Liverpool Annual Report 2016
Annual Report 2016

Report from the

Chief Executive Officer

The year 2016 was highly volatile, presenting important challenges for business in Mexico. In this environment, Liverpool, focused on its customer service, invested in the training of its sales force, both in products and in service techniques, reaching more than 85% of all our collaborators, with an average of 39 hours invested in each associate. We improved the Internet page with various components such as inventory in real time and by making the follow-up friendlier for our customers, enabling them to trace their purchase orders. The Click & Collect module and processes were improved, in which our clients have demonstrated their clear preference in the way they shop. Thanks to all of these improvements, we grew our income by 10.0% and the Company’s net results of operations, by 10.6% in comparison with 2015. We placed special emphasis on the control of expenses, which increased by 10.0% over 2015. We had a slight increase of 21 base points in the commercial margin; the services area showed an increase of 28.3% in insurance profits; results of operations also reflect a significant exchange gain. We had a complicated year in the private label credit card, in which the overdue portfolio deteriorated by 43 base points in comparison with the closing of 2015. The overdue portfolio of the Premium Card, however, improved by 49 points for the same period.

This year, Liverpool made it clear that it believes in Mexico’s future, with a record high in store openings of ten new units and by closing a negotiation for the purchase of Suburbia, the approval of which is currently being analyzed by the corresponding authorities. For the group, Suburbia represents the opportunity of entering into new markets, serving a segment of clients to whom we had not had the opportunity of attending with our current formats. In the real estate area, we began the improvement and remodeling of the Perisur and Galerias Monterrey shopping malls, as well as of the stores in those malls, in addition to Liverpool Satelite. We completed the expansion of Galerias Atizapan and began the expansion of Galerias Merida.

Our conservative and responsible philosophy in handling our finances continues to be one of the organization’s cornerstones. We have no significant debt in currencies other than the Mexican peso, and the control of expenses is again a fundamental matter for 2017, in which our commitment with the Country continues. In addition to the integration of Suburbia, we plan to have another record year, with the opening of 11 new stores, a shopping center, and the beginning of what will be the Company’s most important logistics center.

In Liverpool, our focus and the sole reason for our being are our clients, whose loyalty we greatly appreciate. Our Net Promoter Score (NPS) increased from 87.4 in 2015, to 89.9 in 2016. While this fills us with satisfaction, we know that there is still much room for improvement, particularly in the Omnicanal process, in which achieving the total integration of our various channels and points of contact with the client will be a priority for 2017.

To be able to meet our goals for service, we know that we must have the best collaborators, which now number more than 60,000. We continue to be committed to their training, in addition to establishing a new work philosophy and culture focused on the Company’s total alignment. We appreciate the commitment and dedication of our collaborators, shareholders and suppliers. We are convinced that only with excellent people can we serve our clients correctly, to continue to play an important role in their lives.

Sincerely,

Graciano Guichard G.
Chief Executive Officer

December 31, 2016