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. Juan-Luis Carrasco, Head of Investor Relations, will present a summary of the consolidated results for the first quarter of 2022. Following this, Mr. Gaston Bottazzini, Chief Executive Officer, and Juan Manuel Matheu, Chief Executive Officer of Falabella Financiero, will share some highlights on the performance of the company. 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 at any time during the conference. If you need assistance at any time during the call, please press star followed by zero and the coordinator will be happy to assist you.
Now we'll start with the conference with Mr. Juan-Luis Carrasco.
Good afternoon, everyone, and welcome to Falabella's third quarter 2022 earnings call. Joining me today in the call are Gaston Bottazzini, our Chief Executive Officer, Juan Manuel Matheu, our Chief Executive Officer for Falabella Financiero, and Alejandro González Dale, our Chief Financial Officer. I would like to remind you that numbers presented during the call will be stated in US dollars and rounded to millions. Therefore, certain differences may arise with the published financial statement. I will start the call by going over the key financial highlights of the period. Let's turn to Slide three. During the first quarter of 2022, the company consolidated revenue reached $3,790 million, an 18% increase year-over-year.
This was mainly explained by a 15% increase in non-banking revenue, with strong growth across all of our retailers, and we can highlight a 16% sales increase in home improvement and a 14% increase in department stores, both in Chile, which were facing a tough comparable base. Shopping center revenue at Mallplaza grew by 53% year-over-year, and it was explained by having 100% of the GLA fully operational during the period, coupled with a normalization in rent collections in the period as well. Banking revenue grew 48%, mainly driven by the 35% growth in the regional loan book. During the first quarter, our omni-channel platform reported total sales growth of 16% in the region, with e-commerce growing 8% and physical stores 18%.
Our e-commerce platform achieved $3.8 billion in GMV during the period. Gross profit reached $1,229 million in the first quarter, representing an increase of 8.2% year-over-year. This was mainly explained by higher contributions from shopping centers and department stores, the latter driven by margin containment and better sales performance compared to last year. Home improvement contributed with to a lesser extent, mainly explained by lower margins due to a tough comp base that we had last year, as sales mix tilts more towards soft categories, and we have almost no markdowns. The higher contribution from the banking business was explained by good performance of the Colombian operations, where revenue grew 56% and its portfolio grew 46% in local currency.
This was partially offset by the performance of the bank in Chile, which reported an abnormal margin expansion in the first quarter of 2021, explained by a release in provisions with a loan book that was decreasing in size, but it was improving its risk quality. Turning to Slide four, consolidated EBITDA reached $371 million for the quarter, down 17% compared to the $447 million in the same period last year. This decrease was mainly explained by the 22% increase in SG&A expenses, that were impacted by one-timers, such as cost overruns in maritime transportation and increases in lease expenses as store operations return to normal compared to last year. OpEx related to the development of our technological platforms showed an increase in line with our guidance.
Net income reached $92 million for the first quarter of 2022, impacted by non-operational impacts related to losses on our hedging policy for imports. From a contribution standpoint, Home Improvement Chile, Banco Falabella Chile, and supermarkets decreased their contribution as well. I will now turn the call over to Gaston, who will share some remarks.
Good morning, everyone, and thank you for joining us today. Complementing Juan Luis's description of our results, I would like to start by highlighting how the full reopening of our network of stores is really enhancing the quality of our interactions with customers and how our customers are really becoming omni-channel in the full sense of that word. In the sense that we are seeing more and more customers both going to stores and buying online in our digital channels. As therefore these restrictions lifted overall, our overall number of customers reached or served throughout the region has also expanded substantially. We have reached a level of 37 million customers over the last twelve months, which represents a growth of 25% over the previous years.
Total growth is not only driven by customers returning to the stores, but also by the fact that we have retained a lot more customers in all of our channels than we have done in previous years in the comparison between the fourth quarter and the first quarter of a year. This has been one of the drivers of our increase in total sales of 16%. As a result of that, when we look at our overall sales in comparison to our pre-pandemic numbers, we see quarter-to-quarter growth compared to 2019 of 47%, which disaggregates in a growth of 2.8x in our digital channels and a growth of about 30% in our physical store sales.
Our physical store sales with a much higher conversion rate than we were seeing in the pre-pandemic environment. Our e-commerce also is consolidating its scale with a total GMV of $3.8 billion. The proportion that e-commerce represents of our total sales is representing today more than 10% what it represented pre-pandemic.
In parallel with all of this, in our retail ecosystem, we are also seeing very good traction in our financial ecosystem, both in the growth of our customer base with a much lower acquisition cost, but also, and this is different from what we have seen in previous quarters, with substantial growth in our loan book across all the markets in which we operate, also as a result of the expansion of our digital capabilities and our improved abilities to originate loans digitally. Juan Manuel is joining us today, and he will expand on this point when just after I finish. We see also a big investment in terms of the development of the marketplace.
The marketplace still represents the sales of the marketplace are still over-represented by our 1P sales, and we are making important efforts to make our 3P sales also very relevant in the marketplace. We expect sellers to become much more active and drive growth in sales during the second half of this year. This is a result of basically three events that will take place over the next few months. The first one is the sequential launch of our improved Seller Center. The current Seller Center is an adaptation of the technology we acquired through the acquisition of Linio.
We are substantially improving that in terms of seller functionalities, ability to manage their interaction with the marketplace, track their sales, their inventories, et cetera, which we think is going to allow both to increase the number of sellers, but also to substantially increase the activity of our sellers. The second one is the launch of falabella.com as an umbrella marketplace in Peru during the second half of this year and in Colombia in the early part of next year. The third one is the launch which we are piloting right now, and we will be rolling out in the next few months of Falabella Directo, which provides the ability for sellers to do same-day and next-day delivery on their own, and therefore also allows us to leverage their capabilities a lot better.
As a result of all this, we see the marketplace as a driver in the second half of the year. Finally, in terms of one of the drivers of our ecosystem, the loyalty program continues to scale, not only in terms of participants, it's reached 16.5 million participants, which represents a 43% year-to-year increase. Also in terms of interactions, as redemptions in the program have grown 83% year-to-year as the new participating customers start to earn points and redeem. But more important than that, what we are seeing also is an improvement of the preference levels in our tracking of market positioning of the program across all geographies.
The loyalty program is therefore becoming a very important part of how we are not only enhancing the relationship with customers, but also understanding customers much better and therefore driving decision-making in our company a lot more based on this richness of knowledge. An example of that is our ability not only to make commercial decisions, but also a lot of planning decisions. When we turn to our financial results, we in comparable terms experienced a challenging quarter and basically driven by two factors, one affecting our margins, another one affecting our non-operational results.
We see in home improvement in particular, margin is the category that had the highest margin pressures, which as a result of mix changes, as specialists and construction becomes more relevant in the overall sales mix, and also normalized inventory levels that turn into more discounted pricing than we had a year ago. Department stores were able to defend margins better, but also had pressure on margins as a result of inventories. On the other hand, the mix change played in the favor of this segment in the sense that apparel categories increased share in their mix while electronics and durable categories decreased their share of the mix.
In parallel with that, we had increase in expenses that were 22% year-over-year, while our revenue was 18% growth year-over-year. This is mainly explained by one-time costs and overruns in our maritime transport. This is normalizing substantially compared to what it was during the first quarter. At the same time, we had a normalization of lease expenses, which also is going to decrease the comparable difference on a year-to-year basis as we move forward during the year. This basically is what is making the difference between having higher growth in revenue versus expenses versus the opposite, growing our revenue at a higher rate than our expenses, which is what we expect to do moving forward.
At the non-operational level, the main driver of the difference was the impact of our FX strategy, the hedging strategy on FX, which we take on a real basis and not on an accounting basis. Therefore, when the appreciation of the USD Chilean peso parity is abnormally high like it was during this quarter, we suffer from that. In general, we see the increase in revenue on the growth as very encouraging as it's a testament to the strength of the ecosystem strategy of really offering the customers a better value proposition across the whole value chain of different segments and different offerings. Therefore, this is something that we will continue to work on.
As Juan Luis mentioned, our investments in making ecosystem that is more robust every day are in line with what we planned for the year. While we anticipate a challenging second half of the year, we do see potential upside, mostly in three fronts. The first one is that we see the financial services business continuing to grow substantially and having good space for that, and Juan Manuel will touch on that more deeply. The second one is the, you know, resuming growth of our marketplace. And finally, we do see that the pressure on expenses that we had during the first quarter is going to diminish going forward. With that, I thank you very much and turn over the call to Juan Manuel.
Thank you, Gaston, and thank you everybody for joining today. I will make a brief summary of our financial business. As Juan Luis mentioned in the beginning, our banking revenue grew 48% year-on-year. We believe this is a result of more customers in the region choosing Banco Falabella as their main bank, and customers strengthening their relationship with the bank. For example, during this first quarter, we opened almost 400,000 new CMR cards and 320,000 savings accounts in Chile, Peru, and Colombia. This implies an 82% growth year-on-year, and 57 of these openings were fully digital without any human intervention. This is the result of leveraging the data and the touch points of our ecosystem.
Our new AI credit models, which are already operating in all of the markets we operate in, and our account opening digital journeys are enabling us to do this, and we expect to keep on growing. Customers, on the other side, are strengthening the relationship with the bank. Active customers reached 6.5 million, that is 17% year-on-year growth, and that is surpassing pre-pandemic base. The volume transacted with our cards, debit and credit, increased by $1.5 billion, and that is a 46% growth year-on-year. Out of the credit card purchases, already 55% are from merchants outside our stores, which reflect that customers are not only preferring our payment methods, within our ecosystem, but they are also using it outside of the ecosystem.
Our loan portfolio grew 35% year-over-year, reaching $7.8 billion. We reached third place in customer loans in Chile, and we are gaining market share in credit card purchases, debit card purchases, and consumer loans in all countries in which we operated. As Gaston mentioned, the level of interaction of customers with our loyalty program has also increased significantly. That is extremely positive for our banking business, as it not only increases our customer preference for our payment products, but also today, 50%+ of our new credit card customers come from our loyalty program customer base. On the other side, our digital wallet has also shown strong customer adoption, both in Chile and Peru.
More than 2.5 million registered users today, and we also have more than 510,000 active F pay users. That is, triple of what we had the previous year. Our current focus is in developing new use cases that will drive more use for F pay, like the new functionalities, prepaid, free prepaid account, and public transport card top ups in Chile. We also continue to grow in our buy now, pay later and seller finance initiatives. Regarding buy now, pay later solution, we already have it in Colombia and Chile, and in 2021, approximately 25,000 credits have been sold for a placement of approximately $13 million between both countries.
On our seller finance solution, which will be integrated soon to our new global seller platform that Gaston mentioned in Falabella.com, has already 400 sellers with financing. We believe that F pay traction will allow to increase our customer base and synergies with our work products. Regarding risk cost, it went from CLP 12 billion in the first quarter of 2021 to CLP 89 billion. We expect our delinquency rates to keep on converging to pre-pandemic levels, particularly in Chile, where payments past due were at the lowest historical levels. Our risk strategy prioritize ecosystem customers with pre-approved grade offers.
Today, as we mentioned, more than 16.5 million customers enrolled in our loyalty program allow us to have a better understanding of their purchase history, get their contact info, and their consent to receive personalized offers from our different businesses. Our risk strategy prioritizes ecosystem customers, and we are more rigorous with segments with higher risk, high indebtedness, and low income. Our risk models have allowed us to grow our portfolio 35% year on year with contained risk and low rate of renegotiation. Finally, on our SG&A, Banco Falabella customers are becoming more and more digital. We grew our app customer base 39%, reaching 4.8 million customers, enabling a more direct relationship with them. Today, more than 94% of customers' interactions are via digital channels in the region.
Our operational expenses grew 26% quarter versus the same quarter last year, which is significantly lower than our 48% growth in net banking income. Consequently, our efficiency ratios have been improving across the region, 4 basis points in Chile, 9 in Peru, and 5 in Colombia. The main drivers for operational expenses growth were the loyalty rewards and marketing expenses, which grew 45%, both significant drivers for customer acquisition and increased customer preference. Thus, we expect this trend to continue. I go back to Alejandro.
Thank you. Thank you, Juan Manuel. Gigi, we can 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 on your touch tone telephone. If your question has been answered or you wish to withdraw your question, press the pound key. Again, press star one to ask a question. Please stand by for your first question. Your first question comes from the line of Andrew Ruben from Morgan Stanley. Your line is now open.
Hi. Great. Thanks very much for the color and the question. Just digging in a bit more around expenses. You mentioned maritime freight and leases, particularly around items that drove kind of more of a one-time step up. I was hoping you could dig in more to each of those just to better understand what was temporary versus one Q and how we can think about the rest of the year for those line items. Thank you.
Thank you, Andrew, for your question. This is Alejandro. Related to the SG&A that we had, as we correctly said, we had the same type related to the maritime expenses. On top of that, if you see, we also had a luckily high increase in personnel. Let me get into further detail with that. Roughly speaking, 30% of that increase was, I would say, temporary personnel due to the increase in the physical activity that we saw during the first quarter.
About 20% of that increase, so it would, together with the other 30% would be 50% of that, is basically related to the increase in bonuses given the increase in sales that Gaston and Juan Luis mentioned, the 18% that we saw. What we expect to normalize the increase in leases that we had is basically, as well as you mentioned, a normalization of that. There's also an impact in OpEx IT, which is in line with the investment guidance that we presented in January, that was $240 million. About this, the impact that we had on the demurrages, on the logistics, close to $20 million that we had there, that's almost gone.
Therefore, you should not expect something as of today, further increase in that in the coming quarters that we have. As we've seen, especially in this route, vessel availability is normalized today. Bottlenecks in destination ports have also eased. We think on that side of the impact that we had in the first quarter, we should not have further impact. That would be related to the SG&A for the first quarter.
Great. It's helpful. If I could, sorry, just follow up on the lease expense. It makes sense on the transport side, but for leases specifically, I know you mentioned the operations returning to normal, but was that kind of just one time related to sales ramp or just to dig in slightly more on that item specifically? Thank you.
The vast majority of that increase is basically. If you remember a year ago, during the first quarter, we still were facing a lot of restrictions in the stores opening and in the malls opening. This is basically the first quarter of 2022. It's the first quarter after we started the pandemic in which we had almost no restrictions. We had some capacity limits in some, I would say in some stores in some areas. That was basically almost. We almost had full utilization during the first quarter. It's basically recovering that. That's why we mentioned this concept of normalization. Because, you know, at the end of the day, the lease expenses is something that should be relatively easy to forecast.
It's not so much related to the increase in sales, but more to the, I would say, recovery of operational activity.
Great. That's very clear. Appreciate it.
Thank you, Andrew.
Thank you. Our next question comes from the line of Emilio Acevedo from Santander. Your line is now open.
Hello to everyone. Thank you, Gaston, Juan Manuel, and Alejandro for the call. Basically, I would like to make a question to Juan Manuel specifically. We know that the cost of risk in the last year were very below, and now they are starting to going up. What is your view on that particular risk? Do you think that the cost of risk of the Banco Falabella could increase to the historical level? Thank you.
Thank you for the question. We actually anticipated a normalization in risk. Risk was at an all-time low, and this occurred as a result of the liquidity that was injected in the market, particularly in the case of Chile. We believe that risk will converge to pre-pandemic levels, and we as management anticipated that and have adopted more restrictive credit policies for those segments with higher level, particularly those segments of customers that we know less and those segments that are more exposed to rising inflation levels.
Juan Manuel, do you think that there are potential, like, opportunity to have a lower cost of risk than structurally considering your efforts on efficiencies, also on strategy and also on things like that?
I believe that our cost of risk level will converge to pre-pandemic situation because on one side, I do believe that we have improved significantly the use of information of our ecosystem. We have implemented AI models. We have a lot of traction with our loyalty program. On the other side, we are growing. We are growing in an important way. I will expect that the combination of both factors will lead us to the convergence of pre-pandemic credit risk levels.
Thank you very much, Juan Manuel. Can I make another question for Gaston, please? My question is basically on-
Please go ahead.
Sorry.
Please go ahead.
My question is basically on the concern on inflation. Of course, inflation is one of the main topics that Chile is going through. What is your view on the pass-through to the final product? Considering deflation, do you think it will decelerate demand, and with this we should expect lower margin because of the high level of inflation? Thank you. Particularly in department store and supermarket.
Thank you for the call, for the question, I'm sorry. You know, the impact on costs has been substantial during the first quarter, and we actually have not passed all of the costs to the final customer. In part, as I said before, we see some of these as one-time costs, but also in part because of how the market evolves, we have to, you know, we don't price based only on cost and price based on where the market is moving.
We do see that this is a gradual process in which, on one hand, the inflationary pressure has been quite high during the first quarter and probably right now, and is expected to ease somewhat during the second semester, as at least expected by the central bank. Because there were so many impacts during the first quarter, we also expect that. Therefore, we see a process of catch-up of, you know, being able to just pass a higher cost to customers. Having said that, this is not, you know, working out in the same way across the region.
We actually have been more effective in being more able, particularly in home improvement, to just pass costs to the market in Peru and Colombia, and have been slower in doing that in Chile. We expect in Chile, we will be doing more catch up in the coming months, and less in the other two countries.
Thank you. Do you think that Falabella has a competitive advantage on the pass-through of prices due to its finance, due to its authority position compared to other players? Like, it's less sensitivity to prices?
I think the competitive advantage we are developing comes from two sides. One is the efficiency of purchases and making that more and more data-driven. The other competitive advantage comes from the efficiency of the distribution channels. Now, in spite of the increase in expenses that you've seen in the first quarter, our stores are significantly more efficient than they were before the pandemic, and we are deploying many initiatives to make those stores more and more efficient in the coming months. You have to remember that they have gone through a you know reopening process and therefore, the energy was mostly placed on an effective reopening process rather than on the efficiency itself. The focus going forward is gonna be much more on the efficiency of the stores.
Okay. Thank you very much. Thank you.
Thank you. Our next question comes from the line of Irma Sgarz from Goldman Sachs. Your line is now open.
Yes. Hi. Thanks for taking my question. I was curious just if you could comment a little bit more about the demand backdrop, specifically in Chile. I know you've made a couple of comments, but I was trying to sort of separate how much sort of you're seeing a slowdown in macro demand on the one hand side, like a sort of really consumer backdrop. To what extent when you're thinking about the return of customers to stores, what sort of behaviors you're seeing in terms of what is sticking more in the online world, maybe across channels or across customer categories. If you could call out sort of where you're seeing more of a shift back to the offline and where you're seeing sort of stickiness in the online channel.
A final question, more specifically on the supermarket segment, specifically in Chile, you had margin pressure both on the gross margin level and on the EBITDA margin level. I totally appreciate you coming off a very sort of demanding comp because of moving out of the pandemic. We're just trying to understand what else is going on there in terms of you know specific different drivers for supermarket that maybe we haven't seen in other segments. Thank you.
Hi, Irma. This is Alejandro. It's a relatively long question. I'm gonna try to tackle all those, and if I miss any part, please feel free to jump back and we can go back to those. First I'd like to go on what you mentioned. What has changed with the going back to normal restrictions of mobility. In that sense, there's some things that we see that after we've ended a complete quarter without restrictions, one of the first things that comes to our mind is that more than just different channels, like people going to department store or supermarket or home improvement in our case, there's more, I would say, differentiation in terms of categories.
In that sense, we see that categories like apparel, construction materials or food, they tend to go back strongly to the store and remain in there. Even though they still have a higher penetration online than they used to have before the pandemic, they tend to go strong in that. On the other hand, what tends to stay strong online is basically big-ticket items like electronics.
At a mix level, I would say we could say that they can maintain scale despite some deceleration in categories. Bottom line, as I said before, it's more related to category. What we have been able to see is that customers tend to stay more omni-channel than I would say I used to be. Like it used to be the case before we had some customers that were basically physically driven and some others were online driven. Now it's more focused on categories, and customers they feel comfortable with this, and that's the main explanation to have a strong recovery on the physical world and also to have a I would say a big level of a strong activity on the online business. The other one was how we.
Supermarket.
Supermarkets. Okay. There you go. Thank you. Sorry. The truth is we had a very strong compared base from first quarter last year, in which by the way, just to remind everyone, non-food grew 60% last year, and food sales grew 14%. That said, we are starting to see I would say normalization on that. Non-food has decelerated, but food sales are basically going back, and consumers are basically coming back from restrictions. If you remember last year, we had a relatively high impact on non-food because a lot of people didn't go on holidays outside of main cities. They basically stayed local. That also brought a lot of impact on food and non-food activity for the supermarket.
What are we expecting from this performance? We are expecting the non-food. We don't see that as also bringing a good recovery as much as it's gonna be food driving growth moving forward. The other thing is expectations for the rest of the. Irma, can you confirm if you have a third question? We believe we covered what you asked.
Yeah. No, you covered it well. I was also just asking about macro, just, to help us think what we've observed in terms of now that stimulus is a little bit further in the past, what are you seeing in terms of underlying demand?
In terms of demand, what we're seeing is basically as Gaston mentioned thus far, we have been able to see a strong quarter in terms of demand. We still expect to see that kind of activity in the second quarter. Where we are more, I would say, doubtful in terms of volatility that we've seen in the markets in the second half. But that said, things that as Gaston mentioned are very, I would say, on the positive side for us is that we have inventory in our hands, so we're gonna be able to avoid the situation we faced on the second half of last year where inventory was on the short side for us.
We are still seeing a very strong activity on the financial services following what Juan Manuel was mentioning. The other thing that we are planning also is basically to make sure and foster a lot of, I would say, efficiencies in our business. That's why I highlighted that part of the increase that we presented on the SG&A was basically external personnel, because in case we see a downturn on the performance of the economy or we see the demand is going down, we have the capacity to react on that. That's why we're keeping as flexible and as tight as we can in order to face, I would say, a volatile second half of this year.
In that sense, also as part of things that Gaston mentioned, we're expecting, even though we still have high levels of inflation, and we don't expect them to go that further down, and we expect a second half in which at least part of those inflation pressures may at least ease a little bit in line with what the central bank has already stated here.
Thank you.
Thank you.
Thank you. Our next question comes from the line of Nicolás Larraín from JPMorgan. Your line is now open.
Hi, guys. Good afternoon. Thank you, Gaston, Juan Manuel, and Alejandro. I had two questions, actually. The first one is a follow-up for Alejandro, going back a bit towards the expenses. Alejandro, could you maybe pinpoint if there was any particular format, especially in Chile, that was maybe more affected by these extraordinary expenses that you mentioned? I think that would be super helpful. And then, another question for Juan Manuel. On the growth side, Juan Manuel, I wanted to pick your brains on what are the initiatives on loan book growth, right? So is it more targeting the same consumers with some cross-selling of new products, maybe addressing riskier consumers, especially in Chile? I would like to know what's your ideas on around that front.
Thank you very much.
Thank you, Nicolás, for your question. I'm gonna take the first one and then, I'll let Juan Manuel Matheu to go. In terms of format, certainly the one that was the most impacted was Sodimac, given that's also the largest retail format that we have. The big part of the logistics extra cost that we presented at SG&A was related to the demurrages, and that I would say it's almost entirely driven by Sodimac. Because there's also a seasonal feature here, but it's exactly the amount of, I mean, it was a business in which most of the boats were arriving on time when we started having this restriction that was mainly driven by the port, local ports here in Chile. That's why most of the impact is related to the demurrage.
In terms of the personnel extra, this 30% of external, that's also I would say the majority of that, the 80/20 is also Sodimac. We saw a lot of activity, people going to the store. Part of the things that we are starting to work on, in which the Falabella store was more advanced, that's why the impact for them is lower, is in terms of, I would say, adding more technology for automation and self-managing customers by them. Self-checkout, things like that, is more rolled out in Falabella. That's why the impact in case of Sodimac was higher. I think that's it.
Okay. Nicolás, the question about our loan book growth strategy. I will divide the answer in two. First, it's on our revolving credit card revolving portfolio, and the second part would be our personal loan portfolio. Regarding the revolving portfolio, as you may have seen in the figures that we share, we are observing an increase in preference of our CMR credit card customers, which in the past used to use our CMR within our stores. They are using our credit card, the main credit card that is driving a big growth in purchases with CMR on the one side, and that is resulting also in a growth in the revolving that we have in the card.
We have also launched a couple of initiatives that is to actually convert into installments the purchases that the customers do or the balance due for these customers. That would be my first part of the answer. The second part of the answer would be, regarding our personal loans strategy. What we have been improving are, on the one hand, the information that we use to actually assess the creditworthiness of a customer. We have added thousands of new data points to consider, so we believe that we have better information and also better AI models to assess risk.
Second, we do believe or we have learned through the time that the credit granting process, as you actually improve and reduce friction in the credit granting process, customers start to adopt our products in comparison with our competitors, that sometimes ask for too much information, and that makes the customer prefer to actually use our solutions. Okay? When we talk about personal loans, we focus more in our historical customer base. When we actually add new customers to our bank, we add them through our savings accounts or through our credit cards with generally reduced limits. Once we start knowing this customer, then we start offering personal loans.
We also believe that our strategy of being digital in that way, gaining much more CMR customers in the long run, will also impact our personal loan portfolio.
If I may, I would like to. Hello?
Yes, please go ahead, Gaston.
Yeah. I'm sorry. No, I wanted to just complement Juan Manuel's answer in two ways. The first one is that the substantial increase we are having in, as Juan Manuel mentioned, savings accounts opening means that we have a much better knowledge of the customer, of their transactions, et cetera, before moving into the credit side of the relationship. The second comment I would like to make because you made it into whether we're changing the customer target in terms of segments, et cetera. We really don't think of it that way. We think of it in terms of risk appetite. The answer to that question that I would give you is we have not changed our risk appetite.
We are actually not planning to change our risk appetite. The increased information and increased quality of that information may mean that we can go into lending areas where it was difficult for us to do it before, but it's without sacrificing risk appetite.
Perfect, Gaston. Thank you very much, everyone.
Thank you.
Thank you. Our next question comes from the line of Vanessa Quiroga from Credit Suisse. Your line is now open.
Hi. Thank you for taking my question. I was wondering if I could follow up on the expenses side that you mentioned in the beginning of the Q&A, that 30% was related to salary, temporary salary increases. Just can you give more color on temporary regarding salaries. The other question is about inventory. If you think that this elevated level of inventory on the working capital accounts is permanent or if you are seeing that normalizing currently? Thank you.
Thank you, Vanessa, for both of your questions. In terms of salary, the reason, of course, large part of the salary increase has to do with reopening of stores and it's permanent, right? What we are saying when we include part of the salaries in that 30% is that, an important part of the salary increase had to do with the demand of reopening stores so drastically with logistics that were also demanding more effort from us and now are having more of the initiatives that automate some of those processes. What we see is a curve that maybe looks like a jump up front and then goes back to a level that is lower.
Not where it was before, but it's lower than it was on the first quarter of this year. Regarding inventory, I would say the following. Can you hear me?
Yes. Very well. Thank you.
Okay, I'm sorry. Regarding inventory, I would say the following. The first is that we have quite high levels of inventory compared to a year ago, in part because a large proportion of that inventory during that quarter was in transit. And therefore that adds up inventory that we would have expected, you know, in normal travel times and shipping line offering times, we would have had it more spaced out in time. That's why, as we have cut down in purchases, anticipating a lower second semester in terms of demand, and we also accumulated inventory because of the very high shipping times, the inventory is expected to go down as we move forward during the year.
You expect to need lower inventory for the second half of the year because consumption will also normalize. Did I understand correctly?
You did, yes.
All right. Excellent. If I may follow up with a third question on just the decline, double-digit decline in 3P GMV that we saw. Exactly, if you can explain what happened, where it was sellers actually exiting the platform or customers reducing their interest in these products.
Yeah. I think there are two phenomena behind what you see in our 3P, mainly. The first one is that our 3P seller base is very aligned to the categories that are traditionally strong in our digital platforms. As Alejandro mentioned in a previous question, when you look at the mix, what we saw in our digital sales is that apparel is gaining weight where we don't have a lot of 3P sellers. Other categories like construction, et cetera, and home and home improvement in general are gaining weight. Electronics in particular is losing weight. Many of our 3P sellers are especially in that category, right? In our view it's mostly a mix.
We haven't seen an abnormal, you know, churn rate in our seller base. But on the other hand, what we are aiming for is not just staying out of high churn, but increasing the seller base. That we haven't been able to do so effectively. That's the other factor. That's because we haven't yet launched many of the improvements, as I said before in the Seller Center and in the functionalities that sellers have to operate with us, our aggressiveness in seller hunting process, as you call it, hasn't been as strong during the first quarter and it's going to be stronger going forward.
I think a third factor that has affected sales of the sellers is that sellers have been relatively shorter of inventory in the first quarter and are getting a lot of inventory now. Something similar to what you are seeing happening with us, but with a delay of maybe 60 days, it's happening to many of the sellers, particularly in electronics.
Very insightful. Thank you.
Thank you very much, Vanessa.
Thank you. Ma'am, we will now turn to Juan-Luis Carrasco for closing remarks.
Thanks, Gigi. We would like to thank everyone for joining us on Falabella's first quarter 2022 earnings call. Our investor relations team will remain available to any follow-up questions you may have. Thank you and have a nice day.