Good day, ladies and gentlemen, and welcome to Falabella Earnings Call. My name is Gigi, and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. In the first part, Mr. Raimundo Monge, Head of Investor Relations, will present a summary of the consolidated results for the third quarter of 2023. Afterwards, we will open the line for questions. If you would like to participate in this part of the call, please press star followed by one one at any time during the conference. Now we'll start with the conference with Mr. Raimundo Monge.
Thank you, Gigi. Good afternoon, everyone, and welcome to Falabella third quarter 2023 earnings call. Joining me today are Gastón Bottazzini, our CEO, Andrea González, our Chief Strategy and Sustainability Officer, and Alejandro González, our CFO. I would like to remind you that during this presentation, management may make forward-looking statements relating to our company, its results, operation expenses, strategy, potential restructuring, and other matters alike. This will be characterized by the use of terms such as plan, pretend, expect, anticipate, estimate, hope, and seek. Such statements are based on assumptions and expectations of future events that are uncertain and contain risk. Therefore, and for further information on this matter, I kindly refer you to the disclaimer on forward-looking statement that is displayed on the screen.
Also, that the number presented during the call will be according to the IFRS rule expressed in U.S. dollars, rounded to millions . Therefore, certain small difference may arise with the published financial statement. I will start the call by going on some key operational highlights of our physical digital ecosystem. Let us begin reviewing from slide three onwards. During the quarter, we opened a total of six stores in the region, including the first IKEA stores in Colombia. The slowdown in consumption trends and high inflation level continue to impact our operations. In the case of our retailers, the businesses that suffered the most were home improvement and department stores in Chile and the retail business in Peru. The consolidated revenue of department stores reached $753 million in the quarter.
The electro category experienced the largest drop in sales versus the previous year, both in the physical and on the online channel. In home improvement, consolidated revenue reached $1.3 billion, a decrease of 15%, mainly explained by a contraction in categories associated with construction in the region. Supermarket revenues decreased 8%, reaching $587 million. Non-food categories continued to their downward trend, reducing their participation at sale level. Mallplaza revenues reached $123 million, reflecting high occupancy levels due to a strong proposal and more than 70 million visits. On the banking side, solid progress has been made in the digitalization, strengthening our value proposition.
Today, Banco Falabella Chile is the leading credit card issuer, and that during this quarter, it was ranked first by number of personal checking accounts, highlighting that it was in fifth in 2021. Today, around 50% of total card openings were made 100% digitally. Our loan book portfolio decreased 9% year over year, reaching $7 billion, in line with our restriction in origination, and also, despite a challenging consumption environment, the purchase using our credit and debit card increased by 3%. In terms of the loyalty program, we have reached almost 19 million of participants, generating and maintaining closeness with our clients in the long term, and allowing us to increase the level of transaction, spending, and retention of our customers.
On e-commerce, we now have more than 19,000 sellers with sales in the region, and 38% of the online sales are delivered to customers through the Click and Collect option. During the third quarter, the online GMV decreased 14%, while our 3P online sales grew 1% year-over-year, representing today 26% of the total online GMV. Overall, our e-commerce platform achieved $2.7 billion in GMV during the last twelve months. The consolidated revenues decreased 10% year-over-year, mainly to the decline in the Chilean business of home improvement and department stores and the retail business in Peru. This was partially offset by Mallplaza and Banco Falabella, Peru.
Gross profit decreased 6% year-over-year due to home improvement segment, which declined 25% year-over-year due to lower sales volume in Chile and Peru, mainly explained by the decline in categories related to the construction sector. Department stores decreased 17% year-over-year, mainly due to a lower revenue in the region, coupled with a decrease in gross margin in Peru and Colombia, partially offset by an improvement in Chile. This was, to some extent, offset by the banking business in Chile, mainly due to improvement on the cost of risk and by Mallplaza . We experienced a change in the trends seen in the last 12 months, with the EBITDA growing 1% year-over-year, reaching $202 million.
Our SG&A expenses decreased 6% year-over-year, despite an environment of high inflation in the region, thanks to reduction in the personal expenses, excluding severance payment and optimization of our marketing and loyalty strategy and improvement in logistics. Given all the above, we closed the quarter with a loss of $5 million, a decrease of 73% from the net loss registered in the third quarter of 2022. As far as our financial position, we have decreased 5% in our net financial debt, and we would like to highlight that we have no relevant maturities until January of 2025. Now, I would like to leave the floor with you, with Alejandro González, our CFO.
Hello, everyone, and thanks again for joining our call. I would like to start with a reminder of the commitment we've made in our Investor Day last year, where we launched our efficiency plan or our operational leverage plan. We came to increase our EBITDA margin in 200 basis points, which was around $250 million in gross savings on a yearly basis. The implementation of that plan was completed in the second quarter of this year. However, in a more challenging than anticipated environment, we intensified the efforts, adding new initiatives to the plan of around $100 million, which were also implemented during second and third quarter of this year, giving us a total of $350 million in savings on a yearly basis and also excluding implementation costs.
We also announced on our last call some stop doings, such as closing our digital wallet Fpay , and lastly, where we relaunched our Tottus app with a focus in on-demand delivery for our supermarkets. During this quarter, we continued advancing in our strategy to increase profitability. This focus has allowed us to improve our inventory position, reducing inventories by $570 million or 23% during the last year, through a more conservative inventory purchasing policy, as well as shortening the purchasing cycle of our goods. Additionally, we reduced our SG&A expenses in $60 million during this quarter, which represent a 6% reduction in nominal terms.
This reduction would be $75 million or 7% reduction without the implementation cost of the plan, which was $11 million, and it's mainly due to corporate efficiencies, improvement in our logistic processes, focused marketing expenditure, and the rationalization of our physical footprint. It is important to highlight that cumulative inflation in the region for the period was around 6%, and this affects most of our SG&A. So in real terms, the reduction that we presented in this quarter was around 12%. There have been prior occasions where we at Falabella have had levels of debt greater than what we feel aligns with the duration of our assets. In the past, the recovery has been faster, but now the macro conditions have been more challenging than we would have originally expected.
This is why, as a company, we have made certain commitments to support our financial position, and let me remind everyone that having an investment-grade rating is an integral part of this. We have established a plan that has three levers. The first one is to focus our 2024 CapEx against 2023 in both physical channels and digital developments. We will announce our CapEx plan during the first quarter of 2024. The second one seeks to maintain and increase the savings achieved today that we discussed, and continue improving our operational margins. Finally, as part of our additional effort, we incorporated a third component that expects, with a period of 12-15 months, to raise between $800 million-$1 billion from non-core assets, mainly real estates.
With that, we will now open the line for questions.
Thank you. Ladies and gentlemen, we are ready to open the lines up for your questions. If you wish to ask a question, please press star followed by one one on your touch tone telephone. If your question has been answered or you wish to withdraw your question, please press star followed by one one. Again, please press star one one to ask a question. Please stand by for your first question. Our first question comes from the line of Nicolas Riva from Bank of America.
Thanks very much, Alejandro, for the chance to ask questions. I want to ask about the announcement regarding asset sales. I would assume that the new number you're planning for, the $800 million-$1 billion in asset sales, I assume that includes the previously mentioned $300 million-$400 million that you had discussed in the last earnings call. I want to ask, what's the progress in the completion of the previously announced $300 million-$400 million in asset sales? Because the rating agencies had mentioned that the announcement regarding asset sales had to carry low execution risk for the company to keep its IG ratings. I want to ask, for example, if you have received any offers for the assets you plan to sell, or?
Any update on that? And also, you mentioned these would be non-core real estate assets. Are you planning to sell any of your stake in Mallplaza or Open Plaza? And what's the annual EBITDA from the assets that you plan to divest? And then my second question, unrelated to asset sales, would be: you have discussed all the progress regarding your cost efficiency program. We have seen SG&A down, well in the mid- to high single digits in both the non-banking and the consolidated business.
But we continue to see a lot of weakness in your top line, so revenues being down double digits, year-on-year, and that drove a year-on-year decline in EBITDA, as well, even though the comps year-on-year this quarter were a bit easier, I know, because your results have already been weaker in the second half of last year. So my question would be, why do you think we continue to see such weakness in your top line? And what will be the outlook for the fourth quarter in 2024? And then finally, kind of combining my first question on asset sales, the reduction, and my second question about the weakness in top line and more on the operating results would be: where do you expect to be in terms of net leverage by the end of 2024?
How much higher than the 4 x net leverage requirement to keep IG would you expect to be by the end of 2024? Thank you very much.
Thank you, Nicholas, for your several questions. I will try to address them jointly, but please feel free if I leave anything out of what you are expecting, please feel free to jump in, and we can move on with that. To start with, the first is, yes, this is part of what we announced in the previous quarter, the $300 million-$400 million. This is the same, the same, I would say, part of the plan. This is an increase of that. The difference with what we said in the second quarter is that now there are several processes that are undergoing in this. We've received some...
I cannot give you further detail in several of these transactions, 'cause there's some NDAs that have been signed. But I would say part of the majority of the $800 million-$1 billion that we are basically putting on the market today are things that are undergoing. It is, as you said, it is subject to I would say standard market implementation risk. But so far, we're not seeing something like that, at least in this process. You also asked, give me a sec. If this consider something related to the 9% or any stake, selling a stake in Plaza, it's not included in here.
The majority of what we're talking about in this particular plan that we announced, the most relevant assets are the assets of Open Plaza Chile, assets of Open Plaza Peru, some distribution centers in Chile and Peru also, and some standalone stores in Chile. That's, I would say, the majority of what we're considering here. And as I said before, even though it is subject to, I would say, standard market execution risk, we see this as something that we are counting on the completion of this plan that we announced.
So, Alejandro, just to follow - Alejandro -
Yeah, please do.
May I make just a follow-up on that?
Okay.
You said you ruled it, you ruled out selling a stake then in Mallplaza , but you are saying this would include selling a stake in Open Plaza?
No, I didn't say that. I'm telling you that what I already announced in the press release does not consider selling the 9% of Plaza.
Uh, okay.
I, as Falabella, from a portfolio perspective, I have several other options. What I'm saying is that the $800 million-$1 billion is what I already mentioned, which are the assets of Open Plaza Chile, Open Plaza Peru, distribution centers in Chile and Peru, and standalone stores in Chile. And it goes in line to something that you mentioned, and I would like to please, for everyone's sake, let me be very clear that we're doing this to strengthen the financial position of Falabella, because we think it's the right thing to do. And that's why you mentioned something related to execution risk. Yes, we think this is, this has a standard market execution. This is not something that should have a high execution risk.
But that said, I need to be rational in what I tell you. And what I'm saying, just for the avoidance of any doubt to everyone, in this amount, selling a stake in Plaza is not on the table.
Okay. Thank you,
Okay, regarding the, I would say something about outlook for next year, what I can tell you, so even though the macro trends have been even in the most of the countries in which we operate, we still see a challenging consumption environment. Inflation and interest rates, although they seem to be easing, they still remain at high level. Especially in Chile, with most relevant country for our portfolio, the trend that we're seeing is even though the top line is still decreasing, that decrease is much softer. And what we're putting on our numbers is not a super strong recovery, at least for the next quarters, but we are expecting some degree of recovery in that. And...
I think what's relevant is we are controlling the things that are, I would say, on behalf of Falabella. So we are in a better position for Christmas season this year, as we were before, not only on the, on the inventories, where we already mentioned, also the operational leverage that we're gonna be presenting. So we are getting ready for a tough period for next year. But as I said before, we are expecting a improvement next year, and we are adding on top of that, this, I would say, this program, this $800 million to $1 billion program. It's a mix of both.
With all of that, do you have an estimate for where your net leverage would be at by the end of 2024?
We don't give that kind of numbers. But, the plan that I'm making is a plan that's consistent with the strength and the numbers that Falabella has had historically. This is very relevant for us, but I, as I said before, this is beyond just, I would say, an Investment Grade thing. This is because we need a strong financial situation for the future of Falabella.
Okay. Thank you very much, Alejandro.
Thank you. One moment for our next question. Our next question comes from the line of Melissa Byun from Bank of America.
Hi, thanks so much. I had two questions. First, I just wanted to clarify, you mentioned the increasing savings next year, and I just wanted to understand if this is an annualization of the $100 million in incremental savings that you found this year, or are there new areas of opportunity that you're discovering, and if so, where? And then my second question is just on the e-commerce environment, if you can discuss the competitive environment, and specifically cross-border in Chile, and whether you're seeing any impact from Temu, and I know it's still early for them, but you know, you've had a couple months with them. And then how are you protecting your business from cross-border, or is there an opportunity that you can explore there? Thanks.
Thank you, Melissa-
More than two.
Oh, okay. Yeah, sure. Thank you for your question. I'm gonna take the first one, and let Andrea go on the e-commerce one. In very simple terms, we are expecting to keep the savings we have this far. The structural part of, I would say, savings that we've achieved this far had already been executed. However, we're certainly on budget process as we speak, and we expect that more efficiency related, more than just savings to the focalization of the strategy, and particularly on our omnichannel strategy, there will be more reduction in SG&A moving forward.
As I think we've been very open in saying that there's a lot of stuff doing, there's a lot of focalization of things that we're gonna be doing, and that should bring also a reduction in, in, I would say, investment in CapEx, and also should bring a reduction on SG&A, driven by the reaction from teams that we're, that we're doing things that we're basically start doing in 2024. So to your question, we are planning and to keep and all the savings that we've achieved this far, to move them into 2024. And I know that there's a chance there, because most of our SG&A are in some way indexed to inflation. And as we have been able to beat inflation this far, the plan is also move to 2024, beating also inflation, moving forward.
Great.
Thank you.
Thanks.
Go ahead, Melissa, go ahead. Do you have any follow-up questions, or should I pick up on the e-commerce one?
No, that was very helpful if you can address e-commerce. Thanks.
Thanks. So in terms of what we are seeing on, on cross-border impact, we haven't seen much yet. AliExpress share has been stable through, through the years. And Temu is very recently entering our country with not much penetration. I would say the only exception in terms of growth has been Shein. We don't see much overlap of categories in, in AliExpress and Temu yet, so we don't see it as a, a great threat. We do have a international marketplace proposition which has, which has been growing. And in terms of Shein, I think this is, this is more of a, a concern in, in general for the fashion industry, but we are very confident that our own brands are well-positioned to well-positioned on the, on the same segments in which Shein has penetrated.
So of course, we are continually, I would say, reviewing what the competitors are doing, but we don't see a major threat yet.
Okay, thank you.
Hi, Melissa, this is Gastón. If I may complement that, I would say that in terms of the... Because your overall question was about competitive environment. And I think, if you look at the competitive environment in Chile, we're still seeing most of the competition coming from the local players, which is different from what you're seeing in other countries. And in that sense, I'd say that during the last quarter or so, what we have seen is a strengthening of our position in competitive terms and in market share terms, but in a backdrop of a market that is contracting very much.
But if you think about, and we think about it in terms of categories, I think the main, there are the main retailers, we compete very strongly on the big ticket items, and then we compete with the pure e-commerce players more on the general merchandise and small ticket items.
So, that is- that continues to be, to be the context, and I'd say where we have strengthened our position in the last few months has been more around our 1P offer more than anything, even though our 3P offering has also continued, you know, has continued to have a substantial gap of about 15 or 20 percentage points in terms of growth, when compared to our 1P. But 1P is generally where we have defended our share better. Mm-hmm.
Thank you. It's very helpful.
Thank you. One moment for our next question. Our next question comes from the line of Nicolás Larrain from JP Morgan.
Hi, good morning, everyone. Thank you, Andrea, Alejandro, Gastón, for taking my question. I had a couple here. So first, I wanted to touch a bit, still on the online, piggyback a bit on what Gastón said. Could you tell us how the overall online market in Chile has been performing, you know, to see how that compares versus your growth? Also, I want to touch or to dive a bit deeper in SODIMAC in Chile. Could you break down maybe what's the performance of the retail categories and the construction categories? How has growth been in those two during the quarter?
And also on the level of inventories, I wanted to understand if we saw a relevant inventory adjustment in department stores, and gross margin has actually reflected this quite significantly, but there's still pressure in home improvement. So I wanted to understand how are your inventory levels? You think they're okay into the upcoming holiday season, or maybe could be a bit lower, a bit higher? Thank you very much, guys.
Thank you for your question, Nicholas. So first of all, starting with your question around, I think around e-commerce, it's very hard, you know, and the competitive environment and how we are compared to the market. The figures are not so clear on this, so the more significant signals that we have of how we're doing vis-a-vis the market is basically when there are these big promotion events, the last one of which was the Cyber Day. So in that event in particular, we actually gained share, particularly in electronics and some of the big ticket items.
Regarding your question about home improvement and department stores, I think first of all, in department stores, we continue to be in a very good inventory position comparative to last year, even though there is still room for improving that position, and we're working very hard on having a very clean inventory going into the Christmas season. For home improvement, our inventory position is not so relevant for this time of the year, it's more of a permanent management challenge. It is true that we were in a better position in department stores than we have been lately in home improvement.
I think that continues to be the case, but it's not a major issue facing the end-of-the-year season. In terms of how home improvement is doing, I'd say we are seeing a very consistent level of contraction in demand, both in the harder lines, the construction lines, and in the softer, you know, final consumer or homeowner type of lines. So the weakness is relatively even across categories. We had a very strong contraction during the middle of the year in the bigger ticket items. That is coming back, so audio, video, computer, all of that is starting to improve, and that's the only change we are seeing, I'd say, in demand, in relative terms.
But in general, I'd say that we are seeing an overall contraction of demand, which is not as strong as it had been in previous quarters, but it's still a relative contraction.
Thank you, Gastón. And if I'm just let me clarify maybe one thing that Alejandro mentioned, and maybe I didn't catch that clearly. When we're thinking about the very short-term trends, maybe October, are trends similar to what the third quarter was, or still declining, but declining less than what the third quarter printed? Thank you, guys.
... I'd say they are still declining, but declining less, but still not giving a strong signal of recovery. So I'd say this is the backdrop of everything that Alejandro was discussing around what we are doing in terms of managing margins, managing our SG&A, whereas he said most of the savings have already been captured. But as we continue to focus our investment strategy, that also comes along with SG&A savings and with you know, stop doing some of the initiatives that we were carrying along before. So you're gonna continue to see improvements in SG&A and in margins, we think, in spite or regardless of what happens with demand.
Perfect. Super clear. Thank you for the time.
Thank you. One moment for our next question. Our next question comes from the line of Irma Sgarz from Goldman Sachs.
Yes, hi. Thanks for taking my question. Just a quick follow-up question on the e-commerce or the online channel. How should we think about sort of balancing growth and profitability, as you continue to sort of keep your eyes on savings and working efficiently across, you know, marketing spend and other SG&A elements, including logistics, yet at the same time, obviously, you do operate in a very competitive market, where demand is still relatively weak. So, just how should we think about that balance, and where do you sort of want to come out in that market in 2024?
Then if you can just briefly talk a little bit about what you see into next year for Banco Falabella, where we saw some improvement in profitability, but I'd just love to sort of have an understanding of how you're thinking about resuming growth there of the portfolio and just how we should think about profitability also in the next year.
Yeah. Thank you, Irma, for your question. So I think in terms of e-commerce and the way we are thinking about that balance between growth and profitability, my overall summary would be that we have, you know, compared to where we were probably two or three years ago, we have invested substantially in building capabilities. You know, our e-commerce platform, our logistics platform, our ability to deliver within 48 hours, the overall capacity of our stores to do in-store delivery, all of that has grown substantially and much more than demand has grown over the last, particularly over the last year. Which means from the point of view of our capacity to expand in e-commerce, we are in a very well position from the point of view of capabilities.
But on the other hand, we are trying to do our best not to make investments that don't pay off in terms of shipping promotions, in terms of product promotions, in terms of marketing investments. So make those investments very consciously and in a way that growth is sustainable and not in a way that we are just capturing growth that is not sustainable over time. So in a market that has shown, you know, a very strong contraction as a result of what, you know, of the macro variables in general, the way we're seeing it is we have capacity to grow, but we are not going to use that capacity through, let's call it, you know, forced growth.
Rather, what we are, what we are aiming to do is have the right product assortment, build the seller value proposition so that we complement the 1P with the 3P correctly, aim to bring the larger sellers, so that value proposition becomes more attractive to our customers, and therefore, grow much more consistently and in a healthier way going forward.
Thank you. I think the second question was on the bank, yeah.
Oh, I'm sorry. Yeah. So regarding the bank, I'd say that this year has been, you know, we have had very, very important expenses around risk. We see that coming down, and you already in this quarter see that coming down substantially. And actually, you asked about Chile, but in the three markets now, we are seeing a, you know, the curve of NPLs starting to come down, but still with very high levels of NPLs relative to our history. So we see the next year as a year where those NPLs will continue to stabilize, but we're still not in a position to talk about substantial growth. We have, you know, our overall asset base has contracted during this year.
What we expect is that during next year, it will stabilize rather than grow.
Thank you. Thank you.
Welcome.
Thank you. One moment for our next question. Our next question comes from the line of Andrew Ruben from Morgan Stanley.
... Thanks very much for the question. Perhaps similar to the, the question on SODIMAC, I'm curious for the Chile department stores, what you're seeing in terms of consumption, specifically apparel versus hard goods, if you've seen any inflection in the consumer spending for some of your higher ticket categories? And along that same line, what type of consumption environment you're planning for as you look to the inventory and purchasing into 2024? Thank you.
Thank you for your question, Andrew. So when we look at the department stores, I think I mentioned this, but if you open the sales very broadly into the hard categories and the soft categories, fashion and apparel, what we are seeing is a slight improvement in the hard categories and a relatively flat demand level in the soft categories. And the way we are thinking about demand going forward is quite conservatively, so that we don't build up inventory. Of course, in the hard categories, you know, inventory is a lot easier to manage because we have shorter lead times, tighter relationship with our suppliers.
While in the soft categories, with private labels having such a strong participation in them, our lead times are longer, and therefore, those are the ones where we have to be a lot more careful around inventory buildups and how we plan around the future. To be able to build in some flexibility into that demand planning, we are looking more into increasing the participation of fast fashion, increasing our ability to source locally or within the region, so that we can react to a spike in demand that we are not planning for in our regular buying process.
Very helpful color. Thank you.
Thank you. One moment for our next question. Our next question comes in the line of Gabriela Bahachille from Pine Bridge Investments.
Hi, good afternoon. Can you hear me well? I just wanted to ask two questions. If leverage has peaked, and a follow-up question on a previous question is, what's the annual EBITDA of the assets that you plan to divest? Thank you.
The annual EBITDA of the assets that we're trying to sell. Let me see if I understand your question, because probably is looking for aiming a target to plan next year. The different issues that we are evaluating, the impact in EBITDA, at the end of the day, what we see is not that relevant. For instance, the $300 million operation that we mentioned on our previous call does not have an impact of non-banking EBITDA. But I'll give you a rain check on that, Gabriela, but 'cause, I mean, when we put this, this is very small.
I would say a loss in EBITDA could be, I don't know, $20 million-$30 million, something like that. It compared to the impact of the funding that we can raise is not that relevant.
Perfect. Thank you. And would you say that leverage has already peaked, or you think that there will be some more increase in leverage levels due to continued contraction in demand? Thank you.
I mean, the number that we just presented, we see in all different scenarios that we move forward, it's only going down.
Oh, okay. Perfect. Thank you.
Thank you.
Thank you. One moment for our next question. Our next question comes from the line of Irma Sgarz from Goldman Sachs.
Yes, hi. Thanks for taking yet another question. Just a quick one in terms of customer acquisition cost. In terms of when you look at sort of your engagement of your customer and where you stand in terms of MAU against the main platforms, how do you think about sort of making sure you strike the right balance of maintaining your customers engaged, in again, a pretty competitive environment? And just generally what you've seen in terms of customer acquisition costs, have those gone up generally? And I know we're in a weak demand environment, so it's maybe tricky to sort of extrapolate from the current environment.
But yeah, that's sort of my question of like, where would you like to sort of come out in terms of engagement going forward, and how can you drive this deeper engagement with your customers? And then a second follow-up question, sorry to ask this, but maybe this is more of a question to the board, so feel free to relay. But I was just hoping to get an update for the succession process, if you have any color, anything that you can shed on that process, would just be helpful for the investment community.
... Yeah, thank you, Irma, for the follow-up questions. I'd say in terms of customer acquisition costs, this relates quite a bit with my comment around how we're seeing growth going forward, the investments we're making. So in general, both in our e-commerce platform and in our banking operation, customer acquisition cost has gone down substantially. But mostly as a result of us being a lot more selective and thoughtful around how we invest in customer acquisition, and also around how we leverage the relationship with customers more and look into deepening relationships rather than continuously acquiring customers.
So both in the customer acquisition, you know, in customer acquisition for our e-commerce, we have both decreased the volume of customers acquired, but also decreased churn, and the same is true, about the bank when you think about enforced churn. Of course, in the bank, you're seeing more churn related to risk, but when you think about a churn related to the commercial relationship with customers, that was also reduced. So, the way... Again, the way we are thinking about it is to be a lot more selective and focused on what we do in terms of customer acquisition, so that customer acquisition cost remains relatively low.
But at the same time, invest more in customer relationship and in customer, and in the ongoing, both loyalty and overall communication with customers. So the summary answer is that we have lowered customer acquisition costs, and we see that continuing to be lower, over the next, year or so at least. We also see that level of competition in terms of customer acquisition has decreased in general. In terms of the CEO succession, really, that's a process that's being led by the board, and you will obviously get information when that becomes available. We have, as management, no comments, no further comments to make on that.
Great. I imagine, yeah. Thank you for taking this anyway. Thank you. As a reminder, to ask a question, please press star one, one again. At this time, I will now turn the call over to Raimundo Monge for closing remarks.
We would like to thank everyone for joining us on Falabella third quarter 2023 earnings call. Our investor relations team will remain available for any follow-up questions you may have. Thank you, and have a nice day.
Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.