency, “driven by better performance in the summer season, the omnichannel strategy and the ‘fresh market’ model, which represented 43.5% of total sales,” according to Éxito.

In Argentina, sales rose 48.7% in local currency terms while EBITDA soared to COP$4.9 billion (US$1.26 million), up from COP$1.5 billion (US$387,000) in 1Q 2019.