SMU (SMU) Q3 2024 earnings summary

Executive summary

• Revenue for the first nine months of 2024 rose 0.7% year-over-year to CLP 2,137,384 million, with Q3 revenue up 2.8% year-over-year, driven by 3.6% growth in the Unimarc format and strong new store performance.

• Opened 14 new stores YTD (nine in Q3), outperforming sales and EBITDA expectations, with a total of 28 new stores since 2023.

• Online and omnichannel sales grew 28% in Q3, reaching 4% of total sales, supported by own platforms and partnerships.

• Private label penetration reached 13%-14% of sales, with over 130 new products launched YTD.

• Customer loyalty initiatives and targeted promotions increased average ticket and sales recovery from May onward.

Financial highlights

• 3Q24 revenue: CLP 735 billion (+2.8% YoY); 9M24 revenue: CLP 2,137 billion (+0.7% YoY).

• Gross margin declined to 30.4% in 9M24 (down 20 bps) and 29.6% in Q3 (down 100 bps), mainly due to sales mix and promotional activity.

• Operating expenses rose 8.1% in Q3, mainly from higher minimum wage, inflation, and electricity rates.

• EBITDA for 9M24 was CLP 165,481 million (margin 7.7%), down 14.2% YoY; Q3 EBITDA was CLP 51,478 million (margin 7.0%), down 21.4%.

• Net income for 9M24 was CLP 33,190 million, down 35.2% YoY; Q3 net income was CLP 7,468 million, down 31.7%.

Outlook and guidance

• Management expects improvements in gross margin and EBITDA margin in Q4, with EBITDA margin projected at 8.8% for 2024 and a long-term target of 9% by 2025.

• Same-store sales turned positive in October at 1%-2%, with market share up 20 bps.

• The 2023-2025 strategic plan targets 58 new store openings, focusing on omnichannel growth and store remodeling.