Letter from the Chief Executive Officer

Growth has allowed us to reach a larger number of cities of various sizes, characteristics, tastes and needs, and has brought us closer to a growing number of families. The opening of nine stores during the year reflects the confidence that Liverpool has in the Mexican market and confirms the objective of offering quality and fashion at reasonable prices.

At the close of a year that brought about increased development on several fronts, the Company’s total revenue grew by 12.9% over the prior year. Total sales increased by 12.1%, while same-store sales increased by 7.1%, thanks to the customers’ positive response to our promotions, and to the introduction and launching of new merchandises and services.

The higher demand for consumer credit in the Mexican market provides us with the opportunity to continue to position the Company’s various credit cards. The Liverpool card continues to evolve favorably, while at the same time, the Liverpool Premium Card is beginning to create its own personality in this highly competitive market. At the year-end, 47.4% of the Company’s sales were made with the Store’s own cards.

The need to supply the Country’s different cities with large and diverse shopping malls led us to build and open two new units and to acquire the majority share in yet another mall during the year. This situation favored the income in Liverpool’s real estate division, with such income growing by 22.2% during the year.

Operating expenses increased by 14.0%, pressured by the Company’s constant growth derived from the openings of stores and malls, as well as by the strengthening of key departments to guarantee Liverpool’s development plan.

Inventory management required close follow-up to be able to reduce inventory growth from 16.1% at the beginning of the year, to levels more in line with the growth of the same-store sales at the end of the year.

Never before in the Company’s history had so much investment been made as in the year 2012. Thanks to cash flows accumulated in the treasury at the end of 2011, as well as to the sum of operational flows generated throughout the year, and added to the resources obtained in the placing of debt certificates in March of 2012, capital investment amounted to $8,365 million pesos. This figure permitted the continued driving of the profitable growth of Liverpool’s operations, which attracts new customers.





Sincerely,

Jorge A. Salgado M.
Chief Executive Officer

December 31, 2012