Companhia Brasileira de Distribuição
Q2 2014 Earnings Call Transcript

Published: 24 Jul 2014

[Operator:]

Good morning, and thank you for waiting. Welcome to GPA's conference call to discuss the second quarter of 2014 results. This event is being webcast via webcast, and it can be accessed at www.gpari.com.br where you will find the respective presentations. The slide selection will be managed by you. There will be a replay facility for this call on the website after it's closed, and the press release about the company's results is also available at the IR website of the company. The event is being recorded. [Operator Instructions] Before proceeding, we would like to mention that forward-looking statements that might be made during the call are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on beliefs and assumptions of GA's management and information currently available to the company. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events, and therefore, depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of GPA, leading to results that differ materially from those expressed in such forward-looking statements. Now we would like to turn the floor over to Mrs. Daniela Sabbag, IRO of the company. [Technical Difficulty] The interpreters apologize, but they cannot hear what is being said. We apologize but we cannot hear anything that is being said. Please stand by. Ladies and gentlemen, thank you for standing by. Now we would like to give the floor to Ms. Daniela Sabbag, Investor Relations Officer of the Company.

[Daniela Sabbag Papa:]

Good morning, everyone. And we apologize for the technical problem that we had here. I would like to mention to those who are present, Ronaldo Iabrudi, the CEO of the company; Christophe, CFO; Líbano Barroso from Via Varejo; Fernando Zancopé, CFO of Via Varejo; José Marcelo, CFO of Assaí; Alexandre Vasconcellos; and connected with us, we have Belmiro and Quiroga, who are not is physically present here in the room, but we will be trying to connect to them via conference call. Now I would like to give the floor to Ronaldo for his initial remarks.

[Ronaldo Iabrudi Dos Santos Pereira:]

Good morning. And once again, we apologize for the technical problem. I would like to thank you very much for participating in this call, especially our investors and the people who organized the event. And I would like to congratulate those who are sitting around the table, and also those are not present here around the table, but who will be participating via call for the results delivered. During the quarter and during the half year, our sales grew by 13%, and our net income was twice this growth. That is to say 26%. I believe that these figures are the ones that give color to the work carried out by this team that is sitting around this table. In spite of the consumption scenario that we see that is more complex and more cautious at the same time, the results delivered during the quarter was rather positive, very much in line, mainly when we consider the margin situation in all our business, and the only exception to that was Assaí. And it was an exception only because of the growth pace of Assaí. Had Assaí not grown as fast as it grew, there would be also a positive expansion in the margins. We continue to follow the strategies that we mentioned to you during the last meeting that we had with you. And we have been continuously improving our results in a sustainable fashion, and we have been focusing on 3 priorities. We usually say that if you have more than 3 priorities, you have no priority whatsoever. So operating efficiency, optimization of CapEx and working capital and organic growth, these are our 3. In terms of operating efficiency, we have been continuing with the initiatives implemented in the last quarter. And expenses continue to evolve in the direction that we want. That is to say downwards, which means a reduction in expenses with a higher result in terms of discipline and better results in terms of focus on our business as well, and also streamlining our activities which is very important. And we believe that the simpler we can be, more agile we will be. And in our business, that is to say retail, timing and agility and speed are fundamental. So operating efficiency, which is a priority, we have been able to deliver as we have already been talked -- we have been talking about. And another fundamental point is CapEx optimization and also working capital optimization. I would like to say that the company talked about working capital and adequate CapEx vis-à-vis revenues. And what happened is that we are investing this year, as we have already said, approximately the same amount that we had projected for last year, for last year, but with more square meters, which means that we are making very major endeavors, and understand that it's here and each business owner is here as well for each one of the investments, for each one of the banner. We have been making our necessary investments with a reduction by square meter, but always keeping the concept and the quality of the stores and also of the investments. And another point, working capital. We also saw major evolutions in working capital, and you saw that there was a 3-day reduction in our inventories. And then, as we said, we talk a lot about working capital when we talk about revenues, and this is a total [ph] priority on the part of the company, and the last point or one last priority is organic growth. We believe that when the economy is really moving sideways, so to say, we see opportunities to increase our footprint, and we're working very hard in this direction, and it is a decision made by the company. That is to say to increase our footprint by increasing the number of stores opened. And also, in Via Varejo, we are working with the opening of a higher number of stores than we had estimated in our budget, and Assaí is one example. We have already opened 5 new Assaís this year, and we have an even more daring plan to open other new units of Assaí next year. I wanted to say a few words about each one of the businesses, but as we had this initial technical problem that delayed our conference call, I think it would be more productive to focus on Christophe, and he will be talking about the balance sheet and the results of the company. And then I will come back, and I will make some closing remarks and talk about the outlook. And I think we can recover the time that we wasted with the technical problem. Thank you.

[Christophe Jose Hidalgo:]

Thank you, Ronaldo. Good morning, everyone. And I would like to start our presentation with the highlights of the quarter. Page #2. Net revenue growing by 13.4%, and same-store concept, growth, 9.5% increase, mainly driven by the good performance of the food business, and I would like to highlight the good performance of Assaí and also positive performance on the part of Nova Pontocom. In line with what Ronaldo was said, organic growth has been a top priority for us. We opened 116 stores in the last 12 months. In the quarter, 225 additional selling units. And maintaining our commitment with discipline in SG&A expenses, we were able to deliver a reduction of SG&A expenses of 0.7 percentage points compared to our net revenues, and this reduction can be explained mainly by the efficiency gains achieved by Via Varejo and the continuity of the discipline plan on -- regarding our spending and the streamlining of the Multivarejo processes and the ongoing discipline in the management of the resources, BRL 1.155 billion, adjusted EBITDA advances or 21.1% or a margin, EBITDA margin -- adjusted EBITDA margin reaching 7.6%, 0.5 percentage points higher than the previous period. Adjusted net income, with a good performance, BRL 407 million adjusted net income, an increase of 26.3%, and adjusted net margin increased by 0.3 percentage points, reaching 2.7% of our sales. Now let's go to the next slide with a -- with the main indicators of the first half of the year in the second quarter. Sales, we have already talked, 3.5% growth. Total growth, 9.5% same-store sales in the half year. Growth was 12.6% in sales. Same-store growth continue to be dynamic with 8.5% increase in the first 6 months. Adjusted EBITDA, BRL 1.15 billion in the quarter, BRL 2.23 billion in the half year. Homogenous growth for the first half and the first -- the second quarter, and 22% approximately, and adjusted net margin, 26.3% and 26.1%. Adjusted net income reached BRL 407 million, 26% higher than last year and BRL 770 million in the first 6 months of the year. As you can see, the growth was 26% as well. Our financial discipline is also translated in the level of indebtedness of the company, and the deleveraging during the period was very significant, as the net debt went from BRL 4.17 billion to BRL 3.07 billion, a deleveraging -- a relative deleveraging of 1 point [indiscernible] -- from 1.16x to 0.69x net debt EBITDA ratio if we consider Q2 '13 and Q2 '14. Consolidated net financial expenses behaved as expected. In spite of having the reference rate, which is the CDI going up by 40%, we were able to keep our consolidated net financial expenses, as you can see, growing by 20% and representing 2.4% of net sales. And on the next slide, another highlight is the ongoing improvement in our working capital vis-à-vis Q2 '13. We can see that the gap between inventories and suppliers had an improvement of 3.5 days, approximately BRL 380 million in cash reduction and working capital. And this improvement has to do mainly with the improvement in inventory optimization in Via Varejo with a significant reduction and the positive impact on the working capital. Now going to the next slide. We talked about our organic growth, which is another top priority on the part of the group, and we intend to accelerate and keep a high growth pace. And we have here the Assaí, 15 -- 19 new stores, 15 Minimercado Extra, 1 Assaí, 1 Pao De Acucar, 1 drug store, and the first units of Minuto Pão de Açúcar, almost 1,700,000 square meters of selling area, 6 units of Casas Bahia. As you can see here in Via Varejo, we opened 6 Casas Bahia stores, with 970 stores at the end of the quarter, and 1,070,000 square meters of selling area of Via Varejo. Now let's go to the next slide. And here, we have the main financial performance indicators for the food area, Multivarejo plus Assaí. After mentioning the figures, well, net sales, BRL 8.4 billion in the quarter, $16.7 billion in the half year, growth of 14.5% in Q2 and 13% for the period. Adjusted EBITDA. We also see a positive behavior of adjusted EBITDA going from 22% in Q2, BRL 615 million, and slightly lower than BRL 1.2 billion for the 6 first months of activity, with a margin of 7.1% adjusted EBITDA margin for the half year. Adjusted net income, also accelerating growth, BRL 224 million in Q2, 31% growth, and in the half year, BRL 425 million in adjusted net income. That is to say, a 16% growth year-on-year with 2.5% adjusted net margin. Now I would like to give the floor to Zancopé, representing Multivarejo. And afterwards, [indiscernible]. [Technical Difficulty] The interpreters apologize, but the person speaking is very far from the microphone.

[Fernando Zancopé:]

[Technical Difficulty] as mentioned, we continue with our expansion strategy. We opened Minimercado Extra, plus Pão de Açúcar. We maintained our strategy to gain market share sustained by expense reduction. In the first quarter -- in this quarter, we achieved an EBITDA of BRL 15.49 billion, 8.5% margin, 0.6 percentage point growth of 18.2% compared to 2013. We maintained our strategy to offer same price -- or best prices, best services to our clients with the best sales conditions, maintaining our profitability. I will turn the floor to Belmiro -- actually, to José Marcelo to talk about Assaí.

[José Marcelo:]

Thank you. Good morning. As previously mentioned by Christophe and Ronaldo, Assaí posted growth in the second quarter. And we can see here on the slide the growth. This was sustained by a solid same-store performance and organic expansion in strategic regions, such as the Northeast. Our EBITDA was BRL 66 million, up 35.4%, in keeping with the growth of our net revenue. Even with investments in price and higher expenses of the strong expansion plan, as well as the time of maturation of new stores, we were able to maintain our EBITDA in line. As you can see, Via Varejo and Nova Pontocom, in other words, the Non-Food business, did quite well. So performance has been good, BRL 6.8 billion in the second quarter, 12% increase in total, vis-à-vis the previous period. We see homogenous behavior also for the half year, 12.3% increase net -- or gross sales a little bit over BRL 13 billion. Our profitability, as expressed by the adjusted EBITDA, also shows a good trend, in keeping with our expectations. BRL 540 million was the adjusted EBITDA of the second quarter, 7.9% adjusted EBITDA margin growth. In the half year, was 35% with an EBITDA of BRL 1,050,000,000, 7.7% adjusted EBITDA margin, adjusted net income growing 21% in the second quarter of '14 to BRL 183 million, BRL 345 million in the half year, accounting for 2.5% of sales. Now we will hear some comments about the activities of Via Varejo.

[Líbano Miranda Barroso:]

This is Líbano. In the second quarter 2014, we have several highlights. We had an 8% increase in our net revenue, and this came because we have a same-store sales growth of 6.8%. In this period, in the last 12 months, we opened 45 stores. And in this quarter, 6 stores, and 8 opened in the first quarter of 2014. Gross margin was 31.4%. We maintained our gross margin equivalent to the second quarter of 2013, with increase in the gross profit of 8%. This was possible in a moment where we had intense sales of items that carry a low margin, like TV sets, but we have our economy of scale. Our interests were in line with our suppliers, and so we were able to grow, maintaining our gross margin, adjusted EBITDA margin of 9.1%, 21% increase, up 100 basis points over the second quarter '13 due to improvement of operational efficiencies, which has generated gains in logistics operations, gains in administration expenses. We always try to manage our expense matrix to bring this ongoing improvement. Adjusted net margin, growing 27%, up 50 basis points from second quarter '13, reflecting the impact of financial discipline, a negative need to finance our working capital. In other words, we were able to have a positive gap between inventories and suppliers, and we will continue to grow. We intend to open about 60 stores this year with discipline and profitability. Now we will give the floor to Quiroga to make his comments about Nova Pontocom.

[German Quiroga:]

Good morning. I am kind of limited because I'm speaking from a remote location. We had this quarter with excellent growth in terms of sales of about 35% growth year-on-year and 45% growth in an indicator that includes our marketplace sales. We had increase in our purchasing conversion rate, as well as improvement of -- of improvement -- a bigger share of marketplace in our sales mix. We improved our gross margin and our EBITDA. Our EBITDA margin was increased 0.7 percentage points overall. In other words, considering increased sales and increased margin, we practically doubled our EBITDA in terms of absolute values. The margin increase comes from better margins, better prices, better negotiations with suppliers. And I am here to say that we are enjoying the best moment ever, and we would like to thank our suppliers for all their support and family. In a nutshell, we had a quarter with a strong sales volume, market share gain, improved margin, improved EBITDA. Thank you very much.

[Operator:]

We will now open the floor to questions and answers. We would like to have a Q&A session. [Operator Instructions] Mr. Gustavo Oliveira from UBS has a question.

[Gustavo Piras Oliveira:]

My question is regarding operating efficiency, particularly in the Food business. I would like to know where do you believe we are? What are the primary initiatives that still need to be implemented in the next, say, 2 years, that could still lead to even greater growth of the margins? And if possible, I would like you to elaborate on what kind of target margins you're working with for the food retail business?

[Unknown Executive:]

Gustavo, thank you for the question. In the first place, we are enjoying a strong growth process and a daring one, which brings an improvement in operating efficiency. When we have higher volume, and we expect to open even more stores, we naturally dilute our expenses. And we do have a number of initiatives being implemented in the company, aiming to enjoy more synergies among the businesses, and aiming to simplify processes and to reduce costs as well, never losing sight of the quality of our customer service. So what I can tell you is that we will continue to work and to look for operating efficiency, and we will enjoy natural gains because of higher sales volumes and because of our internal initiatives as we have seen in the first half of the year.

[Gustavo Piras Oliveira:]

Do you believe that the main gains will come from logistics or from the stores, the distribution centers, perhaps, something linked to the systems? Could you give us a little bit more detail?

[Unknown Executive:]

Well, in a company this big, you have gains coming from everywhere

[Operator:]

Mr. Ricardo Boiati from Bradesco would like to ask a question.

[Ricardo Boiati:]

My question is related to consumer behavior at this point. Ronaldo, you said in the beginning that consumers tend to be more cautious. This company operates in different retail segments, targeting different target audiences, so I believe you have good analytics. Can you identify changes in the habits of consumers? Do you think that they have less income, less disposable income or are they trying to save money? Take a Pão de Açúcar typical store, do you think their customers are perhaps not going to Pão de Açúcar stores and moving to Assaí or Extra? Do you see any type of changes like this? My second question has to do with a strategy of more competitive prices. This has been going on for a while. I would like to know, can you see a counterpart in sales? Is this showing in the company's results or is this a benefit that will be taking longer to be realized, that, perhaps, will be seen later, but that will be felt more in the long term and for a longer period of time?

[Unknown Executive:]

Ricardo, competitiveness for us is a strategy that has come to stay. We strongly believe that customers are smart that they know how to measure and compare prices all the time, so we are sparing no efforts to increase our efficiency so that we can keep our customers and ensure price competitiveness in cash-and-carry, in Minimercados, the neighborhood stores, in the premium stores, and so this is a policy of the company. Now what we need to have is the internal capability and the ability to negotiate with our suppliers so that we can maintain and deliver our margins, commercial margins and the EBITDA margin. That's in terms of price competitiveness. Now as for the consumption scenario, I can tell you that we are not too excited and optimistic, but we are not too pessimistic either. I believe that the economy is moving as we have seen in terms of the outlook. But I guess that the fact that we have multi-banners, and that we give customers options to buy online or to buy in a neighborhood store or if they want to shop a lot, they can go to Assaí or to a hypermarket. That puts us in a differentiated position. And to be very clear, we feel more growth in some banners than in others. Minimercado, for example, Pão de Açúcar, cash-and-carry are growing more than, for example, hypermarkets and supermarket. But these are things that we follow constantly, and we believe that this has to do with the purchasing power of the customers. I want to give you an example. We are opening a Minuto Pão de Açúcar, and we are assessing now. Some stores were built years ago in a region that had a certain purchasing power, and the purchasing power has practically doubled in that region. So we are considering turning a hypermarket into a Pão de Açúcar store because this is what that specific target audience demands and expects. So our team is keeping our ears and eyes open to the needs, the options and the way customers shop so that we can adapt to the changing interests and demands.

[Operator:]

Mr. Irma Sgarz from Goldman Sachs would like to ask a question.

[Irma Sgarz:]

I have a few questions. The first one has to do with selling expenses in food, especially Multivarejo, net of Assaí. It seems to me that selling expenses, net of any effect or reclassification of expenses or revenues from the galleries, it seems to me that it went up on a year-over-year basis. So I would like to know whether this has to do with the sponsorship by Extra of the World Cup, and is this a strategy that we should consider for the future as well? The efficiencies that you are achieving in SG&A, is this being reinvested, the savings that you are achieving in your selling? And what about your selling expenses? Was it like a one-off event in the second quarter? And my second question has to do with Pão de Açúcar, Minuto, the new format. Could you give us some more details about returns, potential margins, growth potential of the format, the Minuto Pão de Açúcar? And is there room to convert any of the other formats into a Minuto Pão de Açúcar? I don't believe so. But anyway, could you please let me know?

[Unknown Executive:]

[Technical Difficulty] about selling expenses, 10% and not 14%, as we see here. The interpreters can barely hear the gentleman. [Technical Difficulty] 10% increase, and there is some inflationary pressure on selling expenses. Regarding Minuto, Ronaldo will say a few words.

[Ronaldo Iabrudi Dos Santos Pereira:]

Okay, regarding Minuto Pão de Açúcar, it's what I said before. We have Minimercados, mini-markets in regions. And based on what we see from the client, that is to say the demand on the part of the client or the type of the client, we see that there will be an opportunity to switch still within this year. Switch -- or transform maybe some mini-markets into Minuto Pão de Açúcar. But we are waiting for the results of a survey that is still being made with clients and -- but we are paying attention to that, and we will be delivering the best format for that specific type of client that goes to that specific kind of store. So I would say yes. Still before the end of the year, we could expect a few other Minuto stores according to the clients that are identified.

[Irma Sgarz:]

I would like to better understand the economics of the Minuto Pão de Açúcar and the capital that you have invested per square meter on average, and what about the returns that you expect coming from Minuto?

[Unknown Executive:]

Well, I do understand that you would like us to answer these questions. However, we only have 1 store that has been operating for less than 40 days. So I would say that it's a little bit too soon to say anything. We like to work with a pilot first, and we like to have an analysis that will allow us statistically to make a more precise projection. However, what I can tell you is that it is operating according to the business plan that we have designed. However, it is a little bit too early to give you any additional information or guidance that may be statistically relevant.

[Operator:]

This is Andrea Teixeira from JPMorgan.

[Andrea F. Teixeira:]

You talked about margins in general. I think the margins were higher than expected in the food business. So could you give us an idea? You have already completed 1 year after this investment, and do you think that this margin or this gain will be recurrent? And how do you see the situation for the second half of the year?

[Unknown Executive:]

The margins should remain stable. We do not believe we will have additional increases. We are working on to increase competitiveness.

[Andrea F. Teixeira:]

What about the EBITDA margin? Because you were talking about the gross margin, as you have new format. And Assaí recovery margin, will there be room for any operating leverage, additional operating leverage still within this year?

[Christophe Jose Hidalgo:]

Andrea, this is Christophe. Of course, there is always room for margin improvement at the levels of the EBITDA margin that we see. And we intend to increase competitiveness by means of increasing our efficiency and with a better management of our resources. And of course, there is still room for improvement there with an ongoing search for improvement on our part. And we will continue to do what we have to do, continue to do our work -- homework. Assaí is a little bit different. The reading maybe is a little bit hindered maybe regarding the relative weight impacting growth, and now that we have already confirmed that the older stores are growing as expected by us. As we said in some opportunities in the past, there's concerns that they add an additional return to the group as a whole, like the returns as we have from the other formats. And this is a margin scenario that we see today, or in other words, we could expect a significant improvement of the Assaí margins.

[Andrea F. Teixeira:]

I guess that there was a paradigm shift which was the opening of stores. You have opened more stores recently than historically. So if possible, could you elaborate on how you can get this with CapEx, how CapEx can be better used or you can reduce CapEx per store? Could we use that guidance of 6% of CapEx per store opened, or perhaps, something higher for 2014? How do you see this as an opportunity to increase or to grow now with these well-tested new formats and banners?

[Ronaldo Iabrudi Dos Santos Pereira:]

This is Ronaldo speaking. We are working strongly on standardization.

[Andrea F. Teixeira:]

I don't know, Ronaldo, but I can't hear you very well. I don't know if the others can hear you well, but I definitely cannot.

[Ronaldo Iabrudi Dos Santos Pereira:]

What I am saying is that we are working strongly in standardization and we are defining some standards. And when you have that -- for example, we don't think that we need to have 1 store different from the next. I just said our stores can follow a certain pattern and be standardized, and this apply to hypermarkets, to supermarkets, Pão de Açúcar, Casas Bahia, neighborhood stores, Minimercado. With that, you will remember we approved an investment close to BRL 2 billion, and we believe that we will be able to do what we proposed to do in terms of store openings. And I guess that we're going to be able to spend less than the BRL 2 billion exactly because of this standardization effort, and having greater financial discipline with our investments.

[Operator:]

Ms. Alan Cardoso from Safra Bank.

[Alan Cardoso:]

For quite a while, we have seen Assaí with very good sales performance with a better trend than the average of the company. On the other hand, because of the data we could collect, hypermarkets are performing below the other banners. Does it make sense to imagine that the company might go through an accelerated conversion process, converting hypermarkets into Assaí? Or would this destroy value? My second question is when we look at the consolidated EBITDA margin with Assaí, given the accelerated growth of the company, it remains very much pressured. When we look at the older Assaí stores over the new format that have achieved the pay off curve, what about the margin level? Is it about 5%? Or is it reaching 6%? So we would like to know what would be the Assaí margins if everything, if all of the stores were completely mature?

[Ronaldo Iabrudi Dos Santos Pereira:]

Alan, are you still there?

[Alan Cardoso:]

Yes, I am here. I am still here.

[Ronaldo Iabrudi Dos Santos Pereira:]

Well, let me try to answer the first question. If there would be a possibility of optimizing hypermarkets, you raised a possibility of converting hypermarkets into Assaí or cash-and-carry format. Well, we think about converting supermarkets into Pão de Açúcar stores because of a different purchasing power in given regions. We have been analyzing this, and we should probably go ahead with this conversion. For the hypermarkets, we have Alexandre here, and we are thinking of reducing the selling areas. We would have hypermarkets with much bigger stores than a typical hypermarket with 4,700 square meters of selling area, and we're thinking about what we're calling commercial centers. With that, we can optimize the asset. And more than that, we are able to bring more customers to the stores because they go to the commercial center, then they also go to the hypermarket. So what we are designing and what we are going to do is optimize the hypermarkets, which is the selling area of the hypermarket, and using the commercial centers. As for Assaí, we are in a growth process, which as Christophe has said, is quite strong. And the stores that are operating with a certain level of maturation have an EBITDA and a margin -- an EBITDA that we consider adequate and which we approve for the opening of new stores. So Assaí, in our opinion, our strategy is that they will continue to grow, will continue to expand to other states in the northeast, and defending our position in the region of São Paulo. So we will continue to grow strongly. And where we already have mature stores, the EBITDA will be equal or a little better than what we included in our business plan.

[Belmiro De Figueiredo Gomes:]

This is Belmiro, and I would like add to what Ronaldo mentioned. When we have a sales mix between mature stores and stores opened, obviously, we have higher margins in the old stores, and the new stores operate with lower margins. But the Assaí business, the cash-and-carry business, is characterized by offering low prices with obviously lower margins. The EBITDA, when you analyze, it is not totally comparable with a B2C [ph] retail. There are no operating expenses in the cash-and-carry. We don't sell installments, and we have higher selling areas. But in terms of the return on investment, it is in keeping with what was expected, and we enjoyed 38% growth in this quarter, which points to a strong expansion. It puts some pressure on the margins, but we have been able to recover that because our expenses in the -- in this quarter were lower than the same period of last year.

[Operator:]

Mr. Guilherme Reif from Banco Itaú would like to ask a question.

[Guilherme Reif:]

Let's go back to real estate and hypermarkets, et cetera. This is a business that has started to emerge gradually in your market. So I would like to understand the potential that you see for this market. Do you have a plan already to open more space? And could you share your strategy with us and how this contributes to your overall results? And what will be the participation in the medium and the long run?

[Alexandre Gonçalves de Vasconcellos:]

Thank you for the question. This is Alexandre de Vasconcellos, Guilherme. This was a strategy, as Ronaldo said, to take advantage of the areas where we have a high influence, where it's a confirmed demand with the previous survey regarding desire the design for products and services on the part of clients. And so some of them evolve into this Conviva space. Our installed base of gross leasable area in the -- is 90,000 square meters, and we would like to grow around 20% per year, basically tapping into the installed base of our stores and organic growth. We have 2 Convivas today, 1 Conviva in Rio de Janeiro with Pão de Açúcar banner, and in Belo Horizonte, with the Extra Hipermarcado banner. The performances are according to what we expect, and slightly beyond the result in hypermarket because of high inflow that the hypermarket already has. And we intend to open a third Conviva in Rio de Janeiro in Maracanã, a hypermarket, and this will gradually consolidate our proposal to deliver convenience and neighborhood services to our clients.

[Operator:]

Tobias Stingelin from Crédit Suisse.

[Tobias Stingelin:]

It's rather bureaucratic, my question. But regarding SG&A for Multivarejo, it seemed to me that it had already been reclassified in the release, but the answer is that 14 was not on a comparable basis, and it was 10 instead of 14. So which of these 2 figures should we consider?

[Unknown Executive:]

10%, this is the figure that you should consider.

[Tobias Stingelin:]

So last year, you did not adjust that? Is that correct?

[Unknown Executive:]

Yes.

[Operator:]

GPA conference call is closed. The Investor Relations department of the group will stay at your disposal for any questions that you might have. Thank you for participating and we wish you a very good afternoon.