Companhia Brasileira de Distribuição
Q1 2023 Earnings Call Transcript

Published: 6 May 2023

[Operator:]

Good morning, everyone. And thank you for waiting. Welcome to GPA’s Q1 2023 Earnings Conference. Please note that the simultaneous translation function is available on the platform. To access this service, click the globe shaped icon labelled interpretation at the bottom side of your screen, and choose your preferred language between Portuguese and English. If you are listening to the conference in English, you can also mute the original audio in Portuguese, by selecting mute original audio. We’d like to inform you that this conference is being recorded, and will be available for replay on the Company’s IR website alongside the complete earnings release material. You can also download the presentation slide deck using the chat icon. During the Company’s presentation all participants will be connected in listen-only mode. Following that, we will begin the Q&A session. [Operator Instructions]. We'd like to underscore that the information contained in this presentation and any statement made during this conference relative to GPA's business prospects, projections and operational and financial targets are based on its management's beliefs and assumptions as well as currently available information. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions seeing as they refer to future events and, therefore, rely on circumstances that may or may not materialize. Investors must understand that general economic conditions, the state of the market and other operating factors could affect GPA's future performance and lead to results that are materially different from those expressed in set forward-looking statements. Joining us today are GPA's CEO, Marcelo Pimentel; and CFO and IRO, Guillaume Gras. I will now turn the conference over to Marcelo Pimentel, who will begin the presentation. Please, Mr. Pimentel, you may proceed.

[Marcelo Pimentel:]

Good morning, everyone. Thank you for your interest in joining our Q1 2023 earnings conference. In this introduction, I will present some of our most important developments within the plan we devised based on our six strategic work pillars, which keep us focused on the primary goal of returning the company at large to a path of sustainable growth. Let me start with the top line pillar, which shows overall sales growth by 17.5%, picking up over the fourth quarter of 2022, an important seasonal period. The sales result was driven by our expansion with the opening and maturing of new stores, including those converted from hypermarkets and the rebound in customer traffic, especially in Pao de Acucar and proximity stores. I'd like to draw your attention to our same-store sales growth by 6.3% versus Q1 2022, which is excellent news considering the scenario of declining consumer spending and inflation. Pao de Acucar which already accounts for 46% of the group's total sales reported 7.5% same-store sales growth largely fostered by the increased perishable goods penetration, the result of an important work to readapt this category's proposition as well as the assortment review project both led by our sales team. In proximity stores, we continue to see double-digit growth in same-store sales and a share of perishables 2.1 percentage points higher than in Q1 2022. We also achieved an all-time high on-shelf availability level, improving stock out by 2.2 percentage points, while managing to reduce inventory turnover by 2.7 days. On another excellent news, in addition to sales growth, we also reported market share gain and self-service over the last six months. with our most remarkable result being recorded in March. Also on this slide is our second pillar service level measured by our NPS, which I am incredibly pleased to share with you, baked up nearly 20 points this quarter versus the first quarter of 2022 with all labels showing improvement, especially Mercado Extra, which recorded an increase by almost 24 points. At Pao de Acucar, the rise was by 17 points and even better accompanied by a larger active customer base, higher purchase frequency and increased monthly spending by customers at this store. In fact, the number of premium customers, which spent 4 times more and visit supermarkets more often and which had decreased until the third quarter of 2022, now have reported growth of about 10%. This enhanced NPS result is a consequence of the work we did to increase on-shelf availability, improved customer service at the store, the multipurpose training of our cashier operators, which directly affects the key links issue and the installation of more self-checkout [indiscernible] in stores. And to close this slide, I'd like to talk about the headway we've made on the digital front with improvements on our app and other improvements focused on providing better omnichannel customer experience. We've reported 7% growth in this quarter with a GMV of about $402 million, which preserves our leadership position in the food retail e-commerce space. This result was largely provided by our increased assortment, especially of perishables, the greater availability of delivery times and wider range of fast delivery options. On this front, the integration of James as a logistics engine allowed us to sustainably grow our share of same-day deliveries in 1P, which reached 70% this quarter. We've also updated our app, providing a simpler, more intuitive layout to offer users a more seamless and interesting experience. We've reported an increase of over 330,000 active users in the Pao de Acucar app, reaching over 1,200,000 users over the month. In the 3P partnerships front, we are leaders in food retail with partnerships with iFood, Rappi and others. It's important to point out that our margin on the digital front is growing by 2.5 percentage points over the last quarters, making this channel that has a driving margin for the entire company. In the next slide, I have a few updates about our expansion plan, which is still advancing as provided. Since 2022, we have opened 78 new stores, which this quarter alone brought in $402 million in incremental sales for the company. We've made headway in our top 15 stores, which are premium stores from the group located at strategic locations for the Pao de Acucar and which are a priority when it comes to the revitalization and enhancement of our model offering, for example, outstanding services such as package wrappers and also wine and cheese experts to help clients. Our expansion project is still underway, focusing on proximity stores, especially in the labels Pao de Acucar with a greater capillarity potential in the city of Sao Paulo and the entire metropolitan area as well as more verticalized regions, whereas for the Pao de Acucar label, the strategy prioritizes cities with a high potential for premium customers that hasn't been tapped on. Now about the profitability pillar, I will leave it to Guillaume. I just wanted to point out a few major points. First of all, being our gross margin, which over the fourth quarter of 2022 came to 24.4% and is the best margin point that we've reached in the last few quarters. This is a result of the headway we've made in our strategic pillars, most importantly, with continued improvement in same-store sales and premium formats and also the enhancement of our sales negotiations with increased penetration of perishables and reduced losses. To finish this first part of the presentation, I'd like to point out the ESG and culture pillar. On the fight to climate change, we've reduced greenhouse gases by 20% in the scope 1 and 2 compared to the same period last year by replacing the most pollutant machinery and also providing maintenance to our store equipment. The efforts we have been made in the last few years allowed us to reach our reduction target expected for 2030 last year, which is excellent news. We have also released our new target for 2023, pledging to reduce our emissions by 50% through 2025, considering 2015 as the base year. In terms of promoting diversity, I'm also very pleased to talk about the headway we've made focusing on expanding female leadership within the company. Women positions of leadership at GPA make up 39.3% of our staff, which places us very close to our target of reaching 40% by the end of 2025. And on the social impact front, I'd like to point out the solid work we've done in food donation that's being led by the GPA Institute, supported by all our stores. During this quarter, we were able to add over 380,000 meals, including donations of fruit, vegetables and other greens to our food banks and partnering organizations, helping hundreds of families. This is work that I love to encourage and which I'm very proud of. I'd like to state the one-to state that we have also conducted initiatives for emergency support of people affected by rainfall in the North Shore of Sao Paulo in the month of February. We collected 26 tons of food and doubled our donation volumes, which came to over 52 tons of food and also over 4,000 units of 1.5 liter bottles of water. With that, I conclude my initial words and turn over to Guillaume for the details of our financial performances.

[Guillaume Gras:]

Thank you, Marcelo. Good morning, everyone, and thank you for participating in the GPA Group earnings call. First, I'd like to point out that since completing the request to register Grupo Exito as a publicly held company in Category A and since its Level 2 VDRs were approved for trading, Exito's results are now being reported separately from GPAs. Therefore, the financial information pertaining to the first quarter of 2023, which Grupo Exito released on May 3, can be found at the CDM and on its Investor Relations website. The impacts of Grupo Exito's results on GPA are being considered in operations that have been discontinued as of Q4 2022. Starting with Slide 8, where we present the total revenue of Novo GPA Brazil, which reached R$4.8 billion in the first quarter of '23, with a strong 15.4% growth. After subtracting taxes, sales amounted to R$4.5 billion resulting in a 17.5% increase driven by new stores, the conversion to hypermarkets and the consistent resumption of customer flows in stores in recent quarters. The same-store sales indicator is up by 6.3% with a highlight on the 7.5% increase of the Pao de Acucar brand, which represents 46% of total sales. This is the fourth consecutive quarter where this brand has shown acceleration mainly marked by the progress made and the strategy to increase penetration of perishables as well as strong growth in basic groceries. The proximity format remained with strong double-digit growth at 12.4%. And this increase occurs even compared to a stronger comparison base from the first quarter of 2022. And given the more pronounced seasonality this year with the resumption of the vacation period on the coast, after two years of restricted social isolation measures due to the pandemic. This has a punctual impact to this format because of greater exposure to Metropolitan Region. In the mainstream Mercado Extra and Compre Bem brands, same-store sales growth was 2.2% with a different performance between each brand. Mercado Extra reports consistent increase, offset by the negative impact of the business repositioning of the Compre Bem brand. At gas stations, we see a recovery in volume with same-store growth compared to the previous year at 18% due to reopening hypermarket stores after the transaction with Assai. In the same-store revenue comparison, we had a 6.4% reduction, which is due to the 21% fuel price deflation compared to Q1 2022. And finally, in e-commerce, our GMV was R$402 million, which is 7.0% growth compared to Q1 '22 and reached online penetration of 10.2% of total sales. As Marcelo has already mentioned, we consolidated our leadership in digital food retail, which in addition to leadership under the 1P model continues to grow in 3P partnerships where we're already leaders in the main platforms. On Slide 9, we present the financial performance of Novo GPA Brazil, which does not include the effects of the international perimeter. I'd like to highlight that as of this quarter, we will no longer show the pro forma view ex hyper, given the immateriality of its effects on expenses 1 year after the piper markets were sold. Gross profit reached R$1.1 billion with a 24.4% margin. As you can see in the graph on top, we have a better margin compared to the last two quarters. That is 1.8 percentage points higher than Q4 2022. This result reflects same-store growth, especially in premium formats as well as the development of commercial and business negotiations, the increased penetration of perishables and reduced losses. Compared to Q1 2022, the gross margin is down by 2.5 percentage points, in fact, impacted by high inflation, which puts high cost pressure on goods, labor and logistics and also due to adjustments from repositioning the brands and formats, which now are starting to show more effective positive results as of this quarter. Our adjusted EBITDA amounted to R$270 million with an adjusted margin of 6.0%, which is a slight increase compared to the last two quarters. Compared to the first quarter of 2022, we show a dilution of 0.8 percentage points in SG&A with R$22 million less general and administrative expenses. This partially mitigates the effects that pressured our gross margin. Moving on now to Slide 10. We see our consolidated financial performance, which includes C Nova and the discontinued activities of the Exito Group and hypermarkets. Our continued net income dropped by R$167 million, reaching a net loss of R$315 million. And despite our consolidated adjusted EBITDA being in line with the first quarter of 2022 -- sorry, ‘23, the financial result had a greater negative impact given the decrease in financial income related to the monetary restatement of extra [indiscernible] receivables and the increase in financial expenses related to the increase in the CDI rate here in Brazil. On the chart on the right, we show the consolidated bad debt, which reached R$3 billion at the end of the period with a R$1.7 billion drop in the past 12 months. This is in line with our deleveraging plan. The company maintains a strong cash position of R$3.5 billion, which is equivalent to 3 times its short-term gross debt. And we maintain our focus on our plan for financial deleveraging with the sale of non-core assets and the advancement of the successful segregation of the Exito Group. On Slide 11, we have more details on the development of our operations schedule. As you can see here on the slide, since September ‘22, we have progressed in the segregation process. And in April ‘23, we had some significant deliveries with the end of the legal period for our position by creditors, which I should mention, completed without any challenge. And also we completed Exito's registration as a publicly held company with the CVM and submitted the request for a listing and including BDRs, Level 2 BDRs for trading on B3. From now on, we now await the ADR program to finish its registration with the SEC and the New York Stock Exchange to disclose our share distribution date, which should occur during the second quarter of 2023. I now conclude our financial results presentation, and I'd like to open the session for questions and answers. And please, I should remind everyone that here in this call, we have Carlos Mario and Ivana from Grupo Exito.

[Operator:]

[Operator Instructions] Our first question comes from Felipe Cassimiro sell-side analyst with Bradesco. Felipe, we will activate your microphone so you can ask your question. Please Felipe, you may proceed.

[Felipe Cassimiro:]

Hello everyone. Good morning. Well, my first question, much in line with what we had asked in Q3 about your online growth. You mentioned about improved service and the improved app and a presence across every platform, but we see online sales growing even below Pao de Acucar sales and much lower than the entire brands sales. I mean from what I remember from Q3 did the migration to the app cause any problem considering the systems migration? Or is there any rationality in terms of price or payment terms. I just want to understand from a structural perspective, where are we going? Or where should we be going? Should overall sales be growing faster or not? And my second question has to do with the gross margin. Even though we're seeing progress, and I understand that it takes time for these initiatives to take effect on gross margin, but I still thought it underperformed our expectations. And we believe that gross margin is the most important driver for us to get to where we were until the end of the year. So what can we expect moving forward? And what could create benefits in terms of improving the gross margin in the next few months, so we can see improved figures moving forward in the next few Releases?

[Marcelo Pimentel:]

Thank you, Felipe. Well, let's start with the online results. We are very positive about the news we bring you about our online performance. And there are two sides to this. First of all, is that we had an improvement that also had an effect on our same-store sales. And with all the improvements we've made to our brick-and-mortar stores, what we're seeing now is increased customer traffic customers who are now going back to their regular purchasing behavior in brick-and-mortar. It's important to remember that we did go through transition periods that had an impact that was actually lower than we expected, but we went from 308,000 clients a month, to a million. So we're seeing the quality of those clients also improved, and we're seeing higher penetration of other categories on the online front and products that really didn't have much of a penetration in online such as groceries, which is now growing more online. And in Q1, we saw the penetration of perishables increased by over 30%, which we haven't seen before. So what's the difference here? One thing we should point out is our penetration of online sales even though it's growing less aggressively than it has historically, it's still over 10%. And our ambition, our target for this year is to come closer to 15% by the end of the year. So we believe that in terms of penetration, we should see improved brick-and-mortar sales and a return of clients to their regular behavior with that intense in-store purchase experience, keeping the same experience that we were offering online, which we believe is very positive. We're seeing over 50% of our 1P clients going for on store pickup, and we're also seeing the increase of our penetration in the 3P segment. There's also a ramp-up here. We became a top seller on iFood. We preserved our leadership in Mercado Livre and we are now ramping up our operations in other marketplaces such as Magalu [ph] and others that we are joining as well. And we expect that over the course of this year, that will continue to grow. The upside here has to do with offsetting things. And we've told you that we also changed our pricing model and our loyalty bonus system on the digital side, so that it could also help us drive results. We could be growing more aggressively, much more aggressively actually on this front if we relinquished some of our profitability, but that's something we do not want to do. We want our growth on the digital front to be incremental to the company's overall results. So we are increasingly migrating to a system where our stores will become hubs. We are substantially reducing our share of online sales from our distribution centers. And this adjustment that we're doing definitely is contributing to the company's overall earnings. So what we expect is to see those online sales increase as a share of the company's overall sales. And you're absolutely right with regard to your concerns, and there's an incredible work being done by our sales team. But as we said before, the project to adjust and manage our categories, which we are running very successfully comes with this gap period or transition period because it brings in products that are being excluded, and there is an impact at this very beginning. And I would say that until Q2 or the end of this quarter, we probably will have addressed most of that, which is when we expect to have concluded this project with 90% of earnings, and that's when we conclude this transition. So the work to renegotiate our contracts with our suppliers is underway and should be concluded in late May and early June, which is when we expect to again, see our margins expanding again. But we have told you before and we continue to expect that to reach the high singles until single digits until the end of the year in our gross margins, both with what we just told you and with our work in SG&A, which has been also very successful and has been very consistent, and we will continue to do that. It's important to acknowledge that right now, we are investing in bringing customers to Pao de Acucar stores. We've invested in opening new stores. The NPS rate in those stores is absolutely fantastic. And the growth rates we're seeing for these stores is twice as high as the average for all stores within the company. So -- the important thing for us now is to bring clients back and the good news here is we are seeing double-digit growth in customer traffic and also an increase in spending, an early increase in spending, which we expect to continue over the course of the year.

[Guillaume Gras:]

Guillaume speaking, just adding to the gross margin comments. We also have the effect of increased perishables penetration. As Marcelo said, we had an increase -- we reported an increase this quarter and also an increase in our margins over the previous quarter, even though it has deteriorated versus one year earlier. But we also have efforts to reduce the decrease and that will allow us to have slightly wider margins. It is currently just under 3%, so there's room for improvement, at least 70 or 80 basis points, and we will continue our efforts to improve those figures.

[Operator:]

The next question comes from Felipe Rached sell-side analyst from Goldman Sachs. Please unmute yourself so that you can ask your question. Thank you, Felipe

[Felipe Rached:]

Hi. Good morning, everyone. I hope you all doing great. Thanks for the chance to ask this question. I guess I have a quick follow-up compared to the last question. compared to gross margin, I mean, in terms of gross margin, I understand that you are still in a bit of a friction period while you normalize the product selection and all that. But I'd like to ask what would you consider to be a sustainable level for gross margin in a permanent basis. And looking at expenses, sequential profits, I think, are greatly dependent on operational gains? Or is there any project that you hope to undertake to improve that? And again, also talking about stock-outs and the increase in perishables, this new product selection, let's say, could this have a significant impact in turnaround from now on? Thank you.

[Marcelo Pimentel:]

Thank you, Filipe. All right. Well, for gross margin, what level, we believe that it should be approximately 26% or 27%. All this work we've been doing to review the product selection is a work that started under the Pao de Acucar brand and now starts cascading down to proximity stores and to other stores, and that includes digital. So as we redesign these categories, implement them on store shelves and also implement the process of trickling out selected products, the new selection will start operating at better margins. With regard to expenses, we have one project that we completed at the end of Q4 2022, namely the structural review of all the structures here at the office. We did that and realized $150 million in gains. We've already divided up into the year 2023. And this work is now recurring. There's another project we're doing in partnership with [indiscernible], which is to create a zero-based budget. And that means looking at any and all expenses whatsoever. This project is expected to bring something between R$150 million and R$200 million in additional savings. A great deal of this has already been captured. Many of these are still in the finalization stage for each project, but they're very practical hands-on changes that I think will have a direct impact on what we've been talking about, that is to reduce at least 1 percentage point in our expenses.

[Guillaume Gras:]

Just to add, Marcelo, this is Guillaume. We also have two relevant projects that have an impact on the group's infrastructure. The IT and logistics. In terms of IT, we have begun the move to cloud project. This is a two-year project that actually began late last year, and it should bring approximately $40 million in recurring gains per year. And in logistics, -- we also have been resizing our distribution center networks, and we should have some increased efficiency this year exactly, Guillaume. And in terms of perishables and with regard to their impact on working capital, the answer is yes, and we are already seeing a positive impact. We recently saw a 3-day decrease in capital from the past year. And after implementing this project, we've also added another 2-day improvement to our working capital numbers. It's important to highlight the amazing work by all the teams, supply, sales and the store teams. And I should mention that we've been doing this, that is reducing inventory days while reaching record numbers of in-store availability. So it is a very serious analytical project that's been done. So we are reducing inventory and simultaneously improving inventory for clients. So this is the best of both worlds.

[Operator:]

Our next question comes from Thiago Suedt sell-side analyst with XP. Thiago, we will now open your microphone, so you can ask your question. Please Thiago, you may proceed.

[Thiago Suedt:]

Good morning, guys. Can you hear me, just confirming? Okay. Great. Thank you for taking our questions again. And congratulations on the results you just reported. I just wanted to follow up quickly on profitability. In your release, you talked a little bit about the initiatives you've made on the Compre Bem store label and there was, in fact, a negative impact that ultimately offset the Mercado Extra performance. So if you could maybe share with us how significant that impact is just so that we can have an idea about its impact on those results. And also from a divestment plan perspective, which is directly connected to the company's deleveraging plan. I just wanted to hear from you about the most significant processes you have in place in addition to Exito's spin-off which we addressed during our Investor Day. So these are the two questions we have. Thank you guys.

[Marcelo Pimentel:]

Thank you, Tiago. Well, I will address your first question and take your second one about the divestment plan, to Guillaume. With regard to Compre Bem, you're absolutely right. In fact, if we look only at Mercado Extra, the increase reported is over 7%. So that's really affected by Compre Bem. This was a strategic choice we made to shift the model and particularly make the model more profitable with Compre Bem. And May is actually the last month when we're running this model and we expect to, starting in June, see that performance improve in comparable terms, but now with a much more profitable model than what we had before. So being very pragmatic. In terms of sales, we still expect to see in comparable figures a weak second quarter, but a much better June already and definitely starting in the second half of the year. This supermarket channel this chain of supermarkets will probably be reporting much better results than what you're seeing right now. But Compre Bem specifically will begin to perform in a very different way than we're seeing until May. So about divestment plans, Guillaume?

[Guillaume Gras:]

All right. Sales of noncore assets for this month account for between R$700 million and R$800 million. We focused specifically on three assets. The sale of three assets, three real estate assets that account for just over R$300 million. And the second is the back of headquarters about and an old hyper store that's already been closed in the Bar neighborhood of Rio de Janeiro, which accounts for about R$250 million. And then there are other smaller assets that account for just under R$100 million. So where are we on these 3 projects that are already underway since the beginning of the year. Well, we were expected to end at the end of Q2, the operation of those three stores. And in early Q3 of this year, we expected to close the seasons back of the operation of the other stores and the Bara store will be sold later in the year in Q4. So what we expect for this year is a cash in between R$700 million R$800 million referring to these operations.

[Operator:]

The next question comes from Nicolas [indiscernible] sell-side analyst from JPMorgan. Please unmute your microphone and feel free to ask your question.

[Unidentified Analyst:]

Hi, everyone. Good morning. Thanks for taking my question. I'd like to ask you a question about the release you reported from March, you reported good results compared to February. So I'd like to ask in that sense, how you expect April to do compared to March.

[Guillaume Gras:]

Thank you, Nicolas. It's true, March was a spectacular month for us. It was a month of double-digit growth, and it brings with it some seasonality as well, the start of the Easter seasonality that was quite important for us. Something important I should highlight in the first quarter as a whole is that we round out the quarter with growth on all brands on all regions and all categories. Growth across all 3 of those categories. That proves that the word that is being steer headed by the team is consistent. It leads to consistent growth. And that's what we want. We don't want any growth to be dependent on category B or C or a given brand or region? April also brought with it good growth. We had an amazing Easter season. And with that, we hope to follow up with structured growth in the subsequent months. The key thing for us in the foundations of our turnaround is that this improvement needs to come consistently, as I mentioned, across all business units, brands and regions where we have stores.

[Operator:]

The next question comes from Maria Luisa Guedes sell-side analyst at Citi. Please unmute your microphone and feel free to ask your question.

[Maria Guedes:]

Hello, everyone. most of my questions have already been answered, but I have a few questions about the Pao de Acucar brand. I just wanted to understand a little bit more about your same-store sales. It's been driven by your categories in assortment, but do you expect -- or do you believe that has come from other categories as well? And what do you expect from Q3? Do you expect those -- that level to slow down? Or do you expect the same level we're seeing this quarter?

[Marcelo Pimentel:]

Thank you. Good morning.Well this advance in same-store sales, even as I mentioned in the previous answer, of course, we are very happy about this and happy about this is a structural movement across categories. Obviously, perishables has been a very important category for us even because of how much we want to focus on our customers' reconnection with the Pao de Acucar brand as they return into stores. As I mentioned earlier in my speech, in the Pao de Acucar brand, specifically, perishables already has a 50% penetration -- or 50% share sales in stores, which is what we want because not only does it help with building loyalty, but it also brings in a larger margin. But there's also the work that we are conducting in terms of multichannel operations. We just launched this improvement in our app, and the app also brings this connection with our brick-and-mortar stores. It connects the entire experience link connecting to the customer and bringing that person to store and also our change with the Pao de Acucar card. We changed the loyalty benefit that we provide with our Pao de Acucar card. And because we had removed many of the benefits of people who use their card outside of Pao de Acucar, what we're seeing now is customers understand that if they use their Pao de Acucar card and Pao de Acucar stores, they enjoy special discounts for our private label brands and cheeses and wines and also a level of loyalty points that's one of the best ones in the country of any card if they use their Pao de Acucar card within our supermarkets or online. So another thing that we're showing is an improved value proposition for these customers. And with that, we're seeing penetration increase. In addition to that, there is the work that we are doing in partnership with Stix. More and more Stix have become the currency our customers are using in stores. So even when they collect points outside of our stores, and we have expanded our partnerships with Stix tickets. We are now seeing customers coming into the store and paying their purchases for their purchases with Stix. Now what are we seeing in the Pao de Acucar brand? Our operations team and our sales team have been doing incredible work in improving and enhancing our stores. We worked on the cashier operations, the increase in the number of experts in critical areas for perceived value, such as cheeses, wines and our bread stores. So all of that to improve the experience of our customers when they come into our stores and also very significant and very healthy work from our marketing team to communicate all of that to our customers. Simultaneously, last week, we officially launched our partnership as master Supermarket of the Master Chef TV show, this is a TV show that is on the air throughout the year. So the brand will be very active and very lively on the -- on TV screens, and we expect that brand awareness to be preserved throughout the year. And very soon, we'll be announcing the launch of our new loyalty program. We are already running a test with a select group with those improvements that we're making, and we expect to relaunch our [indiscernible] program by June, which definitely will be very important to keep our customers active and bringing them back to the Pao de Acucar experience going back to the brand's DNA. And in terms of results, we expect to continue to grow our share of customers, continue to grow our share of premium customers, which is very important for us. The -- that core base of customers that spend 4 times as much on our stores and visit our stores a lot more often. So we improved our stores. We improved our value proposition of our products. We improved our communication with customers and also improved the relevance of our brand in our customers' minds. What we expect now or what we are already starting to see is that response for customers, and we expect to continue to see that in the next few quarters.

[Operator:]

Our Q&A session has now been concluded. I will now turn the conference back to Marcelo Pimentel for the company's final remarks.

[Marcelo Pimentel:]

Once again, I'd like to thank everyone for attending our earnings conference. The results we've reported in this first quarter already show early progress with significant deliveries that point to our consistent planning and to the sharp focus our entire team has been working with. I always like to remember that we are in a three-year turnaround project and that being consistent in this process is critical, fundamental for its success. We had major signs of progress during this time. A month of March, like we hadn't seen here at GPA in a long time. And this second quarter, we have already started in a different way, on another level. In April, we reported record-breaking Easter sales in different categories, and we're also seeing a very significant seasonal period this quarter with Mother's Day in May. Our continued like-for-like growth this quarter, our progress on operational fronts in terms of on-shelf availability and our service level in addition to our store opening plan and our growth on the digital front. We have many levers, a lot of momentum and many deliveries ahead of us. So once again, I'd like to take the opportunity to thank the entire GPA team for their dedication in this process. Thank you to everyone, and have a great day.

[Operator:]

GPAs earnings conference has now concluded. The company's IR department is available to answer any questions you may have. Thank you very much for your attendance, and have a great day.