Carlo Solari explains the moment of Falabella

2022 was not an easy year for Falabella. The company recorded losses during the last two quarters of the year and ended the year with an 86% drop in profits.

And he was referring to this scenario as the president of Falabella, Carlo Solari, began the letter that he addresses to his shareholders each year in memory of the company.

“I cannot begin the count of this year 2022 without highlighting the difficulties we have faced and, in turn, expressing my confidence that, Although the path outlined is complex, it is essential to ensure Falabella’s success over time”, said the businessman.

“After an exceptional year 2021, 2022 has been a very complex year of which the entire company and whoever is speaking to you are very aware”.

Thus, Solari highlighted the migration that the company is carrying out to adapt to the new scenario of electronic commerce, and assured that “We are making the biggest transformation in the history of the company.”

“In summary, following an exceptional year 2021, this 2022 has been a very complex year of which the entire company and whoever is speaking to you are very aware. It is an essential, but difficult path, of which we have covered an important part ”, he affirmed.

The president of Falabella continued to elaborate on the difficulties experienced last year. The reduction in state aid and pension withdrawals, combined with an inflationary context, hit the clients of the retailersaid.

He added that, operationally, they were also faced with a complex scenario. He explained that the closure of factories caused by the pandemic, in different countries where they have suppliers, added to the crisis in the logistics chain, meant that at certain times they had very little merchandise, and then they were left with a stock excessive.

“This situation hit us and strongly affected the commercial margin in addition to logistics expenses, warehousing costs and the consequent financial overrun,” he said.

He contrasted, yes, with the return of face-to-face commerce had returned sales to physical stores, which “confirms the validity of our omnichannel strategy.”

Words from the CEO

Falabella’s general manager, Gastón Bottazzini, also published a letter along with Solari’s, in which he complemented the analysis of the company’s president.

“2022 was marked by high volatility in various external factors, such as logistical disruptions, high inflation, and a sharp slowdown in consumption. These effects were enhanced as a result of mismatches between our planning and the economic and consumer reality of the markets in which we operate”, lamented the executive.

With this, he devoted part of his words to projecting the solution to these problems and affirmed that, in 2023, “The company’s emphasis will be on efficiency and the focus of our execution.” This year, he said, the processes to make operations more efficient will converge; make traditional businesses profitable, due to the lower expected volatility and lower operational risks; and mature the company’s technological platforms, especially the Marketplace and Payments (payments), “gaining critical mass and decreasing the relative levels of investment.”