Almacenes Éxito S A : Quaterly Periodic Report

Quarterly Periodic Report

2024 First Quarter

INDEX

1.	GENERAL INFORMATION	3
	1.1	Issuer's basic identification data	3
	1.2	Issuance of outstanding securities	3
2.	FINANCIAL INFORMATION	3
	2.1.	Financial Statements	3
	2.2.	Financial Analysis	3
	2.3 Material changes in the financial statements	8
3.	OPERATIONAL PERFORMANCE	8
	3.1 Main operations	8
4.	RISKS AND RISK MANAGEMENT	16
	4.1 Market Risk updates	16
	4.2 Update of other risks	17
5.	SOCIAL, ENVIRONMENTAL AND CLIMATE ISSUES	18
	5.1 Monitoring of social and environmental issues, including climate issues	18
	5.2 Material changes	19
6.	CORPORATE GOVERNANCE	20
	6.1 Material changes in corporate governance structure	20
7.	ANNEX	23
	7.1 Glossary	23

1. GENERAL INFORMATION

1. Issuer's basic identification data
2. • Corporate name: Almacenes Éxito S.A.
   • Place of business: Carrera 48 No. 32 B Sur 139, Envigado, Antioquia.
3. Issuance of outstanding securities

The Company is the first Colombian company issuing securities with presence, in addition to the Colombian market, in two other markets: the United States and Brazil. The Company's securities are traded in these markets: common shares in the Colombian market, American Depositary Shares (ADS) in the U.S. market, and Brazilian Depositary Receipts (BDR) in the Brazilian market.

As of March 31, 2024, the number of subscribed and outstanding shares is 1,344,720,453 and the number of own shares repurchased is 46,856,094.

2. FINANCIAL INFORMATION

2.1. Financial Statements

The Company's Financial Statements were transmitted to the Financial Superintendence of Colombia and published through the relevant information mechanism of this entity and are attached to the Report.

They can also be consulted on the Company's corporate website.

2.2. Financial Analysis

Consolidated Net Revenue decreased 3.3% (but grew 7.9% when excluding FX effect) to COP $ 5.3 B during 1Q24.

Consolidated Retail Sales decreased by 3.8% (but grew 7.5% excluding FX effect) and totalled COP $5.0 B during 1Q24, same store sales (SSS) grew by 5.7%. Performance reflected positive sales performance in local currency in all the

countries where the Company operates with a trend affected by slow-down in consumption and a higher non-recurring base from property sale in Colombia.

Total sales results in local currencies reflected the evolution of food sales trend in Colombia (+5.8%, above the 1.7% food inflation index) and the solid sales growth in Uruguay (+7.6% and above the 3.8% total inflation index) boosted by macro tailwinds. Argentina showed a resilient sales performance (+228.1% vs 287.7% inflation reported) impacted by and inflationary effects on consumption.

Omni-channel continued contributing to sales performance and grew 8.7% during the quarter. Omni-channel share on sales was 11.2% (+20 bps y/y) during 1Q24. The LTM store expansion of 41 stores (Col 33, Uru 5, Arg 3) also drove the quarterly Retail Sales growth.

Consolidated Other Revenue increased by 9.2% (+17.1% excluding FX) during the 1Q24, driven by the solid growth in Colombia (+14.5%) driven by complementary businesses performance and in Argentina (+193% in local currency), from solid real estate occupancy levels of 94.4%.

Colombia: During the first quarter of 2024, Net Revenue grew 2.6%; Net sales totalled COP $3.7 billion (+2.0%) and SSS (+1.2%), boosted omni-channel (+7.9%, 14.6% share), volume growth (+3.1%) and food sales performance (+5.8%) above food inflation (1,7% LT-march). The Colombia operation represented near 73% of consolidated Net Sales in 1Q24.

Performance was resilient considering that unemployment rose to 11.9% during 1Q24, as well as consumption in Colombia continued decelerating mainly due to reduced household expenditure in the country; the Consumer Confidence Index decreased to -13% in March and for the third consecutive month. Inflation reduced to 7.36% from 13.34% y/y, food inflation dropped to 1.73% (vs 21.81% y/y), the lowest level since 2018. A higher non-recurring base from real estate property sale also affected top line performance.

Other Revenue grew 14.5% during 1Q24 and reflected higher income from complementary business.

The Éxito segment represented approximately 68% of the sales mix in Colombia during 1Q24. The segment´s results reflected the good performance of the FMCG category (+5.9%), the Fresh (+4.7%) and the contribution of commercial events such as Éxito Anniversary. The 32 Éxito WOW stores also contributed to results and represented a 36.2% share on the segment´s sales. From the downside, the low consumption context continued affecting the electro (-4.8%) and apparel (-1.1%) categories.

The Carulla segment represented approximately 16% of the sales mix in Colombia during 1Q24. The segment benefited from the solid performance of omni-channel sales (+27.5%, 27.3% share), the food category growth (+7.2%) boosted by FMCG (+8.1%), and the double-digit growth in the Atlantic coast and the Coffee region and the performance of the 31 Fresh Market stores (63.2% share on the segment´s sales).

The low-cost & other segment which includes Super Inter, Surtimax and Surtimayorista banners, allies, institutional, third-party sellers, the sale of property development projects (inventory) and other, represented approximately 16% of the sales mix in Colombia during 1Q24. The segment´s performance was favoured by the 4.9% growth of the food category but offset by the effect of a higher base from the sale of real estate property (grew by 4.2% when excluded).

Uruguay: contributed with near to 21% of consolidated Retail Sales during 1Q24. Last-12-month inflation as of March was of 3.8% (vs 7.3% in March 2023) and the food component favoured the downward trend and only grew 1.94%, during the last- 12-months. The Uruguay operation grew Retail Sales by 7.6% (+5.6% SSS) in local currency and including the effect of conversions; performance was above reported inflation benefited by a sound political and economic environment, a solid tourism season and the contribution from the 32 Fresh Market stores (+6.1% growth vs 1Q23; 61.1% share on total sales). The operation reported market share gains of 0.5 p.p. to 48.9%, according to Scentia as of March, driven by: (i) the solid sales performance of all banners and (ii) the contribution of the 32 Fresh Market stores.

Argentina: The operation in Argentina contributed near to 6% in 2023 on Consolidated Retail Sales and results in Colombian Pesos included a negative 79.8% FX effect during 1Q24.

Net Revenue in Argentina was COP $305,526 M (+226.8% in local currency) and Retail Sales were COP $295,716 (+228.1% in local currency and +199% in SSS) during 1Q24. Last-12-month inflation as of March was of 287.7% according to Ecolatina (an Argentinian consultancy company) which compares to the 107.5% level reported during the same period last year. Retail sales grew below inflation due to lagged consumption affected by high devaluation specially since the end of 2023.

To highlight during 1Q24: (i) the performance of the Cash and Carry format (12 MiniMayorista stores, 18.5% share on sales), (ii) omni-channel performance (+142.8%, 2.6% share), and (iii) higher income of real estate (+193% in local currency) from improved commercial trends and strong occupancy levels (94.5%).

Operating Performance

Consolidated Gross Profit decreased 7.7% (+6.7% excluding FX) during 1Q24 and margin reached 25.1% (-120 bps) as percentage of Net Revenue, compared to the same period last year, mainly affected by lower consumption trends, price investment, a higher real estate base2 and FX effects.

Gross Profit in Colombia decreased 2.2% to a margin of 21.5% during 1Q24 (-107 bps). The outcome reflected reflected resilient outcome of recurring real state income (+5.6%), offset by price investment and a higher non-recurring base from property sale2 (67 bps effect).

Gross Profit in Uruguay reduced 9% during 1Q24 (+9.6% in local currency) and margin rose to 36.2% as percentage of Net Revenue (+67 bps). Strong results reflected the solid sales evolution during the quarter from the strong performance of the Fresh Market concept (61.1% share on sales) that offset costs of sales.

Gross Profit in Argentina reduced 35.1% during 1Q24 (+220.9% in local currency) to a 32.8% margin as percentage of Net Revenue (-61 bps). Gross profit reflected reflected the lower consumption trends, price investment to face inflation and a higher share of the C&C format (18.5% vs 13% share y/y).

Consolidated Recurring EBITDA reached COP $302,113 M during 1Q24 (-22.0%; - 14.2% when excluding FX) compared to the same period last year and margin was 5.7% (-137 bps) as percentage of Net Revenue. Performance during the quarter reflected the consumption deceleration in the region, higher expenses from international operations impacted by inflationary pressures, a higher non- recurring base real estate base in Colombia (COP $32,842 M) and negative FX impacts (-17% in Uruguay and -79.8% in Argentina) that offset gross margin gains from Uruguay.

Colombia: Recurring EBITDA reduced 24.2% during 1Q24 compared to the same period last year and margin was 4.5% (-159 bps) as percentage of Net Revenue. SG&A grew below inflation and the double-digit minimum wage increase, from internal efficiency plans and despite a higher base of real estate (COP $32,842 M, 81 bps).

Uruguay: Recurring EBITDA decreased 12.3% (+5.7% in local currency) during 1Q24 compared to the same period last year, to a 11.7% margin (-21 bps) as percentage of Net Revenue, mainly impacted by a one-time payment of lease contract fees (+11%, margin 12.1% when fees excluded); the Uruguay operation continued as the most profitable business unit of the group.

Argentina: Recurring EBITDA decreased by 81.7% during 1Q24 (-9.5% in local currency). Recurring EBITDA margin was 0.9% (-222 bps) during 1Q24 as percentage of Net Revenue. Performance reflected Net Revenues affected by lower consumption that led to price investment, inflationary pressures on cost and expenses mainly labour cost and the FX effect.

Group Net Income

During the 1Q24 the Company reported a Net loss of COP $37,863 M derived from:

• Operating performance affected by lagged consumption and inflationary pressures on SG&A.
• Higher non-recurring expenses in Colombia from the restructuring process, including the closing of non-profitable stores to increase profitability and a leaner corporate structure.
• Higher financial expenses mainly from the negative FX effect in Colombia.

Cash and debt at holding level

Solid working capital improvement from:

• Free cash flow generation of 254% y/y amounted to COP $291,000 M.
• Working capital improvement from:
  o Lower inventory levels to 60 days (-4.7 days y/y, worth near COP $114,000
  M).
  o Seasonal improvement in payables.
• Focus on optimizing investment to prioritize cash availability.
• Net Financial Debt reduced COP $183,000 from working capital improvement and despite pressures from still high levels of repo rates3.

2.3 Material changes in the financial statements

Please refer to 2.1 and 2.2. items of this report.

3. OPERATIONAL PERFORMANCE

3.1 Main operations

• A description of the main operating activity, including production, sales, and market developments.
  General Corporate Information
  Almacenes Éxito S.A. is a stock corporation (sociedad anónima) domiciled in Envigado, Colombia and operates under Colombian laws and regulations. Éxito was incorporated under the laws of Colombia on March 24, 1950. The life span of Éxito continues until December 31, 2150. Éxito's principal place of business is at Carrera 48 No. 32B Sur - 139, Envigado, Colombia. The telephone number at this address is +(57) 604 9696. Our corporate website address https://www.grupoexito.com.co/en.
  Grupo Éxito is a public Company, listed on the Colombian Stock Exchange since 1994. Our controlling shareholder is Cama Commercial Group Corp. (hereinafter, for the purposes of this Report, the "Calleja Group", a

Salvadorian food retailer), which as of the date of this report directly or indirectly held 86.84% of our outstanding share capital.

Overview

With over 70 years of retail experience in Colombia and a presence also in Uruguay and Argentina, we operate under a multi-format and omnichannel strategy with a portfolio of recognized brands targeting a customer base across all income levels. We offer a broad variety of products through our physical and online stores, including perishable and packaged food products, and non-food products, including appliances and apparel, among others. We believe our multi-format, omnichannel and multi-brand strategy will potentially let us benefit from the economic growth and rising purchasing power of consumers in our target markets in the future.

In Colombia, we operate stores under five main formats: hypermarkets, supermarkets, cash-and-carry stores and convenience stores, operating principally under our Éxito, Carulla, Surtimax, Super Inter and Surtimayorista brands. Carulla supermarkets and convenience stores cater to the premium consumer segment, Éxito hypermarkets, supermarkets and convenience stores serve the mid-market segment, and Surtimax and Super Inter convenience stores and Surtimayorista cash-and-carry stores focus on the lower-income segment.

We own an apparel manufacturing business through which we design and manufacture clothing, including our own Arkitect, Bronzini, Custer, Bluss, People and Coqui private labels. We also operate a food processing plant where we process and package our own private label food products, including meat, baked goods, prepared foods and bottled water, among others.

In Uruguay, we operate Disco supermarkets and Devoto supermarkets and convenience stores, which cater to the premium segment, and our Géant hypermarkets, which serve the mid-market segment.

In Argentina, we operate Libertad hypermarkets, Mini Libertad convenience stores and Mayorista supermarkets, which serve the mid-market segment.

Operating Segments

We disclose information by operating segments, which are defined as components of an entity whose operating results are regularly reviewed by the chief operating decision maker for decision making purposes about resources to be allocated. Our chief operating decision maker is, collectively, our Board of Directors. Our three operating segments that we report are:

Colombia

1. Éxito: revenues from retailing activities, with stores under the banner Éxito.

1. Carulla: revenues from retailing activities, with stores under the banner Carulla.

1. Low cost and others: revenues from retailing and other activities from stores under the banners Surtimax, Súper Inter, Surti Mayorista and B2B format.

Argentina

Revenues and services from retailing activities in Argentina, with stores under the banners Libertad and Mini Libertad.

Uruguay

Revenues and services from retailing activities in Uruguay from stores under the banners Disco, Devoto and Géant.

In all the countries where we operate, we have also developed a digital strategy, which has achieved significant growth in recent years in all the countries in which we operate. Our digital omnichannel includes e-commerce, click and collect and last mile, digital catalogue, home delivery and B2B.

In Colombia, we also offer our clients last mile and home deliveries in all our formats including our partnership with Rappi, the leading delivery app in Colombia in terms of sales, according to Green Information Group. Together with Rappi, we offer Turbo-Fresh, a last-mile delivery service, through dark stores, with an average delivery time of 10 minutes. Our WhatsApp selling service enables penetration in lower-income segments in Colombia and our