Credit Card Sales - In Colombia, credit card sales accounted for 30.2%, 32.7%, and 33.1% of consolidated revenue from contracts with customers for the years ended December 31, 2024, 2023, and 2022, respectively[43]. - In Uruguay, credit card sales represented 39.4%, 30.7%, and 29.7% of consolidated revenue from contracts with customers for the same years[43]. - In Argentina, credit card sales made up 41.0%, 35.0%, and 38.1% of consolidated revenue from contracts with customers for the years ended December 31, 2024, 2023, and 2022, respectively[43]. - The company is increasingly dependent on credit card sales, which may be adversely affected by changes in the policies of merchant acquirers[43]. - Éxito has over 1.3 million active credit cards through its consumer financial institution, Tuya, co-owned with Bancolombia[176]. Economic Conditions - Economic conditions in Colombia represented 74.3% and 75.0% of the company's consolidated revenue from contracts with customers for the years ended December 31, 2024 and 2023, respectively[75]. - Economic conditions in Colombia and other Latin American countries may significantly reduce consumer expenditure and available income, particularly for lower-income classes[65]. - The company's operations are affected by the weak GDP of the countries where it operates, particularly Colombia[66]. - Economic conditions in Colombia are correlated with those in the U.S., and adverse developments in the U.S. could negatively affect the Colombian economy and the company's market value[102]. Currency Depreciation - The Colombian peso depreciated against the U.S. dollar by 20.8% in 2022, appreciated by 20.5% in 2023, and depreciated by 15.4% in 2024[90]. - The Argentinian peso depreciated against the U.S. dollar by 70.2% in 2022, 362.4% in 2023, and 27.7% in 2024[92]. - More than 75% of the company's costs and expenses in Colombia were denominated in local currency as of December 31, 2024[86]. Inflation and Costs - Inflationary pressures affected approximately 40% of the company's expenses, with indexed and salary-related pressures impacting approximately 36% of expenses[86]. - High rates of inflation have historically impacted the company's business and may continue to do so, affecting consumer spending and revenues[85]. - The company may face significant additional costs if it loses its foreign private issuer status, which could require compliance with more extensive U.S. reporting requirements[155]. Competition and Market Dynamics - The company faces significant competition in the food retail industry, particularly from cash-and-carry and hard-discount sectors, which has imposed pressure on hypermarket stores[64]. - The retail sector in Colombia and other Latin American markets is experiencing a growing adoption of e-commerce platforms, which is expected to continue[39]. Regulatory and Legal Risks - The company may face legal and administrative proceedings that could materially affect its financial condition and results of operations[56]. - The company is subject to various regulations, including antitrust and competition laws, which may limit its ability to complete mergers and acquisitions[72]. - The Colombian government has significant influence over the economy, which may impact the company's financial condition and operations due to potential changes in monetary and fiscal policies[93]. Political and Social Factors - Political unrest and social protests in Colombia may hinder the company's ability to access capital effectively[108]. - The peace agreement with FARC may lead to new laws affecting operations, with unpredictable impacts on the company's financial condition[112]. Corporate Governance and Management - The company appointed a new board of directors on March 21, 2024, comprising seven members, three of whom are independent[196]. - Changes in senior management occurred on March 21, 2024, with Juan Carlos Calleja appointed as CEO, replacing Carlos Mario Giraldo[207]. - The Board of Directors has reduced its members to seven, eliminating several committees including the Appointments, Remuneration and Corporate Governance Committee, Business and Investment Committee, Financial Committee, and Sustainability Committee[216][217]. - The Audit and Risk Committee is now solely comprised of independent directors, ensuring financial literacy among its members[216]. Shareholder Rights and Market Dynamics - Holders of Éxito ADSs and BDRs do not have direct voting rights at shareholders' meetings, which may limit their influence[136]. - The volatility and illiquidity of the Colombian securities market may hinder the ability to sell Éxito shares at favorable prices[119]. - Future sales of substantial amounts of Éxito common shares or ADSs could adversely affect their market price and liquidity[124]. - Éxito is classified as a "foreign private issuer," which exempts it from certain NYSE corporate governance standards, potentially limiting investor protections[150]. - Grupo Calleja controls a majority of the voting power of Éxito's outstanding shares, reinforcing its status as a controlled company[152].
Almacenes Exito S.A.(EXTO) - 2024 Q4 - Annual Report