Grupo Éxito 2Q 2021 Net Profit Quadruples Year-on-Year

Medellin-based multinational supermarket/dry-goods retailer Almacenes Éxito announced July 27 that its second quarter (2Q) 2021 net profits soared 297%, to COP$50.7 billion (US$12.9 million), from COP$12.8 billion (US$3.2 million) in 2Q 2020.

The quadrupling of net income is credited to a “group diversification strategy with a higher contribution of complementary businesses, mainly royalties from TUYA [credit cards] and the development of real estate projects,” according to Éxito.

“Moreover, the company profited from a leaner financial structure and lower levels of non-recurring expenses from Covid-19. Results were partially offset by lower sales levels and the variation in income tax derived from the use of the statutory rate,” the company added.

Recurring earnings before interest, taxes, depreciation and amortization (EBITDA) for 2Q 2021 rose 2.5%, to COP$306.5 billion (US$78 million), while revenues climbed a modest 0.2%, to COP$3.7 trillion (US$942 million), according to the company.

Corporate consolidated results include Colombia, Uruguay and Argentina store operations, as well as the discontinued operation of Transacciones Energéticas S.A.S., according Éxito.

Revenue growth “benefitted by the recovery of complementary businesses, solid omni-channel growth and a higher share on sale of innovative formats (up 20.2% in Colombia, up 43.9% in Uruguay, up 9.3% in Argentina),” according to Éxito.

Recurring EBITDA growth came from “higher contribution from TUYA [credit-card] royalties, the real estate business and increased productivity,” according to the company.

Consolidated capex for 2Q 2021 was COP$54.9 billion (US$14 million), 72% of which was “focused on innovation, omni-channel and digital transformation activities,” according to the company.

The Éxito “Wow” and “FreshMarket” stores “continued growing sales above non-converted stores. New model ‘Vecino’ [format] implemented in ‘Super Inter’ allowed a remarkable double-digit sales evolution,” the company added.

For its rest-of-2021 outlook, Éxito expects to spend US$110 million to US$130 million in capex, of which US$90 million to US$110 million would be inside Colombia.

Commenting on the 2Q 2021 results, Éxito CEO Carlos Mario Giraldo stated: “Despite mobility restrictions in LatAm and social disruption in Colombia, Grupo Éxito continued improving its performance during the second quarter of 2021.

“The company consistently developed innovative formats, its on-line and omni-channel businesses, while our ‘Puntos Colombia’ and complementary businesses — mainly the real estate and the financial divisions — gained traction.

“Today, innovation has proved its importance more than ever and consumer trends confirm the statement. Our clients look forward to combining virtual and in-store purchases and we have continued capitalizing from it by strengthening our retail platform,” he added.

Gross margin improved by 124 basis points (bps), to 26% in 2Q 2021, and rose 158 basis points in first-half 2021, to a margin of 26.3%. “Quarterly margins were boosted by the higher contribution of complementary businesses mainly in Colombia,” according to the company.

“Retail margin (when excluding other revenue) gained 60 bps versus the one posted in 2Q 2020, driven by contribution from the development of real estate projects in Colombia and from cost efficiencies across countries,” the company added.