Report from the Chief Executive Officer
Retailing in Mexico had a good year in 2023. Although inflation was high, the growing economy and the peso’s strength supported sales and margins across the entire retail industry. Seizing this favorable moment, El Puerto de Liverpool focused on retaining the preference of our Customers. Sales were up by 11.3% and we increased our consolidated margin by 148 basis points, to end the year with an EBITDA margin of 17.9% and net income 12.1% higher than in 2022.
On the expense side, we felt some pressure on our input prices, attributable also to inflation, alongside higher salaries and benefits for our employees. We were able to keep these expenses in check through careful workforce management and control measures in various areas of the company. In logistics, for example, we are working toward increasingly efficient delivery, and in energy consumption we are making greater use of green, renewable and lower-cost energy sources.
Results were particularly outstanding in the Financial Businesses division, where the use of store-brand payment methods grew significantly at both Liverpool and Suburbia. The proportion of accounts more than 90 days past due remained at record lows while the growth of our portfolio propelled our gross portfolio to $62 billion pesos, making it the company’s largest asset. As is our policy, we maintained a conservative provision for credit losses so that we are prepared for any market eventuality we may face in the years ahead.
Suburbia had a difficult start to the year, but swiftly took action to correct the course, improving sales floor area in all stores and enhancing product offering, so that by the last quarter of the year, profits were 0.5% higher than the year before, and we are once again on track to achieving the profitability we want for this business.
Digital channels continued to yield solid results. Marketplace grew by 62% over 2022 and is now a significant part of our business. Alongside Marketplace, sales of our store-branded merchandise on the website have increased by 21%, and sales of digital services are up by 32%. The Suburbia page has also seen an exciting growth of 50% and is beginning to carve out its own identity. These achievements stem from our significant investments in leveraging data to better serve each Customer. We have also taken our first steps in using artificial intelligence to optimize processes, such as personalization.
For the logistics area, it was a year of stabilization for big-ticket merchandise, where the new distribution center yielded its first fruits in capacity, processing speed and deliveries. For Softline, we are starting construction of a logistics hub and the first regional distribution centers. We hope to set these new logistics capacities in motion in 2025 and expect to see the benefits fairly quickly.
To sum up, 2023 was a very good year for our company, and our greatest achievement was remaining first choice in retailing for our Customers, who are our reason for being, and who we strive to serve everywhere, every day, for a lifetime.
Thank you,
Graciano F. Guichard G.
Chief Executive Officer
December 31, 2023
Digital channels continued to yield solid results. Marketplace grew by 62% over 2022.