Q2 2026 Falabella SA Earnings Call

August 13, 2026

[Company Representative]: Ladies and gentlemen, thank you. Welcome to the Q2 Falabella Earnings Call. I am Danielle, your coordinator for today's session. Participants are currently in listen-only mode. Present with us are Alejandro González Dale, CEO of Grupo Falabella, Juan Pablo Harrison, CFO of Grupo Falabella, Francisco Irarrázaval, CEO of Falabella Retail, Alejandro Arze, CEO of Home Improvement, Juan Manuel Matheu, CEO of Banco Falabella, Renato Giarola, CEO of Tottus. First, the company will provide a summary of the consolidated results for Q2 2026. Following the presentation, we will open the floor for questions. If you would like to participate in this part of the call, please press star followed by two at any time during the conference. Now we will start the conference with Mr. Juan Pablo Harrison. Please go ahead.

[Company Representative] (Falabella): Ladies and gentlemen, thank you. Welcome to the Q2 Falabella Earnings Call. I am Danielle, your coordinator for today's session. Participants are currently in listen-only mode. Present with us are Alejandro González Dale, CEO of Grupo Falabella, Juan Pablo Harrison, CFO of Grupo Falabella, Francisco Irarrázaval, CEO of Falabella Retail, Alejandro Arze, CEO of Home Improvement, Juan Manuel Matheu, CEO of Banco Falabella, Renato Giarola, CEO of Tottus. First, the company will provide a summary of the consolidated results for Q2 2026. Following the presentation, we will open the floor for questions. If you would like to participate in this part of the call, please press star followed by two at any time during the conference. Now we will start the conference with Mr. Juan Pablo Harrison. Please go ahead.

Speaker #1: Ladies and gentlemen.

Speaker #2: Thank you.

Speaker #1: Welcome to the second quarter Falabella Earnings Call. I am Daniel, your coordinator for today's session. Participants are currently in listen-only mode. Present are Gastón Bottazzini, CEO of Grupo Falabella; Juan Pablo Harrison, CFO of Grupo Falabella; Francisco Irarrazaval, CEO of Falabella Retail; Alejandro Arce, CEO of Home Improvement; Juan Manuel Mateo, CEO of Banco Falabella; and Renato Giarla, CEO of Tottus.

Speaker #1: First, the company will provide a summary of the consolidated results for the second quarter 2026. Following the presentation, we'll open the floor for questions.

Speaker #1: If you'd like to participate in this part of the call, please press the star key followed by 2 at any time during the conference. Now, we'll start the conference with Mr. Juan Pablo Harrison.

Speaker #1: Please go ahead.

Juan Pablo Harrison: Hello, everyone, and thank you for joining us today to review our Q2 2026 results. Before discussing our performance, please note that the management may make or refer to forward-looking statements during the presentation, including statements related to our company results, operation, expenses, strategy, potential restructuring plans, and other similar matters. These statements are based on assumptions and expectations of future events that are uncertain and subject to risks. For further information, please refer to the cautionary statement displayed on the screen. All numbers provided during the call are presented in US dollars and rounded to millions. As a result, minor differences may occur compared to the published financial statements. Today, we will discuss a very strong Q2 for Falabella, the continued progress of our ecosystem, the performance of each of our growth engines, and the strengthening of our financial position.

Speaker #3: Hello everyone, and thank you for joining us today to review our second quarter 2026 results. Before discussing our performance, please note that management may make or refer to forward-looking statements during the presentation.

Speaker #3: Including statements related to our company, results, operator company results, operations, expenses, strategy, potential restructuring plans, and other similar matters. These statements are based on assumptions and expectations of future events that are uncertain and subject to risks.

Speaker #3: For further information, please refer to the cautionary statement displayed on the screen. All numbers provided during the call are presented in US dollars and rounded to millions; as a result, minor differences may occur compared to the published financial statements.

Speaker #3: Today, we will discuss a very strong second quarter for Falabella—the continued progress of our ecosystem, the performance of each of our growth engines, and the strengthening of our financial position.

Speaker #3: I would like to start by highlighting that we delivered a great quarter, supported by broad-based growth across our business, strong customer engagement, and solid execution across the organization.

Juan Pablo Harrison: I would like to start by highlighting that we delivered a great quarter, supported by a broad-based growth across our business, the strong customer engagement, and a solid execution across the organization. One of the most important achievements of the quarter was our net income, excluding fair value, which reached $242 million. This represents an increase of approximately 14% year-over-year and marks the highest adjusted quarterly net income in the history of the group. Including the revaluation of investment properties that we do at the end of each semester, net income reached $330 million during the quarter. These positive results reflect not only the solid operating performance of our business, but also the value embedded in our asset base. At the top-line level, revenues reached $3.8 billion, growing 9.7% year-over-year. EBITDA reached $549 million, increasing 7% year-over-year, with an EBITDA margin of 14.5%.

Speaker #3: One of the most important achievements of the quarter was our net income, excluding fair value, which reached $242 million. This represents an increase of approximately 14% year-over-year and marks the highest adjusted quarterly net income in the history of the group.

Speaker #3: Including the revaluation of investment properties, which we do at the end of each semester, net income reached $330 million during the quarter. This positive result reflects not only the solid operating performance of our business, but also the value embedded in our asset base.

Speaker #3: At the top-line level, revenues reached $3.8 billion, growing 9.7% year over year. EBITDA reached $549 million, increasing 7% year over year, with an EBITDA margin of 14.5%.

Speaker #3: What continues to differentiate Grupo Falabella is the strength of our ecosystem and the way our businesses reinforce each other over time. Today, we serve 38 million customers across the region through a unique combination of capabilities, supported by a physical-digital platform.

Juan Pablo Harrison: What continues to differentiate Grupo Falabella is the strength of our ecosystem and the way our business reinforce each other over time. Today, we serve 38 million customers across the region through a unique combination of capabilities supported by a physical digital platform. By combining stores, urban centers, digital banking, logistic, artificial intelligence, adjacent businesses, data, and loyalty, we are able to engage customers more frequently, better understand their needs, and deliver increasingly relevant experiences across the ecosystem. This creates a competitive advantage that is difficult to replicate and continues to strengthen as customer engagement grows, creating compounding effect. It all starts with engagement. Today, our customers interact with the ecosystem more than 56 times per month on average, giving us frequent opportunities to connect with them across multiple needs and occasions. Those interactions translate into deeper relationships.

Speaker #3: By combining stores, urban centers, digital banking, logistics, artificial intelligence, adjacent businesses, data, and loyalty, we are able to engage customers more frequently, better understand their needs, and deliver increasingly relevant experiences across the ecosystem.

Speaker #3: This creates a competitive advantage that is difficult to replicate and continues to strengthen as customer engagement grows, creating a compounding effect. It all starts with engagement.

Speaker #3: Today, our customers interact with the ecosystem more than 56 times per month on average, giving us frequent opportunities to connect with them across multiple needs and occasions.

Speaker #3: Those interactions translate into deeper relationships. More than half of our 38 million customers connect with two or more group businesses, reflecting the increasing integration of our retail financial services, loyalty, and digital capabilities.

Juan Pablo Harrison: More than half of our 38 million customers connect with two or more group businesses, reflecting the increasing integration of our retail, financial services, loyalty, and digital capabilities. At the same time, our reach extends well beyond our own ecosystem. 82% of purchases made with our payment methods occur outside the group, allowing us to remain present in customers' everyday lives and strengthening our relevance across a broader set of moments and needs. These connections are supported by an increasingly integrated physical and digital proposition. Today, more than 50% of orders are picked up through click and collect, highlighting how customers seamlessly combine our stores and digital channels. As a result, engagement with our value proposition continues to deepen. During the quarter, the number of customers redeeming loyalty points increased 28% year-over-year, reinforcing the role of loyalty in driving engagement across the ecosystem. Ultimately, these capabilities create new monetization opportunities.

Speaker #3: At the same time, our reach extends well beyond our own ecosystem. Eighty-two percent of purchases made with our payment methods occur outside the group, allowing us to remain present in customers' everyday lives and strengthening our relevance across a broader set of moments and needs.

Speaker #3: This connection is supported by an increasingly integrated physical and digital proposition. Today, more than 50% of orders are picked up through Pick & Collect, highlighting how customers seamlessly combine our stores and digital channels.

Speaker #3: As a result, engagement with our value proposition continues to deepen. During the quarter, the number of customers redeeming loyalty points increased 28% year over year, reinforcing the role of loyalty in driving engagement across the ecosystem.

Speaker #3: Ultimately, this capabilities create new monetization opportunities, one example is retail media, where sellers using sponsored products achieved a 48% faster time-to-first-sale demonstrating the value of the traffic, engagement, and commercial capabilities that our ecosystem generates.

Juan Pablo Harrison: One example is retail media, where sellers using sponsored products achieved a 48% faster time to first sale, demonstrating the value of the traffic, engagement, and commercial capabilities that our ecosystem generates. Together, these metrics illustrate how our ecosystem creates virtuous circle. Stronger engagement leads to deeper customer relationships, which enhances the customer experience, ultimately unlocks new avenues for growth and monetization across the group. Having discussed the strengthen of our ecosystem, I will now invite our businesses CEOs to share how these capabilities are translating into results across each of our businesses. Juan Manuel, over to you.

Speaker #3: Together, these metrics illustrate how our ecosystem creates virtuous circles: stronger engagement leads to deeper customer relationships, which enhances the customer experience and ultimately unlocks new avenues for growth and monetization across the group.

Speaker #3: Having discussed the strengthening of our ecosystem, I will now invite our business CEOs to share how these capabilities are translating into results across each of our businesses.

Speaker #3: Juan Manuel, over to you.

Speaker #4: Thank you, Juan Pablo. At Banco Falabella, our ambition is clear: to become the leading digital bank in the countries where we operate. To achieve this, we continue focusing on a simple, digital, and benefits-driven value proposition that allows us to become increasingly relevant in our customers' everyday financial lives.

Juan Manuel Matheu: Thank you, Juan Pablo. At Banco Falabella, our ambition is clear: to become the leading digital bank in the countries where we operate. To achieve this, we continue focusing on a simple digital and benefits-driven value proposition that allows us to become increasingly relevant in our customers' everyday financial lives. Over the last several years, we have been investing in digital capabilities, data, and personalization to strengthen customer acquisition, increase engagement, and deepen primarily banking relationships. What is particularly encouraging is that we are seeing these efforts translate into both customers and financial growth. Our ecosystem gives us a unique advantage in understanding our customers. By combining data, technology, and customer insights across the group, we are increasingly able to provide more relevant products, personalized benefits, and better financial solutions at the moments that matter most to our customers.

Speaker #4: Over the last several years, we have been investing in digital capabilities, data, and personalization to strengthen customer acquisition, increase engagement, and deepen primarily banking relationships.

Speaker #4: What is particularly encouraging is that we are seeing these efforts translate into both customer and financial growth. Our ecosystem gives us a unique advantage in understanding our customers by combining data, technology, and customer insights across the group.

Speaker #4: We are increasingly able to provide more relevant products, personalized benefits, and better financial solutions at the moments that matter most to our customers. During the quarter, active customers reached 8.6 million, and we opened more than 810,000 accounts and credit cards, reflecting continued momentum across the region.

Juan Manuel Matheu: During the quarter, active customers reached 8.6 million, and we opened more than 810,000 accounts and credit cards, reflecting continued momentum across the region. Our loan portfolio grew 18.2% year-over-year, totaling USD 8.7 billion, supported by growth across all markets, while purchase volumes reached USD 7.9 billion, increasing 16.9% year-over-year. This growth continues to be accompanied by stable asset quality, with consolidated NPLs remaining at 2.8%, despite continued expansion across products and markets. One of the strongest indicators that our strategy is working is the growing role Banco Falabella plays beyond our own ecosystem. Today, more than 81% of purchases made with our payment methods occur outside our businesses, demonstrating that customers increasingly choose Banco Falabella as their preferred financial partner in their daily lives.

Speaker #4: Our long portfolio grew 18.2% year over year, totaling $8.7 billion, supported by growth across all markets, while purchase volumes reached $7.9 billion, increasing 16.9% year over year.

Speaker #4: This growth continues to be accompanied by stable asset quality, with consolidated NPLs remaining at 2.8%, despite continued expansion across products and markets. One of the strongest indicators that our strategy is working is the growing role Banco Falabella plays beyond our own ecosystem.

Speaker #4: Today, more than 81% of purchases made with our payment methods occur outside our businesses, demonstrating that customers increasingly choose Banco Falabella as their preferred financial partner in their daily lives.

Speaker #4: Looking ahead, we remain focused on strengthening our digital proposition, expanding personalized benefits, deepening customer relationships, and leveraging the unique advantages of the Falabella ecosystem to continue growing profitably across the region.

Juan Manuel Matheu: Looking ahead, we remain focused on strengthening our digital proposition, expanding personalized benefits, deepening customer relationships, and leveraging the unique advantages of the Falabella ecosystem to continue growing profitably across the region. Ultimately, our goal is to help customers simplify and enjoy life more through simple, relevant, and increasingly personalized financial experiences. Now, I will leave you with Francisco Irarrázaval from Falabella Retail.

Speaker #4: Ultimately, our goal is to help customers simplify and enjoy life more through simple, relevant, and increasingly personalized financial experiences. Now, I will leave you with Francisco Irarrazaval from Falabella Retail.

Speaker #1: Thank you, Juan Manuel. At Falabella Retail, our strategy remains focused on strengthening our position as the leading omnichannel, multispecialist retailer in the region. We continue to differentiate ourselves through a combination of exclusive and private labels, leading international partners, and an increasingly broad assortment available seamlessly across physical and digital channels.

Francisco Irarrázaval: Thank you, Juan Manuel. At Falabella Retail, our strategy remains focused on strengthening our position as the leading omnichannel multi-specialist retailer in the region. We continue to differentiate through a combination of exclusive and private labels, leading international partners, and an increasingly broad assortment available seamlessly across physical and digital channels. The progress we are making is reflected in our results. During the quarter, revenue grew 10.1% year-over-year, with particularly strong performance in Peru and Colombia, thanks to the continued scaling of falabella.com by expanding both assortment and seller participation. Third-party sales grew 34.4% year-over-year, while published SKUs increased 31%, allowing customers to access a broader and more relevant selection than ever before. Beyond expanding assortment, we continue to strengthen the categories and experiences that make Falabella unique. Apparel remains a strong example, with nearly 8% of sales coming from private label or products exclusively available at Falabella.

Speaker #1: The progress we are making is reflected in our results. During the quarter, revenue grew 10.1% year over year, with particularly strong performance in Peru and Colombia.

Speaker #1: Thanks to the continued scaling of Falabella.com by expanding both assortment and seller participation, third-party sales grew 34.4% year over year, while published SKUs increased 31%.

Speaker #1: Allowing customers to access a broader and more relevant selection than ever before. Beyond expanding assortment, we continue to strengthen the categories and experiences that make Falabella unique.

Speaker #1: Apparel remains a strong example, with nearly 80% of sales coming from private label or products exclusively available at Falabella. At the same time, we continue developing concepts such as Beauty F, which are helping us enhance brand discovery, accelerate the introduction of new brands to the region, and connect with younger customer segments in the beauty category.

Francisco Irarrázaval: At the same time, we continue developing concepts such as Beauty F, which are helping us enhance brand discovery, accelerate the introduction of new brands to the region, and connect with younger customer segments into the beauty category. Together, these initiatives reinforce our ability to offer distinct experiences that strengthen customers' preferences and engagement, helping drive 8.1% of sales growth during the quarter, and online growth of more than 34%. We believe these results demonstrate that our strategy is working by combining a differentiated category proposition with a rapidly expanding digital platform. We are building a more relevant, more engaging, and more scalable business while creating additional monetization opportunities through shared capabilities across the ecosystem.

Speaker #1: Together, this initiatives reinforce our ability to offer distinctive experiences that strengthen customers' preferences and engagement. Helping drive 8.1% of sales growth during the quarter and online growth of more than 34%.

Speaker #1: We believe these results demonstrate that our strategy is working, by combining a differentiated category proposition with a rapidly expanding digital platform. We are building a more relevant, more engaging, and more scalable business.

Speaker #1: While creating additional monetization opportunities through shared capabilities across the ecosystem. During the quarter, we continue expanding our footprint, focused on value, creating opportunities among our apparel and beauty specialties.

Francisco Irarrázaval: During the quarter, we continued expanding our footprint focused on value, creating opportunities among our apparel and beauty specialties, which have demonstrated strong performance on new locations while creating additional touchpoints with customers and reinforcing the connection between our physical and digital channels. Looking ahead, we remain focused on strengthening our omnichannel multi-specialist proposition and enhancing the customer experience across every interaction. The integration of our physical and digital channels, together with a differentiating assortment, exclusive private labels, and the broader advantages of our ecosystems, continue to reinforce a value proposition that is increasingly difficult to replicate. Now, I will leave you with Renato from Tottus.

Speaker #1: These have demonstrated strong performance in new locations, while also creating additional touchpoints with customers and reinforcing the connection between our physical and digital channels. Looking ahead, we remain focused on strengthening our omnichannel multispecialist proposition and enhancing the customer experience across every interaction.

Speaker #1: The integration of our physical and digital channels, together with a differentiated assortment, exclusive private labels, and the broader advantages of our ecosystems, continues to reinforce a valuable position that is increasingly difficult to replicate.

Speaker #1: Now, I will leave you with Renato from Totus.

Juan Manuel Matheu: Thank you, Francisco. At Tottus, our focus has been very clear, building a stronger value proposition by improving both price perception and the overall customer experience. In Tottus, we continue upgrading store formats, assortment, and execution standards to improve how customers experience

Renato Giarola: Thank you, Francisco. At Tottus, our focus has been very clear, building a stronger value proposition by improving both price perception and the overall customer experience. In Tottus, we continue upgrading store formats, assortment, and execution standards to improve how customers experience

Speaker #5: Thank you, Francisco. Let's talk about Totus. At Totus, our focus has been very clear: building a stronger value proposition by improving both price perception and the overall customer experience.

Speaker #5: In Totus, we continue upgrading store formats, assortment, and execution standards to improve how customers experience our proposition. In Peru, we improved the value proposition, and we are expanding Precio Uno.

Renato Giarola: our proposition. In Peru, we improved the value proposition, and we are expanding Precio Uno to address customers' everyday affordability needs. Today, Precio Uno is the cheapest grocery format in Peru and is creating a very strong price image. We are already seeing a clear customer response to these initiatives. Revenue increased 10.7% year over year, and online GMV expanded 33.9%. These indicators reinforce our review that improving the customer experience ultimately translates into strong preference, higher engagement, and sustainable growth, with our customer base growing 13.5%. Looking ahead, we will continue investing in store experience, exclusive assortment, private labels, price competitiveness, and omnichannel capabilities to further strengthen our position in both Chile and Peru. We are continually building up a very close supplier relationship to support part of this development.

Speaker #5: To address customers' everyday affordability, needs. Today, precio uno is the cheapest grocery format in Peru, and is creating a very strong price image. We are already seeing a clear customer response to this initiatives.

Speaker #5: Revenue increased 10.7% year-over-year, and online GMV expanded 33.9%. These indicators reinforce our view that improving the customer experience ultimately translates into strong preference, higher engagement, and sustainable growth, with our customer base growing 13.5%.

Speaker #5: Looking ahead, we will continue investing in store experience, exclusive assortment, private labels, price competitiveness, and omnichannel capabilities to further strengthen our position in both Chile and Peru.

Speaker #5: We are continuing to build up a very close supplier relationship to support part of this development. At the same time, we continue advancing the renewal of our private label platform, improving both branded architecture, packaging, and product presentation.

Renato Giarola: At the same time, we continue advancing the renewal of our private label platform, improving brand architecture, packaging, and product presentation, while also investing in the in-store experience. These efforts are helping us strengthen client preference in food and perishables, increase productivity across the network, and further differentiate our value proposition. Tottus boost the ecosystem, bringing client frequency for Falabella's loyalty program, become a good place to point redemption, acquire new clients, and take more information to improve personalization. We also continue investing in technology and operational capabilities that enhance the shopping experience, strengthen our omnichannel proposition, and improve efficiency, creating a strong foundation for future growth. Now, I will leave you with Alejandro Arze from Sodimac.

Speaker #5: While also investing in the in-store experience, these efforts are helping us strengthen client preference in food and perishables, increase productivity across the network, and further differentiate our value proposition.

Speaker #5: Totus boosts the ecosystem by bringing client frequency for Falabella's loyalty program, becoming a good place to point redemption, acquiring new clients, and gathering more information to improve personalization.

Speaker #5: We also continue investing in technology and operational capabilities that enhance the shopping experience, strengthen our omnichannel proposition, and improve efficiency—creating a strong foundation for future growth.

Speaker #5: Now, I will leave you with Alejandro Arce from Sodimac.

Speaker #1: Thank you, Renato. At Sodimac, we are focused on building stronger business for the long term. Considering one of the areas where we can create the greatest differentiation.

Alejandro Arze: Thank you, Renato. At Sodimac, we are focused on building a stronger business for the long term, considering one of the areas where we can create the greatest differentiation: category expertise, relationship with professional customers, omnichannel capabilities, and operational excellence, while improving productivity and efficiency across the organization. Over recent quarters, we have evolved our value proposition to better serve both homeowners and professionals, expanding category depth and assortment, improving service levels, and simplifying the shopping experience across channels. These initiatives delivered tangible results this quarter. Despite a still challenging environment for the construction sector across the region, revenues grew 2% in Chile, 9% in Peru, and 14% in Colombia. Online GMV rose 13% year over year. Today, in our consolidated operations, the professional segment continued to gain traction and represented close to 40% of sales, supported by category expertise, financing solutions, and differentiated services.

Speaker #1: Category expertise, relationships with professional customers, omnichannel capabilities, and operational excellence, while improving productivity and efficiency across the organization. Over recent quarters, we have evolved our value proposition to better serve both homeowners and professionals.

Speaker #1: Expanding category depth and assortment. Improving service levels and simplifying the shopping experience across channels. These initiatives delivered tangible results this quarter, despite a still challenging environment for the construction sector across the region.

Speaker #1: Revenues grew 2% in Chile, 9% in Peru, and 14% in Colombia. Online GMV rose 13% year over year. Today, in our consolidated operations, the professional segment continues to gain traction and represented close to 40% of sales.

Speaker #1: Support by category expertise, financing solutions, and differentiated services. We also advance our productivity and operational efficiency agenda. The quarter includes a non-recurring SG&A charge of approximately $5.4 million related to severance in Chile and the closure of stores in Brazil.

Alejandro Arze: We also advanced our productivity and operational efficiency agenda. The quarter includes a non-recurring SG&A charge of approximately CLP 5.4 million related to severance in Chile and the closure of stores in Brazil. These decisions carry a short-term cost but result in a simpler and more efficient operating model. I will now leave you with Juan Pablo.

Speaker #1: These decisions carry a short-term cost, but result in a simpler and more efficient operating model. I will now leave you with Juan Pablo.

Speaker #3: Thank you, Alejandro. One of the clearest validations of our strategy is our ability to maintain healthy profitability across our growth engines—a direct reflection of the strength and diversification of our portfolio.

Juan Pablo Harrison: Thank you, Alejandro. One of the clearest validations of our strategy is our ability to maintain healthy profitability across our growth engines, a direct reflection of the strength and diversification of our portfolio, both across geographies and across industries. Today, we benefit from exposure to retail, Home Improvement, grocery, financial services, retail real estate, and digital commerce, each serving different customer needs and operating under different market dynamics. This is why we believe that assessing our businesses on a purely standalone basis would not fully capture the additional value generated by our integrated ecosystem. Taken together, these results reinforce our confidence in the quality of our portfolio and in the long-term value creation potential of the group.

Speaker #3: Both across geographies and across industries. Today, we benefit from exposure to retail, home improvement, grocery, financial services, retail real estate, and digital commerce, each serving different customer needs and operating under different market dynamics.

Speaker #3: This is why we believe that assessing our businesses on a purely standalone basis would not fully capture the additional value generated by our integrated ecosystem.

Speaker #3: Taken together, these results reinforce our confidence in the quality of our portfolio and in the long-term value creation potential of the group. The sustained expansion in profitability that we have achieved over the last several years is, in our view, tangible evidence of the benefits of this model and reinforces our confidence in its long-term value creation potential.

Renato Giarola: The sustained expansion in profitability that we have achieved over the last several years is, in our view, tangible evidence of the benefits of this model and reinforces our confidence in its long-term value creation potential. We also made substantial progress strengthening our balance sheet, improving profitability, and enhancing cash generation. As a result, net financial debt to EBITDA has declined to approximately 1.3 times today, while maintaining a long-dated debt profile with around 70% of maturities beyond 2030. Equally important, this deleveraging has been driven not only by earnings growth but also by strong and increasingly efficient cash generation across the group. During the last 12 months, our businesses generated healthy operating cash flows, allowing us to fund investments, reward shareholders, and continue strengthening our financial position simultaneously.

Juan Pablo Harrison: The sustained expansion in profitability that we have achieved over the last several years is, in our view, tangible evidence of the benefits of this model and reinforces our confidence in its long-term value creation potential. We also made substantial progress strengthening our balance sheet, improving profitability, and enhancing cash generation. As a result, net financial debt to EBITDA has declined to approximately 1.3 times today, while maintaining a long-dated debt profile with around 70% of maturities beyond 2030. Equally important, this deleveraging has been driven not only by earnings growth but also by strong and increasingly efficient cash generation across the group. During the last 12 months, our businesses generated healthy operating cash flows, allowing us to fund investments, reward shareholders, and continue strengthening our financial position simultaneously.

Speaker #3: We also made substantial progress strengthening our balance sheet, improving profitability, and enhancing cash generation. As a result, net financial debt to EBITDA has declined to approximately 1.3 times today.

Speaker #3: While maintaining a long-dated debt profile, with around 70% of maturities beyond 2030. Equally important, this deleveraging has been driven not only by earnings growth, but also by strong and increasingly efficient cash generation across the group.

Speaker #3: During the last 12 months, our business has generated healthy operating cash flows, allowing us to fund investments, reward shareholders, and continue strengthening our financial position simultaneously.

Speaker #3: This provides us with greater flexibility, and optionally, as we enter the next phase of our journey. It allows us to continue investing in growth opportunities, strengthening our ecosystem capabilities, and creating long-term value for shareholders.

Juan Pablo Harrison: This provides us with greater flexibility and optionality, as we enter the next phase of our journey, allowing us to continue investing in growth opportunities, strengthening our ecosystem capabilities, and creating long-term value for shareholders. With that, I will hand the presentation over to Alejandro González Dale, Grupo Falabella CEO.

Speaker #3: With that, I will hand the presentation over to Alejandro Gonzalez, Group CEO of Falabella.

Alejandro González Dale: Good afternoon, everyone, and thank you for joining us. As you have heard throughout today's presentation and read in our release, our results reflect the strength of a business that continues to grow through a unique combination of leading positions across retail, financial services, shopping centers, and digital commerce, with our ecosystem as the key source of differentiation. During this quarter, we have delivered strong performances across our businesses while continuing to strengthen profitability, cash generation, and our financial position. These results reflect the benefits of the investments we have made over the years, as well as the consistent execution of our teams across the region. I would like to leave you with three key messages. First, our ecosystem continues to become more relevant to our customers.

Alejandro González: Good afternoon, everyone, and thank you for joining us. As you have heard throughout today's presentation and read in our release, our results reflect the strength of a business that continues to grow through a unique combination of leading positions across retail, financial services, shopping centers, and digital commerce, with our ecosystem as the key source of differentiation. During this quarter, we have delivered strong performances across our businesses while continuing to strengthen profitability, cash generation, and our financial position. These results reflect the benefits of the investments we have made over the years, as well as the consistent execution of our teams across the region. I would like to leave you with three key messages. First, our ecosystem continues to become more relevant to our customers.

Speaker #1: Good afternoon, everyone, and thank you for joining us. As you've heard throughout today's presentation and by reading our release, our results reflect the strength of a business that continues to grow through a unique combination of leading positions across retail, financial services, shopping centers, and digital commerce, with our ecosystem as the key source of differentiation.

Speaker #1: During this quarter, we've delivered strong performances across our businesses while continuing to strengthen profitability, cash generation, and our financial position. These results reflect the benefits of the investments we have made over the years, as well as the consistent execution of our teams across the region.

Speaker #1: I would like to leave you with three key messages. First, our ecosystem continues to become more relevant to our customers. As Juan Pablo mentioned earlier, we are serving 38 million customers who engage with us more frequently and across more businesses than ever before, strengthening the connections that make our value proposition increasingly difficult to replicate.

Alejandro González Dale: As Juan Pablo mentioned earlier, we are serving 38 million customers who engage with us more frequently and across more businesses than ever before, strengthening the connections that make our value proposition increasingly difficult to replicate. Second, our growth is broad-based and supported by the consistent execution of our teams. During the quarter, all of our major businesses delivered positive revenue growth while continuing to strengthen their customer propositions, expand capabilities, and improve operational performance. Third, we are entering this next phase from a position of strength. We have healthier balance sheets, solid profitability, strong cash generation, the flexibility to continue investing in the opportunities we see across our ecosystem. Looking ahead, we remain focused on disciplined execution, strengthening the capabilities that connect our businesses, and continue to deepen the relationships we have with our customers.

Alejandro González: As Juan Pablo mentioned earlier, we are serving 38 million customers who engage with us more frequently and across more businesses than ever before, strengthening the connections that make our value proposition increasingly difficult to replicate. Second, our growth is broad-based and supported by the consistent execution of our teams. During the quarter, all of our major businesses delivered positive revenue growth while continuing to strengthen their customer propositions, expand capabilities, and improve operational performance. Third, we are entering this next phase from a position of strength. We have healthier balance sheets, solid profitability, strong cash generation, the flexibility to continue investing in the opportunities we see across our ecosystem. Looking ahead, we remain focused on disciplined execution, strengthening the capabilities that connect our businesses, and continue to deepen the relationships we have with our customers.

Speaker #1: Second, our growth is broad-based and supported by the consistent execution of our teams. During the quarter, all of our major businesses delivered positive revenue growth while continuing to strengthen their customer propositions, expand capabilities, and improve operational performance.

Speaker #1: Third, we are entering this next phase from a position of strength. We have a healthier balance sheet, solid profitability, strong cash generation, and the flexibility to continue investing in the opportunities we see across our ecosystem.

Speaker #1: Looking ahead, we remain focused on disciplined execution, strengthening the capabilities that connect our businesses, and continuing to deepen the relationships we have with our customers.

Speaker #1: We believe the opportunity ahead remains significant, and that we are still unlocking the full potential of our ecosystem. Before moving to questions, I would like to thank our teams for their commitment, our customers for their trust, and our shareholders for their continued support.

Alejandro González Dale: We believe the opportunity ahead remains significant and that we are still unlocking the full potential of our ecosystem. Before moving to questions, I would like to thank our teams for their commitment, our customers for their trust, and our shareholders for their continuous support. Thank you. Now, we shall open to questions.

Alejandro González: We believe the opportunity ahead remains significant and that we are still unlocking the full potential of our ecosystem. Before moving to questions, I would like to thank our teams for their commitment, our customers for their trust, and our shareholders for their continuous support. Thank you. Now, we shall open to questions.

Speaker #1: Thank you. And now we shall open to questions.

[Company Representative]: Ladies and gentlemen, we are ready to open the line up for your questions. If you wish to ask a question, please press star 2 on your phone. Please stand by for your first question. Our first question comes from Andrew Ruben from Morgan Stanley. Your line is open. Please go ahead.

[Company Representative] (Falabella): Ladies and gentlemen, we are ready to open the line up for your questions. If you wish to ask a question, please press star 2 on your phone. Please stand by for your first question. Our first question comes from Andrew Ruben from Morgan Stanley. Your line is open. Please go ahead.

Speaker #4: Ladies and gentlemen, we are ready to open the line for your questions. If you wish to ask a question, please press star two on your phone.

Speaker #4: Please stand by for your first question. Our first question comes from Andrew Rubin from Morgan Stanley. Your line is open. Please go ahead.

Speaker #5: Please go ahead.

Andrew Ruben: Hi. Thanks very much for the question. What we see was a pretty balanced quarter, but maybe just to dig in a little more on the trends in Falabella Retail Chile. I am curious the type of sales environment you are anticipating for the back half, and there are some moving parts, so understanding the balance between tourist drags, macro impacts, what is evolving in your commercial strategy. I know the sales in the segment have been kind of volatile over the past several quarters, so trying to understand the moving parts on the go forward, I think, would be quite helpful. Thanks again.

Speaker #2: Hi, thanks very much for the question. We see it was a pretty balanced quarter, but maybe just to dig in a little more on the trends in Falabella Retail, Chile.

Speaker #2: I'm curious the type of sales environment you're anticipating for the back half. And there's some moving parts, so understanding the balance between tourist drags, macro impacts, what's evolving in your commercial strategy.

Speaker #2: I know the sales in the segment have been kind of volatile over the past several quarters, so trying to understand the moving parts on the go-forward, I think, would be quite helpful.

Speaker #2: Thanks again.

Speaker #1: Hey, hello Andrew. Thank you for your question. For the second half of the year, we expect the sales environment in Chile to remain mixed.

Alejandro González Dale: Hello, Andrew. Thank you for your question. For the H2 of the year, we expect the sales environment in Chile to remain mixed. On one hand, we continue to face 2 to 3 percentage points of headwind in store sales because of the lower tourist spending versus last year, which we expect to persist through December, even though the effect will be every day smaller. For instance, last year, Q2 was 9.7% of sales, and this year is 3.7%. Looking to the future, that we expect to keep decreasing in size. At the same time, the macro backdrop for discretionary categories remains somewhat challenging. We are seeing some moderation in uncertainty indicators and a constructive discussion around pro-growth reforms in Chile. While consumer confidence remains subdued, these developments could support a gradual improvement in consumption trends over time.

Alejandro González: Hello, Andrew. Thank you for your question. For the H2 of the year, we expect the sales environment in Chile to remain mixed. On one hand, we continue to face 2 to 3 percentage points of headwind in store sales because of the lower tourist spending versus last year, which we expect to persist through December, even though the effect will be every day smaller. For instance, last year, Q2 was 9.7% of sales, and this year is 3.7%. Looking to the future, that we expect to keep decreasing in size. At the same time, the macro backdrop for discretionary categories remains somewhat challenging. We are seeing some moderation in uncertainty indicators and a constructive discussion around pro-growth reforms in Chile. While consumer confidence remains subdued, these developments could support a gradual improvement in consumption trends over time.

Speaker #1: On one hand, we continue to face two to three percentage points of headwind in store sales because of the lower tourist spending versus last year, which we expect to persist through December, even though the effect will be every day smaller.

Speaker #1: For instance, last year, the second quarter was 9.7% of sales, and this year it is 3.7%. Looking forward, we expect it to keep decreasing in size.

Speaker #1: At the same time, the macro backdrop for discretionary categories remains somewhat challenging. We are seeing some moderation in uncertainty indicators and a constructive discussion around pro-growth and reforms in Chile.

Speaker #1: While consumer confidence remains subdued, this development could support a gradual improvement in consumption trends over time. From a commercial standpoint, our focus remains on strengthening our differentiation through exclusive brands, category expertise, and an increasingly integrated omnichannel proposition.

Alejandro González Dale: From a commercial standpoint, our focus remains on strengthening our differentiation through exclusive brands, category expertise, and an increasingly integrated omnichannel proposition. In parallel, we continue enhancing our marketplace capabilities and expanding the value we deliver to both customers and sellers across the ecosystem. We expect to keep growing at a healthy pace. Finally, we will continue expanding our express formats during the H2 of the year, building on the positive early results from recent openings and the halo effects over the online sales in those cities. Because when we open up these stores, the online sales really go up a lot. So yes, it is like a mixed situation looking forward, Andrew, but we expect to go through it.

Alejandro González: From a commercial standpoint, our focus remains on strengthening our differentiation through exclusive brands, category expertise, and an increasingly integrated omnichannel proposition. In parallel, we continue enhancing our marketplace capabilities and expanding the value we deliver to both customers and sellers across the ecosystem. We expect to keep growing at a healthy pace. Finally, we will continue expanding our express formats during the H2 of the year, building on the positive early results from recent openings and the halo effects over the online sales in those cities. Because when we open up these stores, the online sales really go up a lot. So yes, it is like a mixed situation looking forward, Andrew, but we expect to go through it.

Speaker #1: In parallel, we continue enhancing our marketplace capabilities and expanding the value we deliver to both customers and sellers across the ecosystem. We expect to keep growing at a healthy pace, and finally, we will continue expanding our express formats during the second half of the year, building on the positive early results from recent openings and the halo effects over the online sales in those cities—because when we open up these stores, the online sales really go up a lot.

Speaker #1: So yes, it's like a mixed situation looking forward, Andrew, but we expect to go through it.

Andrew Ruben: Absolutely. Hopefully got the sense of those drivers. Thank you.

Speaker #2: Absolutely. And hopefully get a sense of those drivers. Thank you.

Speaker #4: Thank you very much. Our next question comes from Felipe Baladam from Santander. Your line is open—please go ahead.

[Company Representative]: Thank you very much. Our next question Thunder, your line is open. Please go ahead.

[Company Representative] (Falabella): Thank you very much. Our next question Thunder, your line is open. Please go ahead.

[Analyst]: Hi, everyone. First of all, thanks for the call. I have three questions. The first one is regarding department stores in Chile. I was wondering if you could tell us how sales evolved throughout the quarter, and if you have any color on the July data. My second question is about expenses. SG&A, you said they rose 8% adjusted by effects. How does this compare to top-line revenue adjusted by effects? Do you still see an EBITDA margin dilution there, or contraction, actually? My third question, this is a little more technical, but there is a discrepancy between what consensus had in terms of earnings before taxes, which was in line with your numbers, and the distributable net income, which was above the street.

Felipe Ballevona: Hi, everyone. First of all, thanks for the call. I have three questions. The first one is regarding department stores in Chile. I was wondering if you could tell us how sales evolved throughout the quarter, and if you have any color on the July data. My second question is about expenses. SG&A, you said they rose 8% adjusted by effects. How does this compare to top-line revenue adjusted by effects? Do you still see an EBITDA margin dilution there, or contraction, actually? My third question, this is a little more technical, but there is a discrepancy between what consensus had in terms of earnings before taxes, which was in line with your numbers, and the distributable net income, which was above the street.

Speaker #6: Hi, everyone. So first of all, thanks for the call. I have three questions. The first one is regarding the department stores in Chile. I was wondering if you could tell us how sales evolved throughout the quarter, and if you have any color on the July data.

Speaker #6: My second question is about expenses. Is G&A—you said they rose 8% adjusted by effects. How does this compare to top-line revenue adjusted by effects?

Speaker #6: Do you still see an EBITDA margin—I mean, a margin dilution there, or actually contraction? And my third question, this is a little bit more technical, but there's a discrepancy between what consensus had in terms of earnings before taxes, which was in line with your numbers, and the distributable net income, which was above the street.

Speaker #6: But it's hard to tell if this beat was due to a lower minority interest net of asset revaluation and deferred taxes, or if it was due to lower taxes net of deferred taxes.

[Analyst]: It is hard to tell if this beat was due to a lower minority interest, net of asset revaluation and deferred taxes, or it was due to lower taxes, net of deferred taxes. So if you could give us any color here, that would be useful. Is there any way that we could get better at estimating this number, because I have the feeling that the acquisitions you made last year of the minority stakes in Colombia are not being fully incorporated into the market estimates. Thank you.

Felipe Ballevona: It is hard to tell if this beat was due to a lower minority interest, net of asset revaluation and deferred taxes, or it was due to lower taxes, net of deferred taxes. So if you could give us any color here, that would be useful. Is there any way that we could get better at estimating this number, because I have the feeling that the acquisitions you made last year of the minority stakes in Colombia are not being fully incorporated into the market estimates. Thank you.

Speaker #6: So if you could give us any color here, that would be useful, and any way that we could get better at estimating this number, because I have the feeling that the acquisitions you made last year of the minority stakes in Colombia are not being fully incorporated into the market estimates.

Speaker #6: Thank you.

Francisco Irarrázaval: Okay, Felipe. To the first part of your question, then I am going to pass the microphone to Juan Pablo, if that is okay. Falabella performance in Chile evolved positively through the quarter, supported by strong commercial events. May was particularly strong, driven by an excellent Mother's Day campaign, while June benefited from a solid cyber event, where our sales increased almost 10%, despite the overall events declining 4% in local currency. So we outperformed the market by 14 basis points. In July, performance was impacted by a severe rainfall in parts of the country, especially the beginning of the month, particularly affecting our stores in the north and keeping La Serena store closed for quite a long time.

Speaker #1: Okay, Felipe. Falabella Retail—so, the first part of your question, then I'm going to pass the microphone to Juan Pablo, if that is okay.

Speaker #1: Falabella's performance in Chile evolved positively through the quarter, supported by strong commercial events. May was particularly strong, driven by an excellent Mother's Day campaign, while June benefited from a solid Cyber event where our sales increased almost 10%, despite the overall event declining 4% in local currency.

Speaker #1: So, we outperformed the market by 14 basis points. In July, performance was impacted by severe rainfall in parts of the country, especially at the beginning of the month, particularly affecting our stores in the north and keeping the La Serena store closed for quite a long time.

Speaker #1: However, toward the end of the month, we saw an acceleration in online sales driven by the blackout event, which supported digital growth and helped offset some of the weather-related headwinds that we had in Chile, especially in Falabella Retail.

Francisco Irarrázaval: However, toward the end of the month, we saw an acceleration in online sales driven by the blackout event, which supported the EBITDA growth and helped offset some of the weather-related headwinds that we had in Chile, especially in Falabella Retail. Overall, underlying trends remain healthy, supported by our commercial initiatives and continued strength in online channels, particularly on the 3P, where due to the better delivery times, financing offering, and loyalty program, we are growing. We are having a lot of traction recently. We expect to keep growing looking forward. I am going to pass the microphone to Juan Pablo for the second part of the question.

Speaker #1: Overall, underlying trends remain healthy, supported by our commercial initiatives and continued strength in online channels, particularly on the 3P, where, due to better delivery times, financing offerings, and our loyalty program, we are growing—we're having a lot of traction recently.

Speaker #1: We expect to keep growing looking forward. I'm going to pass the microphone to Juan Pablo for the second part of the question.

Speaker #7: Regarding your SG&A question, Felipe, thank you for the question. Just to clarify, the 8%—we effectively showed roughly a 10% growth in SG&A.

Juan Pablo Harrison: Regarding your SG&A question, Felipe, thank you for the question. Just to clarify, the 8%, effectively, we showed roughly a 10% growth in SG&A. But the 8% that we mentioned is adjusted not only for the FX effects, but also of some one-off items, especially in Sodimac in Chile and Brazil. So this 8% is comparable basis, putting apart those effects. In terms of revenues, the impact of the effects is broadly similar in percentage point in the SG&A line and in the top-line growth. The comparable basis is also around 8%. As a result, expense growth was broadly in line with the revenue growth during the quarter.

Speaker #7: But the 8% that we mentioned is adjusted not only for the effects, but also for some one-off items, especially in Sodimac in Chile and Brazil.

Speaker #7: So, this 8% is on a comparable basis, setting aside those effects. In terms of revenues, the impact of these effects is broadly similar, in percentage points, in both the SG&A line and in the top-line growth.

Speaker #7: So the comparable basis is also around 8%. As a result, expense growth was broadly in line with revenue growth during the quarter.

Alejandro González Dale: Hi, Felipe. This is Alejandro. Regarding your last question about the difference between the pre-tax and the profit distributable to the financial holders of the company, two things I see that may present some noise into the number. The first one is the acquisition of the minority positions that our partner in Colombia, Organización Corona, had in Banco Falabella, and also in Falabella Retail that we had in there, that was acquired last year. The other thing that may generate some noise is the fact that it is related to the fair value that we have in Mallplaza, mainly. Please keep in mind that the fair value that Mallplaza presents is for 100% of the assets. When we do that in the Falabella group numbers, we only take into consideration the assets, it would be investment properties, that are not considering the assets that we rent to Mallplaza.

Alejandro González: Hi, Felipe. This is Alejandro. Regarding your last question about the difference between the pre-tax and the profit distributable to the financial holders of the company, two things I see that may present some noise into the number. The first one is the acquisition of the minority positions that our partner in Colombia, Organización Corona, had in Banco Falabella, and also in Falabella Retail that we had in there, that was acquired last year. The other thing that may generate some noise is the fact that it is related to the fair value that we have in Mallplaza, mainly. Please keep in mind that the fair value that Mallplaza presents is for 100% of the assets. When we do that in the Falabella group numbers, we only take into consideration the assets, it would be investment properties, that are not considering the assets that we rent to Mallplaza.

Speaker #1: Hi Felipe, this is Alejandro. Regarding your last question about the difference between the free tax and the profit distributable to the financial holders of the company, there are two things I see that may present some noise in that number.

Speaker #1: The first one is the acquisition of the minority positions that our partners in Colombia, Corona, had in Banco Falabella, and also in Falabella Retail that we had there.

Speaker #1: That was acquired last year. And the other thing that may generate some noise is the fact that it's related to the fair value that we have in Mall Plaza, mainly.

Speaker #1: Please keep in mind that the fair value that Plaza presents is for 100% of the assets. When we do that in the Falabella Group numbers, we only take into consideration the assets that are investment properties. That is not considering the assets that we rent to Plaza.

Francisco Irarrázaval: It is basically 90% of the value that Mallplaza represents, assuming that more or less 90% of the leases that Mallplaza has are with third parties, and the other 10% is the Falabella stores, Sodimac stores, or Tottus stores that we have in the Mallplaza portfolio.

Alejandro González: It is basically 90% of the value that Mallplaza represents, assuming that more or less 90% of the leases that Mallplaza has are with third parties, and the other 10% is the Falabella stores, Sodimac stores, or Tottus stores that we have in the Mallplaza portfolio.

Speaker #1: So, it's basically kind of 90% of the value that Plaza represents, assuming that more or less 90% of the leases that Plaza has are with third parties, and the other 10% is the Falabella store, Sodimac stores, or Tottus stores that we have in the Plaza portfolio.

Speaker #6: That's very helpful. Thank you, everyone.

[Analyst]: That is very helpful. Thank you, everyone.

Felipe Ballevona: That is very helpful. Thank you, everyone.

[Company Representative]: Thank you so much. Our next question comes from Marcia.

[Company Representative] (Falabella): Thank you so much. Our next question comes from Marcia from Goldman Sachs.

Speaker #4: Thank you so much. Our next question comes from Marcia from Goldman Sachs. Your line is open. Please go ahead.

[Company Representative] (Bloomberg): Hi, this is Gabriela from Bloomberg. Thanks for taking my question. I would like to explore a bit more of the dynamics in Banco Falabella Chile. Share income grew close to 30% this quarter, and I understand that portfolio growth and usage supported this. I was wondering if there was anything else that explains this increase and how sustainable that is going forward. Do you see some mix between interest and fee income evolving from here? The second question I have is on your own payment methods. We have seen very consistently gaining share across your entire share equation in all three of the first quarters. It is got to thank the redemption rate behind the loyalty program that was a key driver of this. Thank you.

Gabriela Leme: Hi, this is Gabriela from Bloomberg. Thanks for taking my question. I would like to explore a bit more of the dynamics in Banco Falabella Chile. Share income grew close to 30% this quarter, and I understand that portfolio growth and usage supported this. I was wondering if there was anything else that explains this increase and how sustainable that is going forward. Do you see some mix between interest and fee income evolving from here? The second question I have is on your own payment methods. We have seen very consistently gaining share across your entire share equation in all three of the first quarters. It is got to thank the redemption rate behind the loyalty program that was a key driver of this. Thank you.

Speaker #8: Hi, this is Gabriela from Goldman Sachs. Thank you for taking my question. I would like to explore a bit more the dynamics in Banco Falabella Chile.

Speaker #8: Fuel income grew close to 30% this quarter. I understand that portfolio growth and usage supported this, but I was wondering if there was anything else that explains this increase, and how sustainable that is going forward.

Speaker #8: Do you see some mix between interest and fee income evolving from here? And then, for the second question, I would have it on your own payment methods.

Speaker #8: We have seen very consistent share gains across your entire Chile operation in the last three to four quarters. So, it's difficult to think that the reinvestment made behind a loyalty program was a key driver of this.

Speaker #8: Thank you.

Speaker #1: Thank you, Marcia, for your question. We didn’t hear quite well, so I’ll try to answer, and then, if you see that something is missing, please just let me know.

Juan Manuel Matheu: Thank you, Marcia, for your question. We did not hear quite well, so I will try to answer, and then if you see that there is something missing, you please just tell me. In Chile, net fee income growth on a comparable basis was driven by higher customer engagement. We saw a larger and more active customer base making greater use of our payment methods, which translated into higher merchant fees, maintenance fees, and insurance cross-sell commissions. Maintenance fees income also benefited from the continued development of our customer base and card product mix. Looking ahead, we expect fee income to continue growing, supported by increasing customer primacy, higher usage across our product suite, and a sustained contribution from key drivers that supported fee income growth during the quarter. Regarding the revenue mix, we expect both net interest income and fee income to remain relevant and complementary contributors to the bank's growth.

Speaker #1: In Chile, net income growth on a comparable basis was driven by higher customer engagement. We saw a larger and more active customer base making greater use of our payment methods, which translated into higher merchant fees.

Speaker #1: Maintenance fees and insurance cross-sell commissions. Maintenance fees income also benefited from the continued development of our customer base and card product mix. Looking ahead, we expect fee income to continue growing, supported by increasing customer primacy, higher usage across our product suite, and a sustained contribution from key drivers that supported fee income growth during the quarter.

Juan Manuel Matheu: Regarding the revenue mix, we expect both net interest income and fee income to remain relevant and complementary contributors to the bank's growth.

Speaker #1: Regarding the revenue mix, we expect both net interest income and fee income to remain relevant and complementary contributors to the bank's growth. Rather than anticipating a significant structural shift in the mix, our focus remains on further diversifying our revenue streams and deepening our customer relationships.

Juan Manuel Matheu: Rather than anticipating a significant structural shift in the mix, our focus remains on further diversifying our revenue streams and deepening our customer relationships. That was the first question. The second one, I believe, was regarding the payment methods and the relationship with the loyalty program. Is that correct?

Speaker #1: That was the first question. The second one, I believe, was regarding the payment methods and the relationship with the loyalty program. Is that correct?

[Analyst]: Yeah, that is correct.

Gabriela Leme: Yeah, that is correct.

Speaker #8: Yeah, that's correct.

Juan Manuel Matheu: Okay. The answer is yes. We believe that the continuous enhancement of our loyalty proposition has been one of the factors supporting the penetration of our own payment methods. Over the past year, we have further integrated CMR Puntos into the ecosystem commercial agenda, increasing campaigns and Oportunidades Unicas or exclusive offers with our retailers, and activations around key events while expanding our network of partner and customer benefits. At the same time, initiatives such as Puntos Más Pesos and Puntos Plazoles have increased our value proposition. Our loyalty program, we believe, allow us to transform customer interactions into meaningful benefits and experiences. This reflected in a 27.8% year-on-year increase in redeeming customers, while Chile customers who redeem points spend approximately 40% more in our stores and make around 30% more transactions than comparable customers, highlighting the positive impact of loyalty and engagement and activity levels.

Speaker #1: Okay, okay. So the answer is yes. We believe that the continuous enhancement of our loyalty proposition has been one of the factors supporting the penetration of our own payment methods.

Speaker #1: Over the past year, we have further integrated CMR Puntos into the ecosystem of commercial agenda, increasing campaigns and unique or exclusive offers with our retailers.

Speaker #1: And activations around key events while expanding our network of partner and customer benefits. At the same time, initiatives such as Punto Más Pesos and Punto Plazoles have increased our value proposition.

Speaker #1: Our loyalty program, we believe, allows us to transform customer interactions into meaningful benefits and experiences. This is reflected in a 27.8% year-on-year increase in redeeming customers.

Speaker #1: Chile customers who redeem points spend approximately 40% more in our stores and make around 30% more transactions than comparable customers, highlighting the positive impact of loyalty, engagement, and activity levels.

Speaker #1: But what has us really very enthusiastic is that, looking ahead, next month we're going to relaunch our loyalty program first in Chile, and in the coming quarters, we will do so in Peru and Colombia.

Juan Manuel Matheu: What has us really very enthusiastic is that looking ahead, next month, we are going to relaunch our loyalty program, first in Chile, and in the coming quarters, we will do so in Peru and Colombia. This will allow us to consolidate our program as number one in Chile, and we believe that we could get to be number one in the rest of the region. Our loyalty program is core to our ecosystem, as first it creates greater opportunities for retailers to leverage its benefits, enhance customer experience, and continue driving program engagement and usage, and second, increase the principality of our payment methods. In terms of returns, we measure the program based on its impact on our customer behavior, particularly through higher purchase frequencies, as already mentioned, higher average ticket, and lower attrition among customers who actively redeem rewards.

Speaker #1: This will allow us to consolidate our program as number one in Chile, and we believe that we could become number one in the rest of the region.

Speaker #1: Our loyalty program is core to our ecosystem, as first, it creates greater opportunities for retailers to leverage its benefits, enhance customer experience, and continue driving program engagement and usage, and second, increases principality of our payment methods.

Speaker #1: In terms of returns, we measure the program based on its impact on our customer behavior, particularly through higher purchase frequencies, as already mentioned, higher average ticket, and lower attrition among customers who actively redeem rewards.

[Analyst]: Perfect. Thank you.

Gabriela Leme: Perfect. Thank you.

Speaker #8: Perfect. Thank you.

[Company Representative]: Thank you very much. Our next question comes from Nicolás Larrain from JP Morgan. Your line is open. Please go ahead.

[Company Representative] (Falabella): Thank you very much. Our next question comes from Nicolás Larrain from JP Morgan. Your line is open. Please go ahead.

Speaker #4: Thank you very much. Our next question comes from Nicholas Larraín from J.P. Morgan. Your line is open. Please go ahead.

Nicolás Larrain: Hi, everyone. Good afternoon. Thank you for the time. Thank you for taking my question. I had two, specifically one on Home Improvement and another one on the banking side. First, on Home Improvement, in Chile specifically, we have seen some increase at the margin in terms of building permits and some leading indicators to construction activity. I just wanted to hear if you are seeing anything around improved construction activity in the store, and what is your outlook, let us say, for this sector as a whole in Chile, maybe if you see some green pasture, maybe towards the end of the year, or this is more of a 2027 story. That is my first question. Then on the banking side, I wanted to ask if you could comment to us how you would expect the banking in Chile, specifically, to behave now that inflation should come lower.

Speaker #6: Hi, everyone. Good afternoon. Thank you for your time. Thank you for taking my question. I had two, specifically—one on home improvement and another on the banking side.

Speaker #6: First, on home improvement, we've seen in Chile specifically—sorry—we've seen some increase at the margin in terms of building permits, and some leading indicators to construction activity.

Speaker #6: I just wanted to hear if you're seeing anything around improved construction activity in the store, and what is your outlook, let's say, for this sector as a whole in Chile? Maybe if you see some green pastures toward the end of the year, or is this more of a 2027 story?

Speaker #6: That's my first question. And then, on the banking side, I wanted to ask if you could comment for us on how you would expect the bank in Chile, specifically, to behave now that inflation should come down.

Nicolás Larrain: I know that Banco Falabella is not that much indexed in top line towards the US. But I wanted to understand how you see that operation behaving in a lower inflation environment. Then in the bank in Peru, we saw this uptick in improvisations. It was well explained in the release. I wanted to understand how should we see cost of risk in the bank in Peru, maybe throughout the second semester and also in 2027. We saw, of course, in Q1, very low levels. Now it increased because of El Niño provisions, but we are still below the historical level of cost of risk in Peru. So I wanted to understand where should we land at this cost of risk on a more normalized basis. Thank you.

Speaker #6: I know that the Bank of Falabella is not that much indexed in top line towards the US, but I wanted to understand how you see that operation behaving in a lower inflation environment.

Speaker #6: And then in the bank in Peru, we saw this uptick in provisions. It was well explained in the release. I wanted to understand, how should we view the cost of risk in the bank in Peru?

Speaker #6: Maybe throughout the second semester and also in ’27. We saw, of course, in the first quarter, very low levels. Now it increased because of El Niño provisions.

Speaker #6: But we're still below the historical level of cost of risk in Peru. So I wanted to understand, where should we land at this cost of risk on a more normalized basis?

Speaker #6: Thank you.

Alejandro Arze: Hi, Nicolas. Thank you for your question. In terms of our question of demand conditions, demand recovery in Chile remains gradual. The non-mining activity actually advanced only 1.4%, and construction remains under pressure, with the IMACON down 1.1% in May. We see some positive signals, but a more durable recovery depends on improvement in business confidence, translating that into construction. We think the new government policies points to improvement in our sector going forward. Measuring, targeting construction, housing, and financings, together with the construction programs, should contribute to a progressive recovery in demand for building materials and home projects. Our business is clearly exposed to the economic cycle. What we can control is how we position the company to navigate these swings, and that is where our focus has been, reducing costs, simplifying the operation, and building strength in the segments that were structurally more resilient.

Juan Manuel Matheu: Hi, Nicolas. Thank you for your question. In terms of our question of demand conditions, demand recovery in Chile remains gradual. The non-mining activity actually advanced only 1.4%, and construction remains under pressure, with the IMACON down 1.1% in May. We see some positive signals, but a more durable recovery depends on improvement in business confidence, translating that into construction. We think the new government policies points to improvement in our sector going forward. Measuring, targeting construction, housing, and financings, together with the construction programs, should contribute to a progressive recovery in demand for building materials and home projects. Our business is clearly exposed to the economic cycle. What we can control is how we position the company to navigate these swings, and that is where our focus has been, reducing costs, simplifying the operation, and building strength in the segments that were structurally more resilient.

Speaker #7: Hi, Nicholas. Thank you for your question. In terms of our question about demand conditions, demand recovery in Chile remains gradual. Non-mining activity actually advanced only 1.4%, and construction remains under pressure, with the IMACON down 1.1% in May.

Speaker #7: We see some positive signals, but a more durable recovery depends on improving business confidence and translating that into construction. Within the new government policies, there are points to improvement in our sector going forward. Measures targeting construction, housing, and financials, together with the construction programs, should contribute to a progressive recovery in demand for building materials and home projects.

Speaker #7: Our business is clearly exposed to the economic cycle. What we can control is how we position the company to navigate these swings, and that is where our focus has been: reducing costs, simplifying the operation, and building strength in the segments that are structurally more resilient.

Speaker #7: The professional customer grew close to 5% in the second quarter of 2026 and now accounts for approximately 38% of sales, while the online business continued to perform strongly, with the EMV up to 15% in Chile.

Alejandro Arze: The professional customer grew close to 5% in Q2 2026 and now accounts for approximately 38% of sales, while the online business continued to perform strongly with the GMV up to 15% in Chile. These are structurally more resilient parts of the business, and they allow us to keep capturing demand in a challenging environment, leaving us well-positioned as the recovery consolidates. Nicolas, in terms of the bank, first in Chile and then in Peru, as you well mentioned, Banco Falabella Chile is not very much indexed to inflation. So I would say that a lower inflation is good for our customers. I just see something good, positive news for the capacity of our customers to pay their debts. More generally speaking, we are seeing really very good traction with our customers using every day more their CMR, every day more their Banco Falabella debit card.

Juan Manuel Matheu: The professional customer grew close to 5% in Q2 2026 and now accounts for approximately 38% of sales, while the online business continued to perform strongly with the GMV up to 15% in Chile. These are structurally more resilient parts of the business, and they allow us to keep capturing demand in a challenging environment, leaving us well-positioned as the recovery consolidates. Nicolas, in terms of the bank, first in Chile and then in Peru, as you well mentioned, Banco Falabella Chile is not very much indexed to inflation. So I would say that a lower inflation is good for our customers. I just see something good, positive news for the capacity of our customers to pay their debts. More generally speaking, we are seeing really very good traction with our customers using every day more their CMR, every day more their Banco Falabella debit card.

Speaker #7: These are structurally more resilient parts of the business, and they allow us to keep capturing demand in a challenging environment, leaving us well positioned as recovery consolidators.

Speaker #1: Nicholas, in terms of the bank—first in Chile, and then in Peru—as you well mentioned, Banco Falabella Chile is not very much indexed to inflation.

Speaker #1: So I will say that lower inflation is good for our customers. So I just see something good, positive news for the capacity of our customers to pay their debts.

Speaker #1: In more general speaking, we are seeing really very good traction with our customers using every day more their CMR, every day more their Banco de Falabella debit card.

Speaker #1: We expect them to keep on using our products more and more every time. We also expect our long portfolio to keep on growing double digits.

Juan Manuel Matheu: We expect them to keep on using our products every time more and more. We also expect our loan portfolio to keep on growing double digits. So we are pretty optimistic for the rest of the year. In terms of Peru, as you well mentioned, we now feel really very comfortable with our provision levels, even in the scenario of a strong El Niño in Peru. Okay. In terms of the cost of risk, as you also well mentioned, our cost of risk in Peru has been decreasing. Of course, with provisions for El Niño, their increase in the last quarter, but we expect them to keep on lowering, and then to keep on lowering through the rest of the year, and then to become stable from 2027 and forward.

Speaker #1: So, we are pretty optimistic for the rest of the year. In terms of Peru, as you well mentioned, we now feel really very comfortable with our provision levels, even in the scenario of a strong El Niño.

Speaker #1: In Peru, okay. And in terms of the cost of risk, as you also well mentioned, our cost of risk in Peru has been decreasing, of course, with provisions for El Niño.

Speaker #1: There was an increase in the last quarter, but we expect them to keep on lowering through the rest of the year, and then to become stable from 2027 and forward.

Nicolás Larrain: Perfect. Thank you very much.

Speaker #6: Perfect. Thank you very much, everyone.

Juan Manuel Matheu: Thank you very much. You are welcome.

Speaker #1: You're welcome.

[Company Representative]: Thank you very much. Just a reminder, if you wish to ask a question, please press star 2 on your phone. Our next question comes from Melissa Byam from Bank of America. Your line is open. Please go ahead.

[Company Representative] (Falabella): Thank you very much. Just a reminder, if you wish to ask a question, please press star 2 on your phone. Our next question comes from Melissa Byam from Bank of America. Your line is open. Please go ahead.

Speaker #4: Thank you very much. Just a reminder, if you wish to ask a question, please press star two on your phone. Our next question comes from Melissa Bayam from Bank of America.

Speaker #4: Your line is open. Please go ahead.

Melissa Byam: Hi, everyone. Thanks for taking my questions. I just had a couple on the bank in Chile. I wanted to ask, and I know it is still early, but about the permanent zero fee account offer. If this is driving an uptick in new clients, and do you expect this to change your customer profile at all, or impact your fee income materially? Then, I apologize if you have already answered this, but I wanted to ask about the cost of risk in Chile and expectations over the balance of the year.

Melissa Byun: Hi, everyone. Thanks for taking my questions. I just had a couple on the bank in Chile. I wanted to ask, and I know it is still early, but about the permanent zero fee account offer. If this is driving an uptick in new clients, and do you expect this to change your customer profile at all, or impact your fee income materially? Then, I apologize if you have already answered this, but I wanted to ask about the cost of risk in Chile and expectations over the balance of the year.

Speaker #5: Hi, everyone. Thanks for taking my questions. I just had a couple on the bank in Chile. I wanted to ask—and I know it's still early—about the permanent zero-fee account offer.

Speaker #5: Is this driving an uptick in new clients, and do you expect this to change your customer profile at all, or impact your fee?

Speaker #5: The income materially? And then, I apologize if you've already answered this, but I wanted to ask about the cost of risk in Chile and expectations over the balance of the year.

Juan Manuel Matheu: Okay. Thank you, Melissa, for your questions. In terms of the account zero fee, I am wondering if you are asking for, first, it could be that we have always had a zero account fee in case of customers that really transact with our current account. So in customers that have a certain number of transactions per month, we do not charge a fee. In customers that actually receive their salary, we do not charge fees. In customers that have a certain flow in their current account, we do not charge fees. So that is something that we have been doing for the last 10 years, with really very good acceptance. The combination of this possibility of having a zero fee account, plus the digital value proposition, plus the benefits that only Banco Falabella gives

Speaker #1: Okay, thank you, Felice. Melissa, for your questions. In terms of the account zero fee, I'm wondering if you are asking for—first, it could be that we have always had a zero account fee in the case of customers that really transact with our current account.

Speaker #1: So, for customers who have a certain number of transactions per month, we don't charge a fee. For customers who actually receive their salary, we don't charge fees.

Speaker #1: In customers that have a certain float in their current account, we don't charge fees. So that is something that we have been doing for the last 10 years.

Speaker #1: We have seen very good acceptance. The combination of the possibility of having a zero-fee account, plus the digital value proposition, plus the benefits that only Banco Falabella offers in the debit market in Chile, has been really very good.

Juan Manuel Matheu: In the debit market in Chile, it had been very good. Lately, maybe you are referring to this, we have doing a promotion, just to try to see how customers react, if we just do zero fees without any condition. This is only a promotion. We see traction from that, but we still need to analyze and consider which is the level of increase in new account opening. We also need to understand the level of activation of that account. But basically, we do not see any big changes in the fees, going forward.

Speaker #1: Lately, and maybe you're referring to this, we have been doing a promotion just to try to see how customers react if we just do zero fees without any condition.

Speaker #1: Okay, this is only a promotion. We see traction from that, but we still need to analyze and consider what the level of increase is in new account openings.

Speaker #1: We also need to actually understand the level of activation of those accounts. But basically, we don't see any big changes in the fees going forward.

Melissa Byam: Thanks so much. Yes, I was referring to that, the new promotions.

Melissa Byun: Thanks so much. Yes, I was referring to that, the new promotions.

Speaker #5: Thanks so much. And yes, I was referring to that—the new promotion.

Speaker #1: Okay.

Juan Manuel Matheu: Okay.

Speaker #5: And then, cost of risk over the balance of the year?

Melissa Byam: Then cost of risk over the balance of the year?

Melissa Byun: Then cost of risk over the balance of the year?

Juan Manuel Matheu: I am sorry. For the cost of risk, we have been having a very healthy loan portfolio. We actually feel comfortable with slightly increasing that cost of risk to actually further acquire more customers and keep on growing at the levels we have been growing in the recent past. But I would say that that would be slightly, I would expect the cost of risk to remain slightly more of the levels that we have now, but nothing very significant.

Speaker #1: I'm sorry. Regarding the cost of risk, we have been maintaining a really healthy long portfolio. We actually feel comfortable with slightly increasing that cost of risk to further acquire more customers and continue growing at the levels we have seen in the recent past.

Speaker #1: But I would say that I would expect the cost of risk to remain slightly more at the levels that we have now, but nothing really very significant.

Melissa Byam: Great. Thank you.

Melissa Byun: Great. Thank you.

Speaker #5: Great. Thank you.

Juan Manuel Matheu: You are welcome.

Speaker #1: You're welcome.

[Company Representative]: Thank you very much. Looks like we have no further questions, so I will now pass the line to the Falabella team for the closing remarks.

[Company Representative] (Falabella): Thank you very much. Looks like we have no further questions, so I will now pass the line to the Falabella team for the closing remarks.

Speaker #4: Thank you very much. It looks like we have no further questions, so I'll now pass the line to the Falabella team for the closing remarks.

Juan Pablo Harrison: Thank you all for joining us today for Falabella's Q2 2026 earnings call. We really appreciate your time and interest in the company. Our investor relations teams remains available to address any additional questions you may have. Thank you once again and have a great day.

Speaker #2: Thank you all for joining us today for Falabella's second quarter 2026 earnings call. We really appreciate your time and interest in the company. Our Investor Relations team remains available to address any additional questions you may have.

Speaker #2: Thank you once again, and have a great day.

[Company Representative]: This concludes the call for today. We are now closing all the lines. Thank you and have a nice day.

[Company Representative] (Falabella): This concludes the call for today. We are now closing all the lines. Thank you and have a nice day.

Browse all earnings call transcripts

Q2 2026 Falabella SA Earnings Call

Request TrialDemo

Falabella

Earnings