What: 2023 was a tough year for Falabella, after 2 booming post-pandemic years.

Why it is important: Falabella is a large regional player and innovative in many ways, especially in  terms of omnichannel capabilities.

Falabella SA, a major retail group in Chile, is advancing its strategic plan to raise between $850 million to $1 billion through asset sales, aiming to enhance its credit metrics. Alejandro González, the CEO, announced at the annual shareholder meeting in Santiago that following a successful initial transaction—selling its stake in Falabella Peru to Mallplaza for up to $300 million—they are in discussions for several significant asset sales throughout the year. These efforts are part of a broader strategy to recover profitability and revenue performance, with the objective of returning to investment grade status.

Both González and chairman Enrique Ostale emphasized the company's commitment to targeting a net debt to EBITDA ratio of approximately 4 times, a significant improvement from its current level of 6.5 times, and down from a peak of 8.6. This focus on fiscal stability comes after a challenging period marked by heavy investment in digital transformation and an economic downturn in its operating regions, which resulted in a downgrade to junk status by Fitch Ratings and S&P Global Ratings.

Falabella, which operates across seven Latin American countries, has seen a notable 40% increase in its stock value since October, with its fourth-quarter earnings surpassing expectations. The company's bonds also demonstrated resilience, with a 6.9% return in the first quarter. Falabella is poised to release its first-quarter results soon, amidst an environment of economic and political instability in its key markets.

Falabella Aims to Close Several Major Asset Sales This Year