Falabella profits shrink 37.6% in the third quarter due to the application of IFRS16

Falabella faces the final period of the year on the low. The profit of the Chilean department store group shrank by 37.6% in the third quarter, while sales rose just 1.2%. These results do not reflect the impact of the protests in Chile, which began in October.

The company, controlled by the Del Rio and Solari families, had a net profit of 47,888 million pesos (61.9 million dollars), compared to 76,785 million pesos (100 million dollars) for the same period last year.

The group argued the bad performance was due to the increase in losses on investments in Mexico and an accounting loss of 8,717 million pesos (11.3 million dollars) associated with the implementation of IFRS16.

 Falabella profits were affected by IFRS16 regulations and investments in Mexico

Revenues, meanwhile, stood at 2,197,621 million pesos (2.8 billion dollars). Despite the weak global increase, the online channel has continued to register double-digit growth, boosted by its own platform and Linio, which the group bought in August 2018 for 138 million dollars.

In the third quarter, the company reached 254 million dollars through this channel, compared to 180 million in the same period of the previous year. The number of orders, meanwhile, rose 28%, to 2.8 million.

In the nine months ended September, Falabella revenue has risen 2%, while profits were 31.8% down year-on-year. In its presentation of results, Falabella also recalled that as a result of the social crisis that Chile has been going through since October 18, some stores, offices and department stores have suffered damages or operational effects of varying magnitude.

At the issuance of these results, 58 of the 68 Tottus supermarkets where operational, 85 of the 89 home improvement stores and 45 of the 47 department stores that Falabella has in Chile. The company stressed that it has insurance that covers the risks of deterioration and other related to its assets and equity.