Esteemed Chairman and Members of the Board of Directors:

In my capacity as CEO of Grupo Palacio de Hierro, S.A.B. de C.V., I hereby present the Annual Report regarding the performance and results achieved during the 2025 fiscal year, as well as the accounting and reporting policies and criteria followed in its preparation.

At Grupo Palacio de Hierro, our purpose is to enrich and delight people through unique luxury experiences, delivered through omnichannel service and care, with the quality and level of excellence that reflect the trust placed in us.

Building on our positioning and the luxury ecosystem that has long defined us, we continue to transform and enhance our operational standards of excellence, always taking into account our social and environmental impact. At the same time, we further strengthen our organizational culture, processes, and methodologies in order to exceed the expectations of our customers, employees, partners, and shareholders.

In 2025, Mexico's economic growth reached 0.7%, with an inflation at 3.69% and a strengthened exchange rate. According to data from the Asociación Nacional de Tiendas de Servicios y Departamentales (ANTAD), there is a nominal increase of sales in the department stores segment, on a same-store basis, in the range of 4.8%, and 6.3% when considering all stores, in comparison to 2024.

With a long-term value creation focus, total revenues reached MXN 60.748 billion in 2025, representing an 8.3% increase over the previous year. Over the past five years, the Company has maintained sustained growth driven by strong execution and disciplined control of operating expenses. This resulted in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of MXN 8.521 billion, an increase of 7.4% versus 2024, and net income of MXN 3.029 billion, representing a 1.4% increase compared to the prior year.

Our results confirm that the innovations implemented have been effective. We continued to integrate our omnichannel strategy with physical stores, strengthening business support processes to enable expansion and the Company's future through technology systems with enhanced capabilities for data analysis and hyper-personalization, as well as the introduction of artificial intelligence into selected processes.

Presented hereafter are the most relevant operational highlights for Grupo Palacio de Hierro regarding the 2025 fiscal year.

The future is a Palacio.

Among the key achievements of this period is omnichannel personalization. Through strategic data-driven initiatives, we have begun translating our customer insights into unique, bespoke experiences. This allows us to offer a frictionless journey across all touchpoints, strengthening both loyalty and value for our clients.

Our vision is focused on building the capabilities today for 'El Palacio' of the future, driven by teams that execute a customer-centric strategy to enrich lives through memorable experiences.

Furthermore, to continue growing our digital luxury channel, we launched the e-concession strategy in 2025. Similarly, with the rollout of the "Fast Delivery - Delivery Promise," we enhanced our clients' digital shopping experience by ensuring swifter deliveries and providing greater clarity, security, and confidence throughout the entire process.

OPERATIONS

A new service model was implemented in our Perisur and Polanco stores to deliver an enhanced luxury experience by strengthening key and delight moments in customer service. This elevated the luxury experience and exceeded customer expectations.

For 2026, the plan is to scale this service model and replicate it across our entire fleet of stores.

Within the store operating model, we reinforced the standardization of action-oriented routines, as well as agile back-end, receiving, picking, and replenishment processes, optimizing activities and timelines across these areas.

REAL ESTATE PROJECTS

In 2025, El Palacio de Hierro inaugurated the remodeling of the second level of El Palacio de Hierro Guadalajara, housing the Men's, Home, Technology, and Services departments. In September, the remodeling of the new Basement level at El Palacio de Hierro Monterrey was completed, offering unique luxury experiences.

The new designs in Guadalajara and Monterrey reflect the "community store" concept, paying tribute to the people and cities where the stores are located through architecture and interior design. In Guadalajara, "Orgullo Jalisciense, Totally Palacio" honors the mariachi heritage and the prestige of the booming tequila industry. Meanwhile, in Monterrey, "The Art of Industry" evokes the large-scale manufacture of materials such as steel, glass, and cement, which combine with the sophistication, elegance, and modernity that characterize El Palacio de Hierro.

SUSTAINABILITY AT EL PALACIO DE HIERRO

Significant progress was achieved to further strengthen the Company as a Sustainable Palacio. This approach seeks to balance the impact of current and future operations through comprehensive decisions that contribute responsibly and proactively across environmental, social, and governance (ESG) dimensions.

Sustainability is now an integral part of Grupo Palacio de Hierro's culture and is embedded transversally across the business. To this end, the highest international standards for measurement and reporting have been adopted.

Further details are available in the Annual Sustainability Report, accessible on our website.

A Palacio for Everyone: Our Commitment to Inclusion

We have fostered a culture of equal opportunity, positioning us as an innovative and equitable group. Through the "Un Palacio para Todos", committee, we focus on four priority areas:

• People with disabilities: We welcomed new employees through partnerships with specialized institutions and adapted policies to ensure full labor inclusion.
• Diversity and inclusion: We build safe environments where every individual can be their authentic self; furthermore, we foster open dialogue and a leadership style that listens, learns, and celebrates diversity.
• Gender equality: We achieved 50.17% female representation across our workforce, reflected as well in leadership roles.
• Organizational capability: Internal policies were updated to support this strategy and ensure compliance with certifications recognizing us as a leading employer brand.

Well-Being and Social Responsibility

We held the inaugural edition of 'Palacio Wellness Month', an initiative designed to foster a culture of holistic care across three pillars: physical, mental/emotional, and financial health. We also maintained our well-established programs, such as vaccination campaigns, psychological support, and telemedicine, while continuing to promote various sporting and cultural activities.

Through the "Voluntariado de Hierro" program and our alliance with the Alberto Baillères Foundation, we reinforced our commitment to generating positive impact, contributing to community development and the United Nations Sustainable Development Goals (SDGs).

CUSTOMER EXPERIENCE

Grupo Palacio de Hierro is undergoing a key transformation toward consolidating a luxury ecosystem by offering hyper-personalized experiences that strengthen ties with its customers.

In 2025, we led initiatives that confirmed our position as Mexico's luxury department store, creating unique experiences that go beyond shopping.

The tenth anniversary of "El Palacio de los Palacios" marked one of the year's defining highlights. For an entire month, we hosted activities that brought together the world's most prestigious luxury brands, featuring a traveling pavilion inspired by Mexico City, visits from Formula 1 drivers, and the exhibition of ten unique luxury pieces found nowhere else in the world. The anniversary celebrations culminated in a gala night, an exclusive event where we welcomed over 3,800 guests for a spectacular evening where fashion, art, gastronomy, elegance, and inspiration converged.

Additionally, we celebrated the first anniversary of El Palacio de Hierro León with various activities for the Bajío community and the exhibition "El Palacio de Hierro: An Extraordinary History", which chronicles our company's defining milestones from 1888 to the present day.

We continue to strengthen our omnichannel offering, effectively bridging the gap between the physical and digital worlds. Ambitious projects, such as "Personalization," have enabled half a million clients to receive communications and a shopping experience designed bespoke for them.

The Super App increased adoption with 57.8% growth in downloads, reaching 1.2 million installations.