Letter to Shareholders

Dear Shareholders:

During 2017, we continued achieving our plans for regional growth, digitization and automation within the company, we continued producing reliable performance in a world where constant change is the new paradigm. Today, commercial industry and retail banking are experiencing a transformative technological revolution, which our company is addressing with a sense of urgency, through accelerated decision-making and rapid execution.

We plan to increase our investments in logistics and technology over the next four years, as these areas have become a critical focus for the company. Furthermore, we plan to remodel, adapt and expand our more successful sales outlets and continue opening new stores, branches and shopping malls in areas where we are not represented. We are prioritizing S.A.C.I. Falabella’s long-term development and positioning over immediate results. This vision for the future convinces us that our regional leadership will expand while radical changes are taking place in the industry.

We will maintain our leadership in customer proximity and understanding, and will serve them using the format they prefer on a 24-hour basis. This is the essence of Omni-channels, which is the focus for our substantial investments in information technology and logistics systems. We have focused on mobile technology and integrating our store network into the digital arena.

During 2017 we sold US$ 769 million through the e-commerce channel of our retail businesses (department stores, home improvement and supermarkets), which represent 6.5% of our annual retail sales and growth of 36%. This figure makes us a leading e-commerce company in the region, and this channel is rapidly gaining momentum across all categories. Our investments in logistics and systems will provide us with sustainable growth, as automating processes, strengthening logistics and streamlining deliveries will enable us to provide an excellent service with long-term sustainability.

We want to build long-term relationships with our customers, by understanding their needs, and developing an increasingly personalized service. We want to continue providing differentiated selections using our private and exclusive brands, with financial services tailored to each customer, at attractive shopping malls that provide leisure, shopping and entertainment for the whole family. Here lies both our advantage and our challenge. We have 515 million visits to our web pages, 27 million followers, 324 million transactions at our stores, and 390 million people visiting our shopping malls every year. These are our strengths and they enable us to continue enhancing our offering for our customers.

Regional expansion continues its course, under a clear, prudent and long-term strategy. This expansion will increase our presence and enable us to compete with global players in our industry, thus securing our long-term sustainability.

We continued to strengthen our business in countries where we are well consolidated, and in 2017 we launched the new Falabella Soriana card in Mexico, marking our entry into that country. We also began to build the first Sodimac stores in Mexico City. Meanwhile, in Brazil we have modernized Dicico stores and opened Sodimac stores, which are already beginning to bear fruit.

We have continued to strengthen various aspects of our corporate governance. A multinational company of Empresas Falabella’s size that operates in so many countries using various business models requires processes, checks and balances to guarantee that it is considered sustainable and reliable by its customers, shareholders, employees, financiers, suppliers, regulators and all other stakeholders.

We have been able to address these challenges thanks to our motivated, enthusiastic and continually-trained employees. Our company regularly attracts new talent, due to its development, expansion and the technological challenges it faces. We find people interested in participating in our development everywhere and at all levels within the company, in stores, in administration, in systems, as sales staff or as executives or directors. Our strategy is based on growth and regional coverage, and it enables us to attract a multitude of talent. This talent empowers the company and challenges us to constantly focus on training, professional improvement, internal promotion and career development within S.A.C.I. Falabella.

I would like to thank all those responsible for developing our company. Our shareholders, whose confidence in the future of Empresas Falabella enables us to follow this path of growth and development. The financial markets that have acquired our shares and bonds both in Chile and abroad as they have confidence in S.A.C.I. Falabella. Our directors, for their unfailing and constant support along this strenuous but achievable path. Our suppliers, whose confidence builds our business and its expansion. I particularly wish to thank our employees, whose ideas, commitment and enthusiasm make Management’s strategies and policies tangible.

This encapsulates S.A.C.I. Falabella, who has a clear perspective of its future growth and expansion, based on its unchanging values. Customer-focused, humble, continually innovating, making its dreams come true, while respecting the local environment.

We will continue making progress with enthusiasm and passion, quickly and efficiently reacting to changes, safeguarding the development of everyone who is part of this great and marvelous company.

Affectionately,
Carlo Solari Donaggio
Chairman

Governance Documents

Board of Directors

The Board of S.A.C.I. Falabella is composed of 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 S.A.C.I. Falabella as of December 31, 2017 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.

Juan Pablo del Río Goudie, Member of the Board of Directors

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Director since:

2017

Main ocupation:

Member of the Board of Directors

Other responsibilities in Empresas Falabella:

Chairman of the Board of Sodimac S.A., a position held since 1981, and also of Imperial S.A..

Other responsibilities outside Empresas Falabella:

Chairman of the board of directors of Derco S.A., one of main companies in the automotive, machinery and spare parts market in Latin America, with presence in Chile, Peru, Colombia and Bolivia. He is also one of the three partners of Dercorp, company that invests in several businesses and industries, such as real estate and insurance. He is also a member of the board of directors of Cruzados SADP, a sports and social organisation.

Has lead important developments in real estate, founding Delsa and Constructora Santa María companies, which operate under the brand “Neohaus”.

Education:

Degree in Architecture from the Pontificia Universidad Católica de Chile.

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).

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.

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 , Miembro del Directorio

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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

CEO of S.A.C.I. Falabella Group

Management

Gaston Bottazzini

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, CEO

Gaston Bottazzini, born in Argentina in 1969, took over as CEO of S.A.C.I. 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 S.A.C.I. Falabella into Mexico.

Before joining Empresas 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.

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.

Alejandro Gonzalez Dale

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Alejandro Gonzalez Dale is Chief Financial Officer of S.A.C.I. 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 Empresas Falabella.

Jordi Gaju Nicolau

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Jordi Gaju Nicolau is Chief Strategy Officer of S.A.C.I. Falabella since July 13th, 2009. He is a Commercial Engineer from the Pontificia Universidad Católica de Chile and holds an MBA from the Wharton School at the University of Pennsylvania. From 2002 to 2007, he worked in different positions within Grupo Penta, where he was Portfolio Manager and Head of Strategy.

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 Empresas 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.

Helder Mao de Ferro

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Helder Mao de Ferro serves as Chief Information Officer of S.A.C.I. 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.

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).

Gonzalo Somoza Garcia

Portrait

Gonzalo Somoza Garcia is CEO of Falabella Retail since April 25th, 2014. Prior to that, he was Country Manager of Peru from 2010. Previously, he held the position of Corporate Business Manager for Department Stores in Peru. He is an 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 Empresas Falabella, he worked at McKinsey Company as Senior Engagement Manager and before that worked with Siderar-Techint Group.

Enrique Gundermann Wylie

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Enrique Gundermann Wylie is CEO of Home Improvement since October 30th, 2012. He is an Industrial Civil Engineering graduate of the Pontificia Universidad Católica de Chile, from where he also holds an MBA. Within Falabella Company, Enrique Gundermann has held several positions: he was the General Manager of Home Improvement in Colombia in 2011, before which he was the General Manager of Home Improvement in Argentina. He has also held several management positions in home improvement in Chile and HomeStore S.A.

Johann Ramberg

Portrait

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

Portrait

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 Yver

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Fernando de Peña Yver is CEO of Mallplaza since January 1st, 1990. Before occupying his current position, he was the General Manager of Mallplaza Vespucio, where he spent 23 years. He has a degree in Industrial Civil Engineering from the Pontificia Universidad Católica de Chile.

Ricardo Hepp De Los Rios

Portrait

Ricardo Hepp is CEO of Falabella Inmobiliario since April 1st, 2009. He studied Business Administration at Adolfo Ibáñez 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 S.A.C.I. Falabella, Ricardo worked as a Project Engineer for the Chilean company CMPC.

Rodrigo Fajardo Zilleruelo

Portrait

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 Empresas Falabella. He is a Commercial Engineering graduate of Adolfo Ibáñez University and holds an MBA from the University of Navarra, Spain.

Pablo Ardanaz

Portrait

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 Empresas Falabella in 2007, first as Business Manager of Sodimac Argentina and then as Commercial Manager.

Juan Fernando Correa Malachowski

Portrait

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 Empresas 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.

Shareholder’s Meetings

See the results of the ESM vote

Property & Control

The company is controlled by groups of shareholders as follows. As of December 31, 2017, the Controlling Group owns 74.37% 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

S.A.C.I Falabella

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