SMU (SMU) Q2 2024 earnings summary

Executive summary

• Revenue declined 1.9% YoY in Q2 2024 and 0.4% YoY in H1, mainly due to weak consumption and calendar effects, but sales and customer metrics recovered in May and June.

• Opened 8 new stores in H1 2024, with plans for 19 in Chile and 5 in Peru this year; some openings delayed to early 2025 due to permitting, but not expected to materially impact financials.

• New stores outperformed expectations, with half of 2023 openings exceeding average sales per square meter for their format.

• E-commerce sales grew 28% YoY in Q2, reaching 4.7% of total sales, driven by Cyber Day and omnichannel initiatives.

• Launched a new tiered loyalty program in July, with over 300,000 customers upgrading and a 15% MoM spending increase among them.

Financial highlights

• Q2 2024 revenue was CLP 691,219 million (down 1.9% YoY); H1 2024 revenue was CLP 1,403 billion (down 0.4% YoY).

• EBITDA for H1 2024 was CLP 114,003 million (margin 8.1%, down 90 bps YoY); Q2 EBITDA was CLP 46,871 million (margin 6.8%, down 170 bps YoY).

• Net income for H1 2024 was CLP 25,722 million (down 36.2% YoY); Q2 net income was CLP 6,609 million (down 64.3% YoY).

• Gross margin in H1 2024 was 30.8% (up 20 bps YoY); in Q2, it was 30.1% (down 60 bps YoY) due to increased promotions.

• Operating expenses rose 4.5% in H1 and 3.0% in Q2, but decreased in real terms due to efficiency initiatives.

Outlook and guidance

• Management expects sales and average ticket to continue improving in Q3 and Q4, with a focus on omnichannel growth and promotional activity on basic products.

• Long-term EBITDA margin goal remains 9%, but 2024 full-year margin expected around 8.5% due to Q2 impact.

• Anticipate continued competitive pressure, higher electricity costs in 2025, and mitigation via energy efficiency and supplier negotiations.

• No change to dividend policy anticipated unless operating results deteriorate further.

• Strategic plan for 2023-2025 includes further store openings and omnichannel expansion.