Wednesday, March 29, 2023

Falabella raised red: What is behind the collapse in the last financial?

In 2022, Falabella faced various internal and external issues that caused its net profit to drop 86.2%, from 652,031 million pesos (US$795 million) in profit by 2021, to only 90,189 million pesos (US$110 million) in the final year. Furthermore, in the fourth quarter the firm reported a loss of US$ 26 million. It is worth asking, what happens after the collapse of the company?

The CEO of Falabella, Gastón Bottazzini, had to avoid a series of meetings with investors to explain the reasons for the abrupt drop in the company’s results. According to the Diario Financiero, some of the factors that depressed the company’s margins were the drop in consumption due to the economic slowdown that is taking place in the world and in Chile, added to the high inflation that led to higher supplies in the banking business. and logistical problems worldwide resulting from the COVID-19 pandemic.

In addition, the comparison base is very high due to the large liquidity caused by the 2021 market abstractions, which generated a 20.3% rise in private consumption.

Two courses of Falabella

On the other hand, they assert that in Falabella “there are two souls.” One is more focused on implementing and growing, from a business financial perspective, and another who longs for the days when the center of operations was the consumer experience. The people of the company are known when these two streams were in equilibrium, when the firm managed to improve its results, but the latter has been more prevalent for some years now.

Meanwhile, this is one of the reasons why Falabella suffered the departure of several emblematic executives between 2021 and 2022. The first was Gundisalvus Somoza, general manager of Falabella Retail and Cristián Fuenzalida, manager of e-commerce, who decided to leave the company. to undertake his own

Then there was Jorge Fuenzalida, Business Manager of Falabella Retail, who decided to retire. In mid-2022, Ricardo Alonso, then manager of, and Andrés Salvestrini, manager of Corporate Finance at Falabella Retail, resigned. The source explained that brain drain is complex for a company undergoing process change.


Also read: Falabella profit to fall 86% in 2022 and announces an ambitious investment plan for this year

“A large part of the exit managers had been in the company for at least 15 years, and were part of the group formed under the wing of Juan Cuneo, one of the partners and former vice president of the firm, whose school was very marked. experience with the client,” the media quoted reported.

This group is known as internal marketers, while on the other hand there are executives who come from the financial affairs of the company, whose objectives are more linked to achieving figures and efficiency, running from which Gastón Bottazzini comes.

The player marketer claims that the firm is “losing its tent” with the client, who catapulted it as a big seller in Chile.

Would the CEO of Falabella leave the company with profits?

In recent days, some rumors have spread both internally and in the market about the departure of the CEO of Falabella after the company’s unfair results. Therefore, doubts arose about the strategy that the executive followed with the challenge of transforming Falabella into one of the main physical-digital companies in the country, we remember that Bottazzini took the leadership of the company in 2018.

However, a senior company official denied the possible departure of the CEO. The source said DF MAS “there is no basis, neither in the question nor in the interview. Gaston is immobile, beyond the results. All the indications of the digital transformation are working and giving results”.

Also read: Falabella installs its new 100% robotic warehouse with an investment of US$4 million

The company will once again show solid figures

Sources close to the management of Falabella believe that once the external conditions improve, it will show solid growth figures again, in line with the indicators of digital transformation that are yielding results. For example, they pointed out that has established itself as the most relevant market in the Andean region with a 24% growth in sales.

In addition, they highlighted the faster delivery speed in Santiago de Chile, around 60% in 48 hours and a compliance level of 95%, “super industry”.

Likewise, 62% of new card openings and 57% of Banco Falabella accounts were made through digital channels in the last four months of 2022. They also highlighted that the bank is already the second player in the market in checking accounts.

Block vendors

The composition adjustment, which was announced in October of last year and involves the closure of between 5% and 10% of sellers in Chile, Peru and Colombia, continues, but “it will be a gradual process and does not consider large closures. Although we are already talking silently that a serious adjustment plan is coming.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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