Letter to Shareholders

Dear Shareholders:

In these 130 years, Falabella has become part of the Chilean and Regional history. We have brought products from around the world to millions of customers, improving their quality of life, providing them with access to good quality goods and services, and at low prices. Our shopping malls have become the new parks of cities, creating meeting and entertainment spaces. We have helped to bring banking to the population and democratize loans and consumption. The leadership achieved has been obtained through conviction and execution consistency, supported by innovation and adaptation to various environments. These achievements have been possible thanks to the vision and drive of many people working in the company in the past, and the current support of more than 100,000 collaborators, helping us to surprise our customers, daily. We have a lot to be proud of.

During these 130 years of history we have faced many challenges. Today, we need to tackle a new revolution: the digital one. Falabella has been betting for years that e-commerce will be relevant for our customers. That is why we have been making significant investments for a long time, to be the leaders of e-commerce in the Region. Six years ago, investment in technology and logistics accounted for 26% of the group’s capex. Today, it reaches 36%. In 2019, we sold more than US$ 1,200 million in products via e-commerce, and more than US$ 1,330 million in financial products through digital channels. We believe in the increasing relevance of digital channels. However, we also believe these will not replace the store experience. The e-commerce is complemented by and integrated with physical commerce. In countries more digitized than those in Latin America, physical stores help attract new customers, increase brand awareness and therefore brand choosing, facilitate product deliveries, and especially product returns. The hallmark of our work in physical stores will be adapting them for this new scenario, digitizing the customer’s shopping experience to provide them with greater added value, and reducing friction of interactions. We will focus investments on remodeling our best stores and renovating our leading shopping centers. This combination of digitizing the company and betting on e-commerce, leveraged on a network of stores, shopping malls and logistics distribution centers, is what builds the Falabella physical-digital ecosystem. We promote our wide and differentiated product offer with a model that creates permanent relationships over time, allowing us to understand our customers’ behavior and needs. We have a leading loyalty program which rewards our customers and offers various payment, financing and product shipping alternatives. We create a unique relationship experience with our customers, which is more personalized, more attractive and involving less friction, and in this way we simplify their lives by transforming their shopping experiences. We believe that this supply and relationship fashion will be preferred by the market. This process of evolution and change has had material costs and has resulted in necessary cultural transformations within Falabella. It has been difficult to overcome the inertia; however, we have achieved the appropriate changing speed. We continue our work, on building cross-cutting capabilities and platforms for the entire organization. We are making progress and these efforts are already bearing results, which I am sure will help us further scale the company, generating greater efficiencies for the future.

Since October 18th, 2019, we have faced very difficult moments in Chile, which have had an impact on our company. We have made the greatest efforts to protect our collaborators, customers, suppliers and facilities. We managed keeping most of our stores, branches and shopping centers open in order to serve our customers, providing business continuity to our suppliers, thus supporting the recovery of the country’s operation. History shows us that solid companies survive difficult times, and in crisis times, such look for opportunities. By acting seriously, responsibly and professionally, we will overcome these moments and deepen our leadership. Higher investments in technology and logistics bring new expenses. To dampen their effect, this year we have made significant savings at all levels, focusing and simplifying the company in its main businesses, centralizing support areas and adapting to the new circumstances that we believe will remain at our side. Despite these efforts, we were unable to compensate for the drop in sales and margins as a result of the increase in promotional activity and informality occurring in the market. We hope the results of these savings will be reflected in the short term. Our international development remains dynamic, consistent with our expansion and diversification strategy in the Region. Our efforts are mainly focused on Mexico, where along with our partners, we continue to expand both the Sodimac Homecenter format and our financial services. Furthermore, we will continue to grow our supermarkets network in Peru and develop new shopping centers in Colombia.

Another of our great projects for this year and the next is the development of Ikea in Chile, Peru and Colombia. In 2019, we continued strengthening our corporate governance, increasing transparency in our operations. We have continued investing and improving on the company’s operational controls and cybersecurity levels. Falabella is committed with the promotion of meritocracy and inclusion by gender, age, nationality, or race. We respect minorities and seek to act as a responsible and caring company with our communities and SMB suppliers. We’ve maintained support on the various programs we have in regards to education for children, reconstruction of neighborhoods, training for professionals, incentives for innovation and entrepreneurship, among many other initiatives. In turn, we are increasingly aware of environmental care, so we will continue working to operate with less impact on the environment. We are proud to be part of the DJSI as one of the best global retailers. We will continue going forward along the charted path with even greater speed, with the same conviction and professional work which has characterized us in our long history. I am convinced that we will consolidate Falabella’s leadership in the region’s commerce, building a digital-physical ecosystem that captivates our customers. To finalize, I want to thank our clients, collaborators, suppliers and shareholders for their trust in Falabella. It is in these times when we are all required to work together in pursuit of a common purpose, to improve life in our Region.

Carlo Solari Donaggio

Chairman

Governance Documents

Board of Directors

The Board of Falabella S.A. has nine members, who hold office for three years from their appointment date and can be re-elected indefinitely. The Board does not have any alternate directors. The Annual General Shareholders Meeting held on April 25, 2017 appointed the current directors for a statutory period of 3 years.

The Board of Falabella S.A. as of October 31st, 2019 was composed of the following members:

Carlo Solari Donaggio, Chairman

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Director since:

2011

Position:

Chairman

Other responsibilities in Empresas Falabella:

Chairman of the board of directors of Falabella Inversiones Financieras S.A., and member of the board of directors of de Falabella Retail S.A., Dinalsa SpA, Tottus S.A., Hipermercados Tottus S.A. and Plaza S.A.

Other responsibilities outside Empresas Falabella:

Mr. Solari has served as Managing Director of Megeve, a group that invests directly in private equity, stocks and bonds in Latin America, with a multi-sector focus including, among others, real estate, energy, water and mining. He previously worked at Booz Allen & Hamilton and Empresas Falabella.

Member of the executive counsel of the think tank “Centro de Estudios Públicos”, Vice President of the Fundación Paz Ciudadana and counselor of the foundation Aptus, which gives support to low-income students.

Education:

Civil Engineer from the Universidad Católica de Chile, where he graduated magna cum laude; MBA from the Wharton School at the University of Pennsylvania. He is currently an advisory member of the board of directors for Wharton Latin America.

Juan Carlos Cortes Solari, Vice-Chairman of the Board of Directors

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Director since:

2002

Position:

Vice-Chairman of the Board of Directors

Other responsibilities in Empresas Falabella:

Chairman of the board of directors of Tottus S.A. and member of the board of directors of Dinalsa SpA.

Other responsibilities outside Empresas Falabella:

Director of several companies, including Corinvest S.A., where he is also an active member of the investment committees of the FIP he manages. Serves on the board of non-profit entities, such as Fundación Caserta, which focuses on providing school education to students at social risk and Fundación Meri, which supports scientific research and methods of land conservation in Patagonia.

Founder and Chairman of Corso Inversiones, the family office of the Cortés Solari family.

Education:

Bachelor of Science in Business Administration with mention on economy from the University of Nevada, United States.

María Cecilia Karlezi Solari, Member of the Board of Directors

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Director since:

2003

Position:

Member of the Board of Directors

Other responsibilities in Empresas Falabella:

Member of the board of Sodimac S.A.

Other responsibilities outside Empresas Falabella:

Director of the family office Grupo Auguri.

Felipe del Río Goudie, Member of the Board of Directors

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Main ocupation:

Member of the Board of Directors

Sergio Cardone Solari, Member of the Board of Directors

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Director since:

1986

Position:

Member of the Board of Directors

Other responsibilities in Empresas Falabella:

Chairman of the board of directors of Plaza S.A, member of the board of directors of Falabella S.A. and Falabella Inversiones Financieras S.A.

Other responsibilities outside Empresas Falabella:

Member of the board of directors of the real estate company Enaco, Haldeman Mining Co. and Parque del Recuerdo.

Education:

Bachelor of Business, Administration and Economy from the Pontificia Universidad Católica de Chile.

Jose Luis del Río Goudie, Member of the Board of Directors

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Director since:

2003

Position:

Member of the Board of Directors

Other responsibilities in Empresas Falabella:

Member of the board of directors of Sodimac S.A.

Other responsibilities outside Empresas Falabella:

Chairman and CEO of Empresas Dersa and Inder SpA., Founder and Chairman of Pesquera Friosur S.A. and Salmones Friosur S.A.. Member of the board of Tecnofast, Grupo Alto and Aza. Founder and member of the board of Austral Capital Partners S.A. (Ventura Capital Fund). Also participates in the board of several non-profit organisations and foundations such as Endeavor Foundation (Chile), Carmen Goudie Foundation (family foundation for developing education in Chile); member of the Economic Advisory Council to the President of Pontificia Universidad Católica de Chile, of the Advisory Board of the Engineering School of Pontificia Universidad Católica de Chile and of the Advisory Board the Magazine Mensaje.

Co-founder of different important corporations as Derco S.A., biggest vehicle distributor in Chile and Sodimac S.A. (which merged with Empresas Falabella in 2003).

Education:

Industrial Engineer from Pontificia Universidad Católica de Chile, and has an M.A. from Lancaster University, UK.

Paola Cuneo Queirolo, Member of the Board of Directors

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Director since:

2014

Position:

Member of the Board of Directors

Other responsibilities in Empresas Falabella:

Member of the Board of Directors of Sodimac S.A.

Other responsibilities outside Empresas Falabella:

Executive Director of Sociedad de Inversiones y Rentas Liguria Ltda.

Education:

Degree in the Science of Management from Universidad de Chile and an MBA from Adolfo Ibañez University and Deusto University (Bilbao, Spain).

Hernan Büchi Buc, Independent Director of the Board of Directors

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Director since:

1996

Position:

Independent Director of the Board of Directors

Other responsibilities in Empresas Falabella:

Other responsibilities outside Empresas Falabella:

Counselor of “Libertad y Desarrollo”, a public policy think tank, he founded in 1990. Chairman of the Board of Trustees of Universidad del Desarrollo; and member of the Board of Directors of Quiñenco S.A., SQM S.A., among others.

During 1990, Mr. Büchi advised a number of different governments of Latin America, Eastern Europe and Asia on the design and implementation of economic policy. Mr. Büchi has served for the government of Chile in different positions including Undersecretary of Economy (1979 – 1980) and Minister of Finance (1985-1989).

Education:

Civil Engineer from the Universidad de Chile and holds an MBA from Columbia University in New York.

Carlos Heller Solari , Member of the Board of Directors

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Director since:

2002

Position:

Member of the Board of Directors

Other responsibilities in Empresas Falabella:

Member of the Board of Directors of Falabella Retail S.A.

Other responsibilities outside Empresas Falabella:

Chairman of Bethia, Club Hípico S.A., Megavisión S.A. AND Betfam S.A, among others. Vicepresident of the board of directors of Latam S.A.

Together with his family, they founded the Bethia Group, focused on agriculture (Ancali S.A.), communications (Megavisión S.A.) and experience in transport (Sotraser S.A. and Blue Express).

Education:

Agricultural Engineer

Committee Composition

Falabella CEO

Management

Gaston Bottazzini

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, CEO

Gaston Bottazzini, born in Argentina in 1969, took over as CEO of Falabella on June 1st, 2018. He previously worked as CEO of Falabella Financiero for approximately 10 years, which afforded him deep knowledge of the businesses and markets in which Empresas Falabella operates, as well as its different subsidiaries. Bottazzini led the innovation and digitalization of Banco Falabella and CMR in Chile and the region, launching Banco Falabella in Colombia and leading the entry of Falabella into Mexico.

Before joining Falabella, he was a partner at McKinsey & Company, where he worked between 1996 and 2008, mainly in the financial sector of several countries in Latin America, the United States and Spain. He holds a Master of Business Administration from Harvard Business School and a Bachelor of Science degree from the University of California, Davis.

Alejandro Gonzalez Dale

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Alejandro Gonzalez Dale is Chief Financial Officer of Falabella since November 6th, 2006. He has a degree in Business Administration from the University of Chile, where he graduated with the highest honors and received the ICU (Alumni Association) award. He also holds an MBA from the University of California, Los Angeles, where he received the J. Fred Weston Award for Excellence in Finance. He joined Endesa Chile in 1996. From January 2002 to July 2003, he was their Financial Vice-President, and in August 2003 he became the Financial Director of Endesa Chile, a position he held until joining Falabella.

Jordi Gaju Nicolau

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Jordi Gaju Nicolau, has been the Chief Strategy Officer of Falabella since 2018, having previously worked as Chief Development Officer for 9 years. From 2002 to 2007, he worked in different positions within Grupo Penta, where he was Portfolio Manager and Head of Strategy. Jordi is a Commercial Engineer from the Pontificia Universidad Catolica de Chile and holds an MBA from the Wharton School of the University of Pennsylvania.

Helder Mao de Ferro

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Helder Mao de Ferro serves as Chief Information Officer of Falabella since February 1st, 2019, after more than 20 years of experience in areas of technology and operations in the banking industry and large consulting companies. Helder is a Business Administrator, holds a Master in Banking and Finance as well as an MBA from IESE. For six years at Falabella Financiero he led a deep digital transformation. He has driven key projects for the company such as the Omnichannel Platform and the development of the Digital Factory.

Francisca Prieto Arroyo

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Francisca Prieto Arroyo is the Chief People Officer since September 1st, 2018. Francisca graduated as a Commercial Engineer from the Pontificia Universidad Catolica de Chile (PUC) and holds an Executive Coaching Certification, as well as a Master in Strategic Human Resources Management from PUC. Within Falabella, Francisca worked since 2012 as Project Manager and on 2014 she assumed as Chief People Development Officer. She also served as the Human Resources Director for Papeles Industriales and served as the Lead Consultant for BBR e-Commerce & Retail.

Gonzalo Smith Ferrer

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Gonzalo Smith Ferrer is Legal Affairs and Governance Manager since December 16th, 2015. He is a lawyer in Chile and North Carolina (USA), a Law graduate from the Pontificia Universidad Católica de Chile, an LLM from Harvard Law School and an MBA from the University of Arkansas. Previously he was Vice-President and General Counsel of Walmart for all of Latin America; Legal Affairs Manager of Walmart Chile; Associate in Carey y Cía (Santiago), besides having worked in Cuatrecasas Abogados (Madrid) and Davis Polk & Wardwell (New York).

Jorge Joannon Errazuriz

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Jorge Joannon Errazuriz is Chief Controller since August 14th, 2014. He is an Industrial Civil Engineer from the University of Chile. Previously, he worked at Citibank N.A. for 17 years, holding positions in various departments, such as operations desk, customer relations, product development and administration. After that, he served as Manager of the Control Department for six years at Comercial Kauffman S.A. In addition, he was Controlling Manager of Laboratorios Andrómaco S.A. for three years.

Gonzalo Somoza Garcia

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Gonzalo Somoza Garcia is CEO of Falabella Retail since April 25th, 2014. Prior to that, he was Chief Merchandising Director for Falabella. Previously, he was Merchandising Manager in Argentina, Peru and Chile from 2000 to 2010. He is and Industrial Civil Engineer from the Technological Institute of Buenos Aires and holds an MBA from the Sloan School of Management at the Massachusetts Institute of Technology (MIT). Prior to joining Falabella, he worked at McKinsey Company as Senior Engagement Manager and before that worked with Siderar-Techint Group.

Alejandro Arze Safian

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Alejandro Arze is CEO of Home Improvement since March 2020. He studied business and administration at the Universidad Católica Chile and has an MBA from the Sloan School of Management at MIT. He joined Falabella in 2000 and has held various executive roles in the Sodimac, Seguros, CMR and Banco Falabella businesses. In these last two companies, he was general manager.

Johann Ramberg

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Johann Ramberg Arnillas is CEO of the Supermarkets division since September 1st, 2018. He has Bachelor Degree in Economics from Universidad de Lima. Within Empresas Falabella, Johann held several positions: since 2003 he served as Buyer and Divisional Merchandise Manager in Falabella Retail, on 2009 assumed as General Merchandise Manager and on 2017 he became the General Manager of Supermarkets in Peru. He also worked as Asset manager in Citibank N.A. Lima branch.

Juan Manuel Matheu

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Juan Manuel Matheu is CEO of Falabella Financiero since June 1st, 2018. He studied business and administration at the Universidad Católica Argentina and holds an MBA from the University of California, Berkeley. He joined Banco Falabella Chile in 2009 as Channel Manager, before rising to General Manager three years later. During this period, he led the transformation of Banco Falabella into an integral people’s bank, owing to which it is now the fifth largest player in the use of debit, with present growth double that of the industry average.

Fernando De Peña Iver

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Fernando de Peña Iver is CEO of Mallplaza since April 16th, 2008. Before occupying his current position, he was the General Manager of Plaza Vespucio S.A. and then Aseger S.A., both Mallplaza Companies, where he spent 18 years. He has a degree in Industrial Civil Engineering from the Pontificia Universidad Catolica de Chile. He led from its origin Mallplaza to transform it into a company that in Chile, Peru and Colombia manages 23 regional malls.

Ricardo Hepp De Los Rios

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Ricardo Hepp is CEO of Falabella Inmobiliario since April 1st, 2009. He studied Business Administration at Adolfo Ibañez University and holds an MBA from the IESE Business School of the University of Navarra. Having been with Empresas Falabella since 1995, he has also served as Country Manager in Colombia and Peru. Before joining Falabella, Ricardo worked as a Project Engineer for the Chilean company CMPC.

Rodrigo Fajardo Zilleruelo

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Rodrigo Fajardo Zilleruelo is Country Manager of Colombia since February 9th, 2011. Previously he served as General Manager of Sodimac Peru and CFO of Falabella Retail Chile. He has been with the company for more than 18 years and has held various management positions at Falabella. He is a Commercial Engineering graduate of Adolfo Ibáñez University and holds an MBA from the University of Navarra, Spain.

Pablo Ardanaz

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Pablo Ardanaz is Country Manager of Argentina since August 1st, 2016 and the CEO of Sodimac Argentina since 2011. He is an Industrial Engineer from the Universidad Tecnológica Nacional and holds an MBA from the Universidad del CEMA, both from Argentina; besides having a joint MPA between ESADE (Barcelona) and Wharton (Philadelphia). He joined Falabella in 2007, first as Business Manager of Sodimac Argentina and then as Commercial Manager.

Juan Fernando Correa Malachowski

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Juan Fernando Correa Malachowski is Country Manager of Peru since January 1st, 2017. He is an Industrial Engineering graduate from the Pontifical Catholic University of Peru, holds a Master's Degree in Industrial Management (MSIA) from Purdue University, and has undertaken specialist studies at the Kellogg School of Management. He joined Falabella in 2004, as General Manager of Tottus Peru. He has more than 30 years of experience in multinational companies in the field of Mass Consumption, Telecommunications and Retail, both in Peru and in Argentina, having worked at Procter & Gamble and BellSouth, both in Peru.

OSM

ESM

Property & Control

The company is controlled by groups of shareholders as follows. As of October 31st, 2019, the Controlling Group owns 70.58% of the company’s share capital. This Controlling Group has a coordination agreement, in accordance with the shareholders’ agreement signed on September 24, 2013. It contains limitations on freely disposing of shares.

Shareholders Agreement opens in a new window

Corporate Structure

Falabella S.A.

99.8%
100%
Chile
Falabella 100%
Sodimac 100%
Imperial 60%
Tottus 88%
CMR 100%
Banco Falab. 100%
Rentas Falabella (Open Plaza) 100%
Mall Plaza 59.3%
Nuevos Desarollos 77.5%
Peru1
Saga Falab. 98%
Sodimac 100%
Maestro 100%
Tottus 100%
Banco Falab. 100%
Open Plaza 100%
Mall Plaza Peru 66.7%2
Argentina
Falabella 100%
Sodimac 100%
CMR. 100%
Colombia
Falabella 65%
Sodimac 49%3
Banco Falab. 65%
Mall Plaza
Brazil
Construdecor 100%
Uruguay
Sodimac 100%

1 Through Falabella Peru S.A.A.
2 New company created following the dissolution of Aventura Plaza JV
3 Unconsolidated subsidiary

As of July 2018