Good day, ladies and gentlemen. Welcome to Falabella Earnings Call. My name is Victor, 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 third quarter of 2021. Following this, Mr. Gastón Bottazzini, Chief Executive Officer, will share some highlights on the performance of the company. Afterwards, we will open the lines 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 the conference with Mr. Juan-Luis Carrasco.
Thank you, Victor. Good morning, everyone, and welcome to Falabella's Third Quarter 2021 Earnings Call. Joining me on today's call are Gastón Bottazzini, our Chief Executive Officer, Alejandro González, our Chief Financial Officer, and Alejandro Arze, CEO of Home Improvement. I would like to remind you that numbers presented during the call will be stated in U.S. dollars and rounded to millions. Therefore, certain differences may arise with the published financial statements. I will start the call by going over the key financial highlights of the period. During the third quarter of 2021, the company's consolidated revenue reached $3,572 million, an increase of 16.7% year-over-year. This was mainly explained by the increase in revenue from home improvement and department stores across the region.
Retail formats in Chile performed strongly, with department stores revenue growing by 39% and home improvement by 33% on a year-over-year basis. Banking business revenue grew 4%, mainly explained by the increase in loan book of 6.8% on a year-over-year basis. Shopping center revenue grew by 163% year-over-year, associated with lease income from returning to normal conditions in the operations of the malls when comparing to the third quarter of 2020. During the third quarter, our omnichannel platform reported total sales growing 23% in the region. This is considering both e-commerce channel and physical stores. Our e-commerce platform achieved an online GMV of $3.5 billion over the last 12 months on an FX neutral basis.
Gross profit reached $1,266 million in the third quarter of 2021, an increase of 38% on a year-over-year basis, mainly explained by a higher contribution from department stores in Chile, whose margins expanded to 33.8%, explained by a reduction in promotional activity, along with a strong contribution from home improvement in Chile, whose gross margin reached 30.7%. Higher margin from the Chilean banking business explained by lower cost of risk. Lastly, a higher contribution from the real estate business, whose gross margins recovered up to 69.4%. Moving on to the next slide, we can see that consolidated EBITDA reached $480 million for the quarter, up 117% when comparing to the $221 million for the same period last year.
This increase was reflected into a 13.4% margin, mainly due to contributions from home improvement and department stores in Chile. Also, the real estate business and the banking operations in Chile and Peru contributed. Net income reached $226 million for the third quarter of 2021, mainly explained by higher contributions from home improvement in Chile, department stores in Chile, and the real estate business as well, and to a lesser extent, banking operations in Chile and retail formats in Peru. Additionally, non-operating results were positively impacted by a financial income of $87 million, mainly explained by gains recognized in derivative contracts used for hedging purposes. I will now turn the call over to Gastón.
Thank you very much, Juan Luis. Thank you everyone for joining us this morning. To start, we would like to express our gratitude to all of the teams across the region that are continuing to face a very challenging situation in the face of the pandemic. We have gained a lot of freedom and mobility as a result of a better and more stable situation in terms of contagions across the different countries. This has been a driver of our performance this quarter. In spite of that, we continue to navigate very challenging waters in terms of continuing waves as well as supply chain challenges.
In terms of the quarter performance itself, it was mainly driven by the return of customers to shop in our physical stores, which underscores the importance of these stores to enhance our overall value proposition as a physical and digital ecosystem. Our physical stores this quarter grew by 40% year-over-year. The quarter was also driven by continued strong performance in home improvement across all of our markets, with sustained good performance in the physical stores driven by continuous appetite by consumers to continue to renovate and expand their homes.
Our international operations have been also an important driver of performance, particularly Peru and Colombia, where overall retail revenue grew by 16% and 22% respectively. Our shopping malls, lastly, also were an important driver of performance in particular this quarter in comparative terms, because with increased mobility, we actually reached almost 100% of leased GLA operational, and very low vacancy levels in comparative terms. This also, in terms of the expanded hours of operations of our malls, permitted our food and beverage value proposition to actually restart very strongly. Overall, mall performance therefore was an important factor in the performance of the quarter.
Finally, our banking operations, which had been losing ground in terms of loan book as a result both of restrictions in mobility and more conservative approach in terms of risk policies, are finally starting to resume expansion with a 7.9% growth of the loan book in Chile and 6.8% growth of the loan book across the region.
In terms of the execution of our ecosystem strategy, this quarter has also been a very relevant one and almost a point of inflection in this execution since at the end of August, we launched our new falabella.com portal, which integrates all of our e-commerce sites with all of our retailers in a single platform, as well as all of our resellers, third-party sellers that we had in Linio, making this a single destination for our customers and a single point of contact for our sellers. This is, as I said, a very important point of inflection in our digital transformation. Behind this, there was a very relevant effort of integration of many different systems.
The fact that we were able to do this without losing ground in the growth of our GMV and in terms of the satisfaction of our customers, we consider to be quite an accomplishment. We continue and will continue to work to position falabella.com as the single destination for all products, both for our retailers and for our sellers. We think this is going to be a particularly important driver of growth going forward, particularly as we revamp the marketplace operation. In digital banking, we also made a significant progress in terms of improving our product opening processes. We issued more than 170,000 fully digital credit cards. These cards are opened without any human participation.
Current accounts were also introduced with a fully digital opening, and we opened 130,000 current accounts in the third quarter. We are also benefiting from our improved loan origination models coupled with enhanced customer journeys, which means that in spite of the reopening of most of our bank branches, over 50% of loan origination continues to be digital. TPV on our payments platform reached a total volume of $2.9 billion, with our digital wallet in particular gaining traction and total volume actually being a little bit contracted as a result of a lower GMV, e-commerce GMV as the stores reopened almost completely. In loyalty, finally, we have reached 14.6 million participants in our program.
This is a 60% increase in the program as we have opened it to all means of payments, which is helping us significantly in terms of visibility of our customers and our ability to permanently improve that value proposition. In summary, as we continue to see greater mobility and our customers return to the stores across the region, we see that the combination of fully reopened stores with an e-commerce platform that continues to improve and maintain a strong performance allows us to drive overall top-line growth. The combination of channels is actually becoming one of addition rather than cannibalization. Also, the traction we are gaining in product origination in the banking operation is the foundation for taking our digital banking proposal to the next level and is going to continue to help our customer acquisition levels.
We are committed to strengthening the physical and digital ecosystem, focusing on enhancing and scaling all of our core platforms. In the short term, we are focusing on some very specific initiatives, such as the full deployment of our Global Seller Center, which is a very important part of the falabella.com value proposition to the marketplace sellers. Continue to scale fulfillment capacity, ramping up operations of our newly inaugurated fulfillment centers for third parties in Chile, Peru, and Colombia, which are exclusively destined to marketplace sellers. Continue to roll out falabella.com platform in Peru and Colombia, which is coming in the next two quarters.
We have recently launched Fpay in Peru, and we'll launch Fpay in Colombia at the beginning of next year. In the longer term, we are very encouraged by the positive performance of our business in Brazil and the improvements in this Sodimac Dicico model value proposition, which has led us to also consider the expansion in Brazil as one of our priorities in the near future. At the same time, we are also trying to push forward in our expansion in Mexico and try to open a few stores to complement the eight stores we have opened in that country so far. To finish, we are really very encouraged by the results of this quarter, but more importantly, committed to advancing our journey of digital transformation, which is helping us shape also our cultural transformation as an organization. Thank you very much.
Thank you, Gastón. 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 on your touch tone telephone. If your question has been answered or you wish to withdraw your question, press star followed by two. Again, press star one to ask a question. Please stand by for your first question. Our first question will come from the line of Marko Kraljevic from LarrainVial. You may begin.
Hi. Thanks for taking my question. My first question is, what benefits are you seeing from online home improvement after the integration under falabella.com? My second question is, how do you feel about the current inventory levels facing the fourth quarter and the first half of 2022? Thanks.
Marco, hi, thank you for your question. I'll take the first one. The online sales for home improvement have gained relevant scale with $809 million as of Q3 2021, last 12 months, more than 4x what we had in 2019. Benefits of the integration in falabella.com are becoming tangible rapidly as our products gain immediate access to a larger traffic base, resulting in increased exposure and sales. Home improvement categories within the platform are showing rapid, strong growth, particularly across general furniture, home appliances and gardening equipment. We continue focus on getting our customer increasingly familiar with this revamped experience with a marketing and communication plan to position falabella.com as our one-stop shop.
I will take the question on inventories. Basically, the challenges we face are across the whole value chain, right? There is an imbalance in production. Obviously, there are, as you know, problems in the inbound logistics, and in general terms, in the different categories we are facing challenges. There are certain categories in which we are facing more challenges, particularly those more linked to home improvement, decoration, gardening, construction materials. Having said that and looking forward to the holiday season, we actually are in a very comfortable or we feel in a comfortable position in those categories that are facing highest demand during that season, like electronics, particularly small electronics, fashion.
Those are categories in which we are actually and we have been building up inventory and are in a better position than we have been in the last few months. We are continuing to work on this. We actually feel we are in good shape for those categories that are in highest demand in the coming months, and actually have been, you know, balancing between those different categories to make sure that those that are more relevant to our customers in the next few months are the ones that we have highest availability.
Thank you.
Thank you. Our next question will come from the line of Maria Ignacia Flores from Credicorp Capital. You may begin.
Hi, Gastón and Alejandro. How are you? Thank you for the call and congratulations on the results. I have a question for Alejandro in home improvement. You mentioned you're looking with revised prospects, your home improvement expansion plans for Brazil and Mexico, given the better than expected performance. I was wondering if you could provide further color on that. Thank you.
Thank you, Maria Ignacia. Mexico, it remains as a very attractive opportunity for growth, as it's a market underserved by home improvement chains and with very attractive growth prospects. In that sense, we are executing an organic growth plan to enter this market. We have been focused on Mexico City / Monterrey area and also Mexico City, Veracruz area. Despite a slower than anticipated pace in store openings, mainly explained in the delays in obtaining construction permits, today we have eight operational stores, and the performance on these stores is very good. All of them are profitable on a standalone basis.
In Brazil, we are encouraged by the performance of the home improvement in Brazil, and we are evaluating to accelerate our expansion plan in this market. Our study about the Dicico proposition continues to strengthen our positioning in front of our customers. This came as a result of a multi-year effort to turn a construction specialist into a broader home improvement value proposition, which has turned out very successful for us. This has turned into a very healthy sales growth for each one of the stores that we remodel. Therefore, we have no doubt that it has been both a market share gain and also performance improvement in Brazil with very healthy growth rates. We are evaluating to accelerate the plan.
Thank you.
Our next question comes from the line of Andrew Ruben from Morgan Stanley. You may begin.
Hi. Thanks very much for the question. Just to follow up on e-commerce, could you talk a bit more about the 3P marketplace? I know it declined on a tough comparison this quarter, but any color you can provide on the integration of marketplace within the new platform, any supply chain issues with sellers and more broadly, any color on expectations for the marketplace as we move to the end of the year? Thank you.
Hi, Andrew, and thank you for the question. In general terms, you know, as you said, marketplace performance has been a little bit softer than it had been previously. We do think that the supply chain issues that are affecting us as a relatively large retailer have actually a greater effect on smaller retailers. That is part of the explanation for that. Also, marketplace in general has higher exposure to, you know, it's very broad in terms of its exposure to categories compared to our retail. In particular, we have seen that the growth in categories or the categories that have grown the most are actually ones that in which our retail is very focused, particularly those around home improvement, decoration, home furnishings.
Part of our strategy also is to continue to build a more diverse seller base since our seller base is today very focused on certain categories that are not the ones that have seen the highest growth in the last quarter. I'd say those are the explanations for what you see in our volumes. Our...
Therefore, as we continue to improve our value proposition in the marketplace, and in particular, as we implement the new version of our global seller center, which will have a much easier onboarding process and much better visibility of inventories, et cetera, that should allow us to, you know, increase the rate at which we bring in sellers as well, and as a result of that, increase the performance of our 3 P.
It's all very helpful. Thank you.
Thank you. Our next question comes from the line of Nicolás Larrain from JP Morgan. You may begin.
Hi. Good morning, Gastón, Alejandro, Juan- Luis. Thank you for the call and for taking my question. I have three, actually. The first one is, I wanted to ask, what are you seeing in terms of trends on the fourth quarter, and, if you can share any outlook into 2022, considering that you face maybe high comparison basis, into next year. Also on the e-commerce front, I wanted to understand, from you, Gastón, maybe in which areas you think that further investment is needed in order to continue accelerating, e-commerce. Lastly, thinking on the department stores, how should we think about potential repurposing of some department store area, considering the growing e-commerce penetration in that format? Thank you.
Thank you, Nicolás, for your questions. In terms of how we're seeing the fourth quarter, in fact, we are actually seeing a lot of stability in most of the dimensions. Both at the sales level, margins level, and you know, we are seeing more or less the same story that you've seen so far this year. Of course, it's very you know, still relatively early to call it the margin, a trend in the quarter because actually the last month of this quarter represents you know, a very large proportion of the overall quarter. A lot is going to be defined by how the holiday season goes in the quarter.
In terms of, I think your second question was around e-commerce and what are the, you know, where we see the drivers of growth there and what types of investments we are making. I'd say today, there are two or three axes. One is the implementation of falabella.com in Peru and Colombia. That is going to be coming in the next few months. You know, having a successful implementation such as the one we had in Chile is a very important aspect of keeping the growth. We think the impact in those two countries is actually going to be higher than it was in Chile, given the breadth of product that we have in Colombia, for example, compared to Chile.
A second area of investment, as I said before, is our Global Seller Center. Even though we implemented the integrated e-commerce platform, the value proposition to sellers still has a way to go in terms of both functionality, ease of use, visibility of inventory, et cetera. When we have that, we will have a much better value proposition, but also a much more rapid way to onboard sellers, which will translate into a capacity to onboard a lot more sellers than we have had in the past. I'd say in terms of e-commerce, the third area of investment is around logistics. We have greatly improved service levels.
We have been able to sustain, you know, these major events, Cyber Day in Chile, Peru, and Colombia, and maintaining safe service levels through those events, which was very important for us. We still are not at our target of, you know, delivering more than 70% of our orders below 48 hours. That continues to be our target. We are at a number slightly above 50% in that. We are continuing to make several investments in technology, transfer centers, which we are expanding in routing capabilities and tracking capabilities so that those numbers are actually reached in the next few months.
Perfect, Gastón. Thank you very much.
Nicolás, I'm sorry if I didn't cover all of your questions, but let me know if there's one that I left. I may have left one out, so remind me and I'll go through it.
Yeah. It was just, Gastón-
Sure.
If you could comment a bit on the department store area. How should we think about repurposing maybe some of this area considering the growing e-commerce penetration in that format?
All right. You know, if you think about at a very high level about the department store, this has mostly been a sales surface, right? 100% of the area of the department store or almost 100% was destined to just selling product, showing product that we have in stock and sell. Today, there are several changes that are taking place. They may not be completely obvious, but if you go to one of our stores today, you will see two or three major changes. One of them is that a part of the store is actually today functioning as a showroom. You know, and particularly in some categories that we had partially or completely taken out of the store, such as furniture, sports equipment, strollers for kids.
These are categories that are going back to the store with a showroom type of value proposition where we show a partial view of the assortment and then digitally you can access 100% of the view of the assortment. Part of the role of the store there is more the advisors that we have that are specialized in those categories and therefore not only improve the sale at the store, but also the sales in our digital channels. Another change that is taking place is around logistics in general, right? The store, the area that was destined to product pickup in the store has almost quadrupled over the last couple of years.
It is very relevant in terms of giving the customer a lot of space to try the products, to try clothing if they need to try clothing, to make exchanges, you know, we are also incorporating technology, so we have an automated product pickup in the larger stores where the volume justifies that. That's another area, another major change in the department store. In terms of the network itself, we are continuously reviewing the store network. We are closing a few stores, but as I've said, many times before, we don't foresee that we will have any major, you know, or massive, store closures since both in terms of size and distribution across the three different countries, we are comfortable with the coverage we have.
There will be some store closures, but we think they're gonna be sporadic and spread over time.
Perfect. Gastón, thank you very much, and congrats on the numbers.
Our next question.
Thank you.
From the line of Irma Sgarz from Goldman Sachs. You may begin.
Yes. Hi, thanks for taking my question. Gastón, I wanted to dig in a little bit on the consumer credit or the Banco Falabella results. Actually, perhaps maybe if you can comment about the outlook that you see. You mentioned in your opening remarks that you're starting to sort of open the channels a little bit more again on the lending, and we already saw the growth in the loan book again. Now when we combine that with the fact that maybe liquidity isn't gonna be perhaps quite as large into 2022 as it has been in 2021.
With provisions normalizing, but also a number of new efficiency and digitalization tools that you've been putting in place, it feels like you're actually having probably pretty solid and positive outlook for this part of the business into 2022. I just wanted to check in on what your vision was for this business and if there's anything else that is on your radar that we should just keep an eye on or bear in mind. Thank you.
Thank you very much, Irma, for the question. In general terms, we are actually quite excited about the financial services business and the digital bank, which is, you know, as we today have more than 95% of our transactions being performed digitally, we think we can already call it a digital bank. Even though in terms of product origination, it's still 50/50, you know, 50% of a product origination is done digitally, 50% in our branches. In terms of our outlook for the business, you know, the contraction of the loan book over the past year and a half or so has been mainly driven by two factors. One has been the liquidity, particularly in Chile, but also in the rest of the countries.
There has been enough liquidity that demand for credit has decreased. The uncertainty about the course of the pandemic had us really be a lot more conservative in our credit policies. The result of that is that the customer base is really unlevered compared to where it was a year and a half ago. That's one factor, that there is space for people. As you said, Irma, as liquidity decreases over time, there's going to be this additional source of liquidity, which is people have a personal relatively unlevered balance sheet. The second aspect is that we have really improved our origination processes and made them a lot faster and in a lot less steps.
At the same time we have improved the origination quality through our credit models. The impact of that is that we expect that we will really ramp up account openings. The combination of ramped up account openings and, you know, our customer base with a more unlevered balance sheet, we think is a very promising scenario for the coming months, maybe more than months, maybe a couple of years, in terms of expanding this business. Of course, there are many factors that can affect this going forward. If you were to ask me today, this is probably one of the engines of growth for our overall business that I see going forward.
That's great. Thank you.
Thank you, Irma.
Our next question will come from the line of Rodrigo Echagaray from Scotiabank. You may begin.
Thank you, and congrats on the results. Just a quick question on the loyalty program. You're obviously making progress. I was just curious to hear your thoughts on the vision for that, you know, how it ties in the wallet and cross-selling, and how important is that going forward for your strategy? Thank you.
Thank you, Rodrigo, for the question. Yes, I think the main change and the reason you're seeing so much traction in the loyalty program has to do with the fact that about a year and a half ago, we decided that the loyalty program should not be attached to our financial services value proposition, should not be part of the credit card exclusively, but should be a loyalty program that all of our customers can access. With that in mind, we allowed all customers that shop in our stores and digital channels to sign up for the program, and we brought the program participant levels from about 5 million, which was the number of credit cards we had in the region, to close to 14 million today, right?
That growth in the number of participants is also coming hand-in-hand with a growth in the engagement, at least with the program at this point, which is what we are able to measure at this point, right? In general terms, you know, we have also, in line with having a greater number of participants, have increased substantially the number of customers that redeem, right? The redemption rate over the last year has gone from close to 50%- 60%, which means that customers are really engaging with the program. That has also come hand-in-hand with changing how we think about redemption and allowing customers to redeem at lower levels of points than we had before, right?
In order to get early engagement rather than people have to wait a long time before they can engage with the program. The result of this in the short term is that we have much better visibility of our customers across all of our businesses, all of our channels, and therefore are able to really target the commercial proposal to them a lot better, and therefore get even more engagement as a result of that. We think this is a very important part of the overall value proposition to the customer, a very important part of the ecosystem. It will be very relevant in our payments platform.
The payments platform leverages points significantly today in terms of signing up customers and you know getting you know through gaming and other strategies getting customer engagement in the platform. To answer your question, it's a very good driver of engagement, but also it's a very good driver of customer insight, both for our retail business and our financial services business.
Got it. Thank you. Just one additional question. You mentioned earlier that in your view, the falabella.com integration could be even more powerful or impactful in Peru and Colombia. Just curious as to why you think that's the case?
Well, it's for different reasons in the two countries. I think in the case of Peru, because we are even further behind in terms of our marketplace, so the attractiveness of the marketplace by the fact that you have all of the 1P offering there and all of the traffic there is going to be a lot higher. Therefore, the consolidation of all of the, you know, both the retail side and the marketplace side is going to produce a higher synergy. In the case of Colombia, because we have a relatively lower assortment compared to Chile and Peru, the fact that we don't have Tottus there, which has the lower range of the electronics. You know, Tottus is a significant player in non-food in Chile and Peru.
You know, in addition to what I described in Peru, also in Colombia, you have the additional factor of having, by consolidating everything, a better impact in terms of enhancement of the assortment. Those are the reasons that I think it can be even more impactful, in that the value proposition to the customer improves more in those countries than it does in Chile.
Got it. Makes sense. Thank you.
Thank you.
Our next question will come from line of Antonio Hernández from Barclays. You may begin.
Hi, good morning. Thanks for taking my question. Congrats on the results. Two questions, actually. The first one is what is impacting differently our Chile versus other countries after the admin SG&A expenses increasing faster than gross margin? Is this related to the changes being done in Chile? For how long are you expecting this? The follow-up would be regarding how normalized are your shopping center revenues and vacancy rates with pre-pandemic? I know they are improving, but if you could shed more light on this, that would be very helpful. Thanks.
Yes. Thank you, Antonio, for the questions. You know, double-clicking on the Brazil P&L, you know, when you look at margins, there has been a slight deterioration on margins. This is a result of a change in mix. The growth of the construction segment relative to the retail or consumer segment in that market is producing that change. As a matter of fact, in all of the new markets, you see this happen over time. When we enter a market, we usually have a better performance in consumer. This is happening today in Mexico, for example. Over time, it takes a longer time to gain the professional and the construction segment relations.
Also this is a signal of reactivation of the Brazilian economy in the last few months, right? The fact that you have better construction performance, better retail performance versus retail performance. In SG&A, I think your second question in Brazil was an SG&A. What you see there is a difference in the base because a year ago in Brazil, we had employment subsidies and savings in rentals that were actually temporary as a result of the pandemic. As this came back to normal, the SG&A also grew, and it grew, you know, more than sales, right? We are also in the case of Brazil, in relative terms, investing more in marketing than we were a year ago.
Those are the explanations for the you know those changes you see in the Brazilian P&L. In terms of our shopping centers, we are actually quite encouraged by the you know the return of customers to our malls. Today, 100% of the GLA is operational, and we are having you know a full day in terms of opening of the malls, which is really driving our food and beverage performance, which was the one that was suffering the most in relative terms. Those are the good news. In terms of occupation, we have had some decrease in occupation. Pre-pandemic, occupation level was about 95%.
Today, we are about 91% and working on recovering that gap as we move forward.
Perfect. Thanks a lot. Have a nice day.
Next question will come from the line of Vanessa Quiroga from Credit Suisse. You may begin.
Hi, team. Thanks for taking my question. There's two parts to my questions. One of them is regarding lending to sellers. Can you talk a bit about how you will manage risk in this case, in this opportunity? Also, in general, if you can comment about your methodology to decide or who you are selecting to lend to. On the other part of my question is regarding margins. Can you comment on what you expect regarding profitability, especially in your Chilean business going forward? Thank you.
Thank you, Vanessa, for your question. Lending to sellers in the marketplace is one of our initiatives which we are pursuing. We have, you know, a few hundred that we are, you know, experimenting with today. The way we are thinking about that in the short term is that we lend them a proportion of their monthly sales, initially one time, eventually two times the monthly sales with us, which is a, you know, gross understatements of their total sales. The way we decide on who we, you know, who we invite to be part of this pilot and eventually the way we will decide on who we lend to over time is through a scoring system.
The scoring system will take, you know, is an evolving model that, you know, is a trial and error model. We take into account the performance of the sellers in their operational side, in their financial side, in several aspects. Overall, it's, you know, it's the same thing we do for final customers, but adapted to the variables that are relevant to sellers in terms of, you know, their performance and their reliability. It's a model that improves over time. That's why we're starting with a lower number of sellers and expect to ramp up as we believe that the model is mature enough. In terms, I think your second question was around margins.
Yes.
Uh, you know, in the-
For the retail business in Chile.
Yes. In the short term, you know, we have a situation in which margins are, you know, quite solid and the combination of this good liquidity and consumer dynamic in the market, as well as relatively restricted supply in part as a result of the supply chain chain challenges that I mentioned, means that the, you know, markdown levels and stock levels in general are, you know, even actually lower than we would want. Margins, while that situation remains, will continue to be, you know, higher than historical. Having said that, we do foresee going forward as we go into 2022, that margins will start to normalize. Having said that, we don't believe they will go back to 2019 levels or, you know, levels where we actually had excess supply.
We think we have calibrated our planning processes quite a bit since a year and a half ago to believe that we will be able. You know, even though margins will go down, they will still stay at relatively healthy levels compared to 2019, which is probably our low point in terms of historical margins. Going down, but hopefully staying at relatively good levels.
Okay. That's great. Thank you.
Thank you.
Our next question will come from the line of Emilio Acevedo from Santander. You may begin.
Hello to everyone. Thank you for the call. I would like to know more about the breakdown between apparel and electronics on how they have changed in the last month. Of course, I would like to know what would be like the normal breakdowns for both categories in particular. The second question is if you could give more color in how IKEA is going on, and what are you planning over there? Thank you.
Great. Thank you for your question, Emilio. I will talk a little bit at relatively high level about the first one, and then I will pass on the word to Alejandro so that he will talk more about the IKEA project. You know, in general terms, what we've seen is the relative weight of electronics was much higher during the pandemic. As stores opened, we almost went to normal breakdowns. You know, I don't have the exact numbers here with me of the breakdown between apparel and electronics. In general, our breakdown is very similar in terms of you know, hard products being half of our sales and soft products being the other half.
What we are seeing today is apparel actually gaining a lot of weight in relative terms. If you look at our margins, even though they look stable, there is actually a double effect going on there. You know, one is that the fact that we are selling more apparel increases margins, but the fact that electronics are increasingly being sold through our online channels puts actually more pressure and more of the apparel also is being sold through online channels, puts some pressure on margins. Alejandro.
In terms of IKEA, we are running on schedule, and we should see our first store opening in March 2022. That will be in Open Plaza Kennedy. Now we're doing all the construction of that store and everything. It's on schedule. We already have most of the team in place, and we are starting the hiring process for the store team. As far as we go, we foresee that we're gonna meet the date that we are planning. That should be at the end of March or no longer than April 2022. In terms of the other markets, we are also running on schedule on Colombia.
We are working on our Bogotá store, and we're also running very good on the second store that will be in Medellín. We're okay with the plan.
Thank you very much to you both.
Thank you.
Our next question comes from the line of Nicolás Levy from Grupo Security. You may begin.
Hi. Hi, everyone. Regarding to the Pismo investment, can you give us more detail about this and if this is part of the $300 million investment plan that you announced early this year for technology? Thank you.
I'm sorry, Nicolás, can you repeat the question? I missed the first part of it. I'm sorry.
Yeah. About the Pismo investment that we saw in the press, if you can give us more detail about this and if this is part of the $300 million investment plan that you announced early this year for technology.
Thank you, Nicolás. I'd have to explain a little bit more about what that investment is. But to answer your last question, that is not part of our $300 million investment that we announced. We carved out a Falabella fund called Falabella Ventures. It's a relatively small $10 million fund. The objective of this fund is to invest in companies that we think are very relevant for our ecosystem. You know, we did an investment in, actually so far one last mile company called Chazki. We made this investment in Pismo, which is the engine that actually drives our digital wallet.
We think Pismo is very important for us going forward, and that's the rationale of that investment. We will continue to make investments in that order of magnitude in other startups that we think are very relevant to the growth of the ecosystem and are actually part of what we consider our overall ecosystem.
Okay. Thank you.
Thank you.
Thank you. I'm not showing any further questions in the queue. I'd like to turn the call back over to Juan-Luis Carrasco for closing remarks.
We would like to thank everyone for joining us on Falabella's Third Quarter 2021 Earnings Call. Our investor relation teams will remain available for any follow-up questions you may have. Thank you and have a nice day.