Esteemed Chairman and Members of the Board of Directors:
In my role as CEO of Grupo Palacio de Hierro, SAB de CV, I submit for your consideration this Annual Report, detailing our performance and results during the 2023 fiscal year, in addition to the Financial Statements and accounting and data criteria and policies used to draft this report.
Underpinned by our market position and our on-going focus on luxury, we are continuing our period of transformation by raising our standards to consolidate our organizational culture, processes and methodologies, allowing us to surpass the expectations of our customers, employees, partners and shareholders in the digital era.
Despite an extremely complex global panorama, the Mexican economy grew by 3.1% in 2023, with annual inflation standing at 4.66% and an exchange rate that grew stronger during the year. Based on data from the Asociación Nacional de Tiendas de Autoservicio y Departamentales (ANTAD), within the department store segment, real growth in terms of same-store sales grew by 4.4% and total store sales by 6.5%, compared to 2022.
Through its focus on driving long-term value creation, the Company’s total revenue reached MXN $50.487 billion in 2023, a year-on-year increase of 10.6%, representing a compound growth rate of 16.5% (2021-2023). Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased by 14.8% over the past year, reaching MXN $6.773 billion. Net earnings reached MXN $2.436 billion in 2023, a 41.1% increase in a year-on-year comparison.
Below are some of the most relevant operational milestones reached by Grupo Palacio de Hierro during the 2023 fiscal year.
El futuro es un Palacio.
TRANSFORMATION
During 2023, we continued on our path of Transformation, which is underpinned by our 4D Strategy: Digitalization, Differentiation, Diversification and Design.
Every transformation begins within our teams, which is why we have placed special emphasis on our cultural evolution. During 2023, we trained more than 9,000 employees to ensure our entire team acquires new aptitudes that encompass leadership, strategic vision and assertiveness in decision-making to continue driving advances in this ambitious process.
On our quest to consolidate the omnichannel experience, we continue investing in the integration of our digital and physical channels every single day. Our focus lies in connecting customers across all possible channels, ensuring that they find the same outstanding service no matter the channel.
To mention just some of the major milestones this year, we launched the Mi Palacio mobile app, which offers all our customers access to El Palacio de Hierro from the palm of their hand, thereby consolidating our luxury omnichannel ecosystem. We also focused our efforts on using a data-based approach to develop hyper-segmented campaigns, allowing us to understand each of our customers in detail and fulfilling our mission of enriching and meeting people’s needs through unique luxury experiences.
An agile, digital and
collaborative culture.
TRANSFORMATION
During 2023, we continued on our path of Transformation, which is underpinned by our 4D Strategy: Digitalization, Differentiation, Diversification and Design.
Every transformation begins within our teams, which is why we have placed special emphasis on our cultural evolution. During 2023, we trained more than 9,000 employees to ensure our entire team acquires new aptitudes that encompass leadership, strategic vision and assertiveness in decision-making to continue driving advances in this ambitious process.
On our quest to consolidate the omnichannel experience, we continue investing in the integration of our digital and physical channels every single day. Our focus lies in connecting customers across all possible channels, ensuring that they find the same outstanding service no matter the channel.
To mention just some of the major milestones this year, we launched the Mi Palacio mobile app, which offers all our customers access to El Palacio de Hierro from the palm of their hand, thereby consolidating our luxury omnichannel ecosystem. We also focused our efforts on using a data-based approach to develop hyper-segmented campaigns, allowing us to understand each of our customers in detail and fulfilling our mission of enriching and meeting people's needs through unique luxury experiences.
An agile, digital and
collaborative culture.
OPERATIONAL INDICATORS
Bricks-and-mortar stores recorded significant improvements in operational indicators, including average ticket and transaction volume. They also saw improvements in service qualit and the NPS indicator (Net Promoter Score), ranking us among the highest on the market.
Our new Extended Catalog sales channel was successfully rolled out as part of our omnichannel vision, expanding the product offering in physical stores. Artificial Intelligence was also introduced to streamline the merchandise planning and distribution process.
Through elpalaciodehierro.com, as a nonface-to-face sales channel, we achieved growth in key indicators such as an increase in website traffic and conversion rate, coupled with increased transaction volume and total pieces sold.
We remain committed
to innovation by employing
cutting-edge technologies
and Artificial Intelligence.
OPERATIONAL INDICATORS
Bricks-and-mortar stores recorded significant improvements in operational indicators, including average ticket and transaction volume. They also saw improvements in service qualit and the NPS indicator (Net Promoter Score), ranking us among the highest on the market.
Our new Extended Catalog sales channel was successfully rolled out as part of our omnichannel vision, expanding the product offering in physical stores. Artificial Intelligence was also introduced to streamline the merchandise planning and distribution process.
Through elpalaciodehierro.com, as a nonface-to-face sales channel, we achieved growth in key indicators such as an increase in website traffic and conversion rate, coupled with increased transaction volume and total pieces sold.
We remain committed
to innovation by employing
cutting-edge technologies
and Artificial Intelligence.
REAL-ESTATE PROJECTS
In November, we celebrated the reopening of the totally refurbished El Palacio de Hierro Satélite, providing customers with a differentiated value proposition and wider range of new experiences and the luxury brands that characterize us.
El Palacio de Hierro Satélite pays homage to the iconic Torres de Satélite, combining four columns in its central atrium, each over 20 meters high. The signage in the store also references the iconic arrows found on the roads in this part of the City, while decorative touches nod to the architectural elements of the 1980’s that have been adapted to encompass luxury and modernity.
When redesigning our stores, we focus on the concept of community, adapting them to their surrounding environments and neighbors by offering a differentiated range of products and cuisine. We are focusing on providing more spaces for our customers to come and enjoy these spaces and boost their experience.
El Palacio de Hierro pays
homage to the iconic Torres
de Satélite, a benchmark
of luxury and style.
REAL-ESTATE PROJECTS
In November, we celebrated the reopening of the totally refurbished El Palacio de Hierro Satélite, providing customers with a differentiated value proposition and wider range of new experiences and the luxury brands that characterize us.
El Palacio de Hierro Satélite pays homage to the iconic Torres de Satélite, combining four columns in its central atrium, each over 20 meters high. The signage in the store also references the iconic arrows found on the roads in this part of the City, while decorative touches nod to the architectural elements of the 1980's that have been adapted to encompass luxury and modernity.
When redesigning our stores, we focus on the concept of community, adapting them to their surrounding environments and neighbors by offering a differentiated range of products and cuisine. We are focusing on providing more spaces for our customers to come and enjoy these spaces and boost their experience.
El Palacio de Hierro pays
homage to the iconic Torres
de Satélite, a benchmark
of luxury and style.
The
redesign of each of our
stores is drawn from a concept
of community: is inspired
by the environment and the
people that surround it.
The
redesign of each of our
stores is drawn from a concept
of community: is inspired
by the environment and the
people that surround it.
SUSTAINABILITY AT
EL PALACIO DE HIERRO
Embarking on a path of transformation also implies operating in compliance with the highest standards to benefit our planet. This is why Grupo Palacio de Hierro has set itself the goal of becoming a Sustainable Palacio, fulfilling our purpose of enriching and satisfying people through unique luxury experiences while ensuring we have a positive impact on our surroundings.
A Sustainable Palacio governed
by four major pillars that guide
our strategy.
SUSTAINABILITY AT
EL PALACIO DE HIERRO
Embarking on a path of transformation also implies operating in compliance with the highest standards to benefit our planet. This is why Grupo Palacio de Hierro has set itself the goal of becoming a Sustainable Palacio, fulfilling our purpose of enriching and satisfying people through unique luxury experiences while ensuring we have a positive impact on our surroundings.
A Sustainable Palacio
governed
by four major pillars that guide
our strategy.
We understand that achieving this goal requires continued efforts and that there is no final destination but rather a series of actions that enable us to become a more socially responsible company every single day. As such, Grupo Palacio de Hierro’s Sustainability Committee drives our strategy and value model, which are governed by four major pillars: being a responsible Palacio for our business, our environment, our people, and our community.
This information is further detailed in the Annual Sustainability Report.
Learn more about our
strategy and results
in our Annual
Sustainability Report.
Learn more about our
strategy and results
in our Annual
Sustainability Report.
We
firmly believe that the growth
of our company is reflected in more
opportunities of development
for our colaborators.
EMPLOYEES
During 2023, we consolidated our commitment to human development by bolstering the four cultural pillars that define our identity:
- Excellence, because we are committed to delivering outstanding results and creating quality experiences, from start to finish.
- Style, because we create unique luxury experiences.
- Warmth, because we connect with people, and we are truly interested with.
- Joie de Vivre, because we create spaces that allow us to enjoy ourselves and grow as people.
We
firmly believe that the growth
of our company is reflected in more
opportunities of development
for our colaborators.
We continue promoting our Diversity, Equity and Inclusion strategy, reinforcing our team’s identity as an innovative and creative group that fosters collaboration and respect.
Diversity, Equity and Inclusion: A range of actions was taken to certify all our businesses in the Mexican Standard (NOM) on Labor Equality and Non-Discrimination. Some of the major steps taken include the consolidation of the Diversity, Equity and Inclusion Committee, which has established a network of allies to drive the inclusion of people with disabilities, no matter their gender, sexual orientation, or age.
People with Disabilities: Based on the premise of equal opportunities for all, we are constantly increasing the number of our employees who have disabilities.
Gender Equity: Fifty-one percent of leadership positions in the company are held by women. Grupo Palacio de Hierro has joined the WEP’s (Women’s Empowerment Principles) network, which guides companies in promoting gender equality and the empowerment of women.
LGBT+: Training sessions and panels on good workplace practices are coordinated to promote LGBT+ inclusion, in addition to enabling dialog on the topic of Diverse Families.
Diversity is part of our identity
In collaboration with the Alberto Baillères Foundation, we have benefitted the community where our employees live and work by engaging, providing support, and improving educational infrastructure to create longterm value for society.
As part of our commitment to fostering respectful and harassment-free environments, our first Ethics & Compliance workshop was held. We also offered workshops focusing on preventing, addressing and eradicating workplace harassment and violence.
We support the creation of long-term value in our employees through continuous learning within our e-learning system, which provides training to employees throughout the year. Additionally, as part of the evolution of Campus Palacio, a digital academy model was rolled out to promote the development of skills and competencies as part of the company’s digital transformation.
We
acknowledge our employees’
results and experience, and
we are confident that their
contributions will help accelerate
our transformation.
In collaboration with the Alberto Baillères Foundation, we have benefitted the community where our employees live and work by engaging, providing support, and improving educational infrastructure to create longterm value for society.
As part of our commitment to fostering respectful and harassment-free environments, our first Ethics & Compliance workshop was held. We also offered workshops focusing on preventing, addressing and eradicating workplace harassment and violence.
We support the creation of long-term value in our employees through continuous learning within our e-learning system, which provides training to employees throughout the year. Additionally, as part of the evolution of Campus Palacio, a digital academy model was rolled out to promote the development of skills and competencies as part of the company's digital transformation.
We
acknowledge our employee's
results and experience, and
we are confident that their
contributions will help accelerate
our transformation.
CUSTOMER EXPERIENCE
Grupo Palacio de Hierro is currently undergoing an exciting transformation towards hyper-personalized service to create unique bonds with its customers. This is a huge leap forward in getting to know our customers better and understanding their tastes and preferences to provide them with products, promotions and events that are designed exclusively for each of them.
In 2023, we rolled out a number of initiatives to fulfil our purpose of enriching and meeting people’s needs through unique luxury experiences. These key initiatives were conceptualized, designed and executed to bolster the customer shopping experience.
Offering unique and
personalized experiences.
In
2023, we commemorated
the 135th anniversary
of El Palacio de Hierro by
organizing a historical and
contemporary retrospective
exhibition, reflecting style,
In
2023, we commemorated
the 135th anniversary
of El Palacio de Hierro by
organizing a historical and
contemporary retrospective
exhibition, reflecting style,
An important milestone this year was the 135th anniversary of El Palacio de Hierro. To commemorate this milestone, we organized a historical and contemporary retrospective exhibition, reflecting style, fashion, and daily life and allowing us a glimpse into the future of El Palacio de Hierro.
Thanks to the loyalty of our customers, for the first time in history, our Noches Palacio were held during the first half of the year under the theme Estelar. Our Spring Noches Palacio contributed to revenue growth during Q2 2023.
To celebrate six decades of commitment and loyalty to our customers, El Palacio de Hierro launched a special edition of the Tarjeta Palacio, designed by the talented sculptor Sebastián.
