Good morning. My name is Daniela, and I will be your conference operator. All lines have been placed on mute to prevent any background noise. This is Liverpool's Q3 2023 earnings call. There will be a question and answer session after the speaker's opening remarks, and instructions will be given at that time. Today, we have with us Mr. Enrique Guijosa, Chief Financial Officer, Mr. José Antonio Diego, Treasury and Investor Relations Director, and Mr. Enrique Rincón, Investor Relations Officer. They will be discussing the company's performance as per the earnings release for the Q3 of 2023, issued yesterday. If you did not receive this report, please contact Liverpool's IR department, and they will email it to you or download it at the IR website as well.
Please note that this call is for investors and analysts only, and questions from the media will not be taken, nor should the call be reported on. Any forward-looking statements made during this earnings call are based on information that is currently available. These are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors, including the risks outlined in El Puerto de Liverpool's most recent annual reports. Please refer to the disclaimer in the earnings release for guidance on this matter. I will now turn the call over to Mr. Enrique Guijosa.
Thank you very much, Daniela, and good morning to everyone. Thanks for joining us. I certainly hope that you are all doing well. I will start by quickly covering the highlights of our Q3 results and devote the rest of the call to answer your questions. I am pleased to share with you that, once again, during the Q3 of 2023, we posted strong results in almost all our key performance metrics, while we continue to develop industry-leading strategic initiatives. Our consolidated revenues increased almost 10% year-on-year. Although we did see a sequential slowdown in Liverpool's top line, we continued to achieve double-digit revenue growth rates in both our financial services and our real estate business units.
July was a very strong month for both Liverpool and Suburbia, but during the rest of the Q3 , we observed a moderating demand in both banners.
Positive top-line results were achieved despite facing a challenging base period. Our same-store sales for Liverpool and Suburbia during the Q3 of 2022 grew 19.3% and 16.1%, respectively. Comp sales for Liverpool grew 5.8% in Q3, and practically all of this increase was explained by higher traffic. We continue to see our top-line categories growing above average, particularly cosmetics, fragrances, and accessories. In the case of Suburbia, same-store sales were 3.8% above year ago, a sequential acceleration, with a unique contribution of both traffic and average ticket. General merchandise and men's apparel grew above average. Importantly, during the Q3 , we launched the campaign Rediscover Suburbia, aimed at communicating the improved customer experience in all our stores.
It is important to highlight that it seems like the sales deceleration that we observed during the Q3 was quite broad. For perspective, ANTAD department stores reported a 3.5% increase in same-store sales during the Q3 , and total ANTAD apparel and footwear categories grew comps 3.3%, while general merchandise increased 3.7%. In spite of the small slowdown, our healthy inventory position allows us to maintain a disciplined approach regarding our promotions throughout the whole quarter, which, together with a higher share of top lines, resulted in a retail gross margin of 33.5%, 110 basis points above a year ago. We closed the Q3 with our inventory growing just 2% year-on-year. The top line of our financial services business unit increased 27.6% versus a year ago.
This reflects a 22.6% increase in our net credit portfolio as we continue to pursue a more aggressive role in our credit card business. We achieved a 9.5% increase in the number of cardholders to reach 7 million, a new milestone. Suburbia, in particular, grew its cardholder base by 18% to reach 1.5 million accounts. Furthermore, the share of sales with our own credit cards during the first nine months of 2023 was 48.3% in Liverpool. This is 240 basis points above a year ago, while in Suburbia, it was 30.6%, 350 basis points above.
Revenues from our shopping centers grew 15.8% year-on-year, as we were able to increase occupancy by 2 percentage points to reach 91.8%, and we continued to see healthy growth rates in the number of visitors to all our shopping centers. Our consolidated gross margin of 41.6% was 200 basis points over a year ago, as the business segment mix effect, together with above-mentioned improvement in our retail margin, contributed to this result. Operating expenses without bad debt provisions and depreciation grew 13.5% year-on-year. The main factors behind this increase were once again payroll expenses, as we continue to face wage pressures, and we have increased our headcount in both the digital and the technology departments. We closed the Q3 with an NPL ratio of 3.5%.
This is 65 basis points above a year ago, and we were unable to offset the higher entry rates that we faced early in the year. To note, the NPL ratio for Liverpool was 3.3%, while Suburbia closed at 6.1%. As you already know, we decided to make an important change to the way we account for our bad debt provision in our current quarterly P&L during this year. Accordingly, in Q3 2023, we provisioned MXN 664 million, double the amount that we posted a year ago. As we explained, this accounting change does not represent a material effect in our full year figures. For perspective, in 2022, the cumulative budget provision for the first nine months of the year was only a third of the total year.
Our coverage ratio at the end of the quarter was 10.4% of the gross credit portfolio, and this is 10 basis points below a year ago. The balance of the bad rate reserve represented 3.3 times the NPL balance. Our Q3 EBITDA of MXN 6.9 billion was 12.9% over a year ago, while our EBITDA margin was 16.8%, 50 basis points above the same period of 2022, as a strong consolidated gross margin allow us to more than offset the reduced operating leverage and the significant increase in our bad debt provision. Net profit increased 29% year-on-year.
If we exclude the 40% improvement that we saw in our net financial expenses, which was mainly due to FX, our Q3 net profit was 19% over a year ago, reflecting the aforementioned strong operating results and a significant improvement in the contribution from Unicomer, albeit from a low base. As I stated at the beginning of this call, we continue to move forward in all our key strategic initiatives to strengthen our omni-channel ecosystem. The digital GMV in the Q2 was 23% over a year ago, and our digital share was 23.4%, 240 basis points above the same period last year. Monthly active users of Liverpool Pocket increased 10% and downloads grew 6%. Total visits to our digital platforms increased 22%.
Our marketplace GMV grew 62% year-on-year, and we closed this quarter with 34% more sellers and 41% more SKUs. For perspective, almost half of our digital catalog is now coming from our marketplace. During the Q2 , the digital orders that were delivered in 48 hours or less grew 28% year-on-year and accounted for 45% of the total orders. The share of Click and Collect was 38%, 4 percentage points above the same period last year, and direct store deliveries were 27% of total home deliveries, 1.7 percentage points above a year ago. In the case of Suburbia, our Q3 digital share almost doubled to reach 3.3%. We now have a digital kiosk in almost 40% of our stores, and we have developed fulfillment capabilities in all the Suburbia store base.
Regarding financial services ecosystem, we continue to roll out our personal loans for our best Liverpool cardholders. We closed the quarter with a Liverpool Cash portfolio of almost MXN 700 million, and this is eight times the balance we had a year ago. In the case of Suburbia, the Minipagos product is now available in all Suburbia stores. Cash flow from operations in the quarter was MXN 2.2 billion, and this was significantly above the negative MXN 329 million that we posted in the same period of 2022, due to the abovementioned favorable operating results and lower working capital requirements. CapEx during the quarter was MXN 2.5 billion, and this brought the cumulative investment to MXN 5.9 billion, almost 30% above a year ago.
About half of this amount was invested in our Arco Norte project, and another 31% was allocated to new stores, remodeling, and expansion projects. Importantly, the remodeling of Liverpool Santa Fe, one of our flagship stores, continues as planned. At the end of the quarter, cash on hand was MXN 14.9 billion, and our net debt to EBITDA ratio was only 0.37x. Regarding dividends, the first installment of MXN 1.57 per share was paid back on May the 26th, and the remainder of MXN 1.04 per share was paid just recently on October the 13th.
In terms of new stores, we opened two new Suburbia stores during the Q3 , and we have just opened another two during the first half of October. There are still four new openings for Suburbia planned for the rest of the year, to finish 2023 with a total of 10 new Suburbia stores. During the Q3 , we also opened three new Liverpool Express units to reach a total of 14. Finally, on September 6, Unicomer formally filed a request with the Banking Regulatory Agency in Peru, the [Foreign language] , to withdraw from its intention to acquire [Foreign language] . Concurrently, Unicomer signed a termination agreement with Scotiabank Perú for this transaction.
That's it in terms of reviewing our performance during the Q3 . Now, before we move to Q&A, let me share with you some other exciting news.
As you probably read, we were included in the Time magazine and Statista 750 Best Companies of the World listing. We were number 4 out of 11 Mexican companies included in this global ranking. The factors considered to prepare this list were employee satisfaction, revenue growth, and progress in the ESG initiatives. Merco Talento just recently named El Puerto de Liverpool as the best company in terms of reputation and talent attraction in the self-services and department stores category. Also, on October seventeenth, Merco published its annual ranking of the companies with the best reputation in Mexico. El Puerto de Liverpool occupied the ninth place, an improvement of 9 positions versus the 2022 ranking.
Furthermore, the IGDS, which is the Intercontinental Group of Department Stores, recognized Liverpool in its recent fourteenth World Department Store Summit, which was held in Dubai a couple of weeks ago, as the runner-up in its most innovative department store in the world award. This competition was open to department stores across the world, from small to large, from premium to luxury, evaluating their impact on customers, employees, community, and stakeholders in general, as well as the digitization and innovation over their businesses. In closing, we're encouraged by the strong operating results we delivered in the Q3 and the momentum that we have achieved in all our strategic initiatives. We believe we're ready for the upcoming holiday season and are looking forward to serve our customers everywhere, every day, for life. Now, let's move to Q&A. Thank you.
Thank you. We will now conduct a Q&A session. If you would like to ask a question, please press the Raise Your Hand button located at the bottom of the screen. If you are connected via telephone, please dial star nine. We remind you that all lines have been placed on mute. When it is your turn to ask a question, you will be unmuted. If you have placed yourself on mute, you will need to unmute yourself to ask your question. We will now pause for questions. Our first question comes from Ben Theurer. Please state your company name and then ask your question.
Yeah. Good morning, this is Ben Theurer from Barclays. Thank you very much for taking my questions. The first one, I'd really like to understand a little bit better some of the dynamics you're seeing in the markets in regards to some of the consumer behavior, downtrading. How do you feel about the upcoming holiday season as it relates to the necessity to be aggressive on promotion, to drive ticket traffic into the stores? You flagged, obviously, the soft lines continuously driving some of the traffic recently, but how do you feel about the upcoming season as it relates to the need to invest in promotioning? That would be my first question.
Yes, thank you, Ben. Well, regarding the question on downtrading, we have not seen any, frankly. When we mentioned that, , the key driver for the increase that we saw in same store sales in the case of Liverpool was basically traffic, since the average ticket only grew 0.4%. It was basically flat. That, the driver behind that flatness, let's say, in the average ticket is more related to the business mix, as soft lines grew basically at two times the rate that the hardline categories grew. And that was the key driver of the growth in same store sales.
That's why the average ticket was flat. The average ticket, in the case of the softline categories, is much lower than the hardlines. In fact, I mean, looking at the numbers, for example, the designer brands, as , we don't carry, , the ultra-luxury brands, but the designer brands that we carry in all our stores are doing pretty well. And most of the brands that we have, , on the high tier are also moving nicely. So, again, we don't see any evidence of customers in Liverpool doing any downtrading. Now, regarding your question in terms of the upcoming holiday season, we feel, , that we have, , a very strong promotional plan.
Since we also finished the Q3 with very healthy inventory levels, we frankly don't have the need to be very aggressive on the holidays in order to push the merchandise. That's one very very good news in terms of the profitability that we're expecting for Q4. So, as usual, we are planning to have, , like a very strong promotional campaign for both the Venta Nocturna and Christmas, and also especially the Buen Fin, which is coming now just a month from now, basically. So we're feeling in with a good shape.
And again, because of the discipline that we have had on the inventory side, we don't feel that we will have to be going overboard on the promotional, on the promotional side.
Okay, perfect. And then, my just quick second question is related to the operating expenses, and you've highlighted obviously some of the investments, logistics, digital, people. How much of an impact do you expect into the next, whatever, Q2 to Q3 still to see from the increase from the wage increases and the change in the holiday schedule here in Mexico? How much of an incremental headwind do you think this is going to be?
Well, unfortunately, I think that the next both Q4 this year, and frankly, I also expect the same pressures for all 2024. We continue to see a lot of pressure on the payroll expenses for, we'll probably have once again a double-digit increase in the minimum wage, which is gonna be announced in the next weeks. As far as I know, , private sector is pushing for a 12.5%, but I think most likely it will be close to 20%, since it's gonna be the last year of the current administration. We continue to have the pressures of the one extra percentage point that has to go into the pension plans of the employees.
The reform to the vacation is already, , in the base, so that's not gonna be additional pressures. But importantly, the minimum wage also, , forces us to review the salaries for all the lower levels of organization. So there's also like an effect in those levels, not only the people that only earn the minimum wage. So, and of course, there's a major risk, which is currently still not approved, but I'm sure , there's a discussion going on in the Mexican Congress about the reform of going from 48 hours to 40 hours.
And that, we probably have a, , like, if it comes to pass in the Congress, that's gonna have a major effect in terms of how we manage our payroll expenses. So that's just a risk. As of this point in time, it has not been approved, but it's certainly something that we have to watch out.
Okay, perfect. Thank you very much for that.
Thank you.
Thank you. Our next question comes from Andrew Ruben, from Morgan Stanley.
Hi, Andrew at Morgan Stanley here. Thanks very much for the question. I just wanted to dig in a bit more on the gross margin. I mean, it was a historically strong figure for, for your business, and you mentioned some of the, the mix effects, some of the improvements in the retail margin, but trying to understand these drivers, if this is a level we should think as reasonable to, to hold going forward, if there were some more temporary factors or mix items that you'd consider reversing, just to get some more clarity, given the performance in the quarter, would be very helpful. Thank you.
Yes, Andrew. Yes, there are two important drivers of the significant increase that we saw in the gross margin. The first one has to do with the pure retail margin, which increased 110 basis points. And that, again, the big driver there was. I think there were two drivers. One was the the fact that the softline categories continued to perform very well and well ahead of the headlines. And softline as have a high gross margin than headlines in general terms. So that's one important factor that helped us in Q3.
The other one was that because we had, we still have, we have had a healthy inventory position at the end of Q2, we were able to, , have a very good resource in the first stage of the promotional season to clear out all the spring/summer merchandise. So, the majority of the merchandise that we had, , to promote or to mark down, was moved in the first part of the promotional campaign. We didn't have that much product left for the latter stages of the promotion, where we, of course, do higher markdowns in order to finish the clearance season in good shape. So that's another factor.
I mean, a lot of the merchandise that we cleared out was sold in the first stage of the market period and instead of the latter stages. So those two things helped us a lot in terms of the retail gross margin. And the other one, of course, was a business mix effect, as both the financial services and the real estate business units continue to grow at very strong rates, double digit, high double digits, for both business units. So that was another help.
As we move forward, I would tend to think that soft lines will probably not continue to grow well ahead of hard lines. I think that things will tend to stabilize. Now we're back, basically, we're back to the business mix that we had between soft line and hard line before the pandemic. So I don't think that there's a lot of upside on that front anymore. Also, , the growth rates that we're seeing, both in real estate and financial services business unit, should moderate going forward. So that's also gonna be another, let's say, a headwind in terms of our gross margin.
Very clear. Thanks for the color, as always.
Thank you, Andrew.
Thank you. Our next question comes from Alan Alanis, from Santander.
Okay, thank you so much, and again, congratulations for the results. Alan Alanis from Santander. I want to follow up on the, the mention that you said that soft line is growing two times faster than hard line. Can you hear me there?
Yep, loud and clear.
Okay. Sorry. Is this a leading... is the fact that soft line is growing two times faster than hard line, a leading indicator that there's further deceleration ahead? Meaning, people are not buying as many refrigerators or televisions, and instead they're just buying apparel and perfumes and so forth? I mean, that would be the first question.
I'm not sure about that, but I think that, that the softness that we're seeing in hard line has, has a lot to do with the, with the, what we saw during the pandemic, , both the 2020 and 2021 and the first half of 2021. And, we saw, , like, a, a lot of people, , buying things for their homes. Buying computers, buying, , like, new furniture, new chairs, as, , equipment to do exercise at home. And, so I think that what we are seeing right now is still some kind of normalization, that people, those are not, things that you buy very frequently.
But as we are now almost two years behind that, I would tend to think that people, I mean, are going back again to take a look at these hard line categories. So I don't see that as a leading indicator. I think it's more of a normalization. I would think.
Got it. Okay, so it's more of an effect of base, base of comparison and normalization.
Yes.
And then my last question has to do with the... I mean, I don't like to ask questions to management about the stock price, but I think in this, in this instance, I think it's, it's appropriate. I mean, the Liverpool share left the Mexican Bolsa index, and, and that, that caused a big decline in the stock. And it's causing a lot of anomalies. On, on our calculations, your stock is trading below book value, which makes absolutely no sense. It is like if the market would believe that you have, that you have, losses to perpetuity, and you're trading at one third your historical PE multiple and so forth. So it's a big anomaly.
My question is, Enrique, how does management think about this issue, about leaving the index and the lack of liquidity, and is there anything to be done? I just want to understand the thinking of management, because I think that, I mean, I think that Liverpool, I honestly think it's a great company-
Thank you.
- and you're delivering great results. But we're seeing this other issue around liquidity and the lack of participation in the index that is impacting you.
Well, I'm glad that you wanna ask about the stock price, because in general terms, as management, we also don't answer questions about the stock price. I can tell you that, , like, we were frankly surprised by the fact that we are, I mean, just a few days before the bourse announced the new index, all the indicators were that we were gonna stay. But eventually, what affected us, as I'm sure , was one of the things that the bourse looks at to make up the index, which is what they call the weighted float.
In that regard, I mean Chedraui surpassed us by that measure, and that's why they got into the index, and we were out. Again, we were surprised, but there's not much we can do. Frankly, , the level of trading in our stock that we have seen since then has been quite high, frankly. Of course, a lot of people are selling, but also, I mean, a lot of activity. And our focus is, , to execute our strategy. I mean, that's what is in our hands, and that's what we're focused to do.
We're trying to do our best in order to make sure that the company stays competitive, that we deliver on the expectations that we and the market has in terms of business results. That's, again, 100% of our time is devoted to that.
Yeah, and I think that's the right thing to focus. Maybe the high liquidity that we've seen recently is more of index funds that are just unwinding their positions, and then things will normalize soon. Again, congratulations for the results, and thank you for taking my question.
Thank you, Alan.
... Our next question comes from Camila Acevedo. Please state your company name and then ask your question.
Hi, everyone. Good morning. Thank you for taking my question. I'm Camila Acevedo from UBS. So could you please comment about the competitive and promotional environment year to date? And how do you see your online competitors behaving? Also, I would like to hear your thoughts on how is the marketplace contributing to your online offering, and if you could comment on how you choose your sellers, SKUs, and if you have any specific plans for 2024, that would be very helpful. Thank you.
Yes, thank you, Camila. Well, , competitive environment, as always, I mean, in retail is not like competition is tough. I mean, as I like to say, I mean, probably the retail market in Mexico is the most competitive industry in the country. I mean, as , I'm sure , I mean, there are a lot of industries where there's only one, two, or three players, and they... In our case, particularly being discretionary seller, as is the case of Liverpool, a department store, we compete with the self services in several categories, compete with specialty stores. In several categories, we compete with the Costco and the Sam's.
We compete with, now, obviously with the pure players on the online business. So it's a very competitive market, but we haven't seen, , any, , like, the weird, I would say, behavior in terms of, people going, like, , crazy on promotions or anything like that. I think that we're all behaving, let's say, on that front. I think that we're managing our businesses depending on our the different strategies. But again, we don't see anyone doing some, , like, very aggressive promotions and being out of whack with the rest of the market. So I think that that's good news.
In terms of the online players, of course, they continue to be very aggressive, not only in our case, Amazon, Mercado Libre, which are the two huge ones. But I'm sure also that, , Shein and Temu just recently are putting a lot of focus on the Mexican market. And I'm sure, although there's no public information on them, that they are growing also a very quite healthy growth, which of course, was one of the things to watch out for in the next several quarters. Now going to your marketplace question, well, marketplace is posting very good results.
We expect to finish the year with the GMV in the marketplace growing basically 40% year-on-year, and that's basically in line what we said at the start of the year. So we're gonna be right on the money in terms of the growth that we expected. As I mentioned in my opening remarks, marketplace is now represents almost half of the SKUs that we have in our catalog. And I'm sure you also know that in our case, the marketplace or the three P offer, we see it as a complement of our one P or the merchandise that we sell in our stores. So it's not an open marketplace, so we're very careful in, , the sellers that we invite to become part of our marketplace.
Not everyone can start selling just right away in our marketplace. It has to go through a vetting process in order to make sure that it really complements our 1P offer and not compete head-to-head with, again, what we offer in our sales floor. So that's, that is basically what I can tell you in terms of competition marketplace.
Great. Thank you very much.
Thank you.
Thanks. Our next question comes from Irma Sgarz from Goldman Sachs.
Hi, thanks. Hopefully you can hear me now. Thanks for taking my question. I wanted to just follow up on Suburbia. It was nice to see some slight market share gains again, and I think this was really interesting in a context that, as you'd mentioned, at the lower end of the price points in the market, there's new online competitors pushing quite heavily into that market. What would you sort of... What would you say has really been sort of the few key points in terms of you cited customer experience and the campaign around sort of rediscovering Suburbia?
But in terms of sort of mix and price points and merchandise, what would you say were really sort of the key points in Suburbia that are driving customers back, and what's sort of the early response that you're hearing from customers? And then maybe also with the online competition, again, like, I think, there's obviously, as you say, quite a lot of focus on the download stats or the MAU stats that Temu has garnered over the last couple of months. I understand that for Liverpool's business overall, there's much more of a higher, higher end tilt or a higher average average order value or average ticket and more of a branded mix.
In those categories where there's less branding and where there's maybe some degree of overlap, do you see any impact so far? Or do you think that's sort of competition that is ultimately mostly away from your Liverpool core mix?
... Yes, thank you, Irma. I mean, thank you. I mean, we're also very glad to see that, , at Suburbia, , a slight acceleration in terms of the, sequential acceleration quarter-over-quarter on the same store sales. We now have, basically, completed all the plans that we had in terms of, changing the layouts, changing the in the stores. Making sure that they look like, very clean and very nice, with nice colors on the, on the walls, and, so that, I mean, we are- we, we feel that, , that that's why we launched this campaign, and we feel that the, customers are, are noticing that, that the, Suburbia stores are looking better than ever.
So I think that was, that's one of the things that's helping. We are also—I mean, we have taken a very thorough look at the merchandise mix. At some point in time, we thought that Suburbia could be like a full department store, and we put a lot of categories, which frankly were not in the mindset of a Suburbia customer. For example, furniture. And frankly, it didn't work very well. So we have been taking a very thorough look at the categories we want to sell in Suburbia.
And we have a very choiceful in terms of the hard lines that we think have a right to be in the Suburbia business mix. So we have done a lot of cleanup. That's finally behind us. And, with the hard lines that we continue to sell in Suburbia, some like TVs, like small appliances, that sort of thing, the growth rates that we're seeing are very nice. Both general merchandise and hard lines have been growing ahead of soft lines in the last Q2 or Q3 for Suburbia. And then that reflects the fact that we have done an effective, , like a cleanup job.
We still have a lot of ground to cover in Suburbia to do a full turnaround. We have done a lot of changes to the organization, particularly to our merchants. We have changed a lot of people from the very top of the buying organization to the middle managers. And as , that takes almost a year to see, , the decisions that we are taking now with those new managers. They will be seen at the Suburbia sales floor or digital channel a year from now. So, again, it's we will have to be patient and...
But we're convinced that we have taken the, , the right decisions, and the business results will continue to improve. Now, in terms of online competition, in the case of Suburbia, I mean, Suburbia, of course, I mean, competes again, like the case of Liverpool, with a lot of different players on the lower socioeconomic levels. And I think that what's different with Liverpool is that also the informal market, in the case of Suburbia, is a huge competitor. And based on, , the information that we have, which is not, certainly not, , like an official or public or very hard data, but at least on an anecdotal way, evidence, we see a lot of growth on the informal channels and a lot of...
So that's something to watch out, and it's on fair competition, but it's something that we now have to take into account. And on top of that, you of course have the SHEIN, very, very aggressive, very, very low price points. And Temu, I'm still not sure. I mean, Temu, frankly, we're still trying to learn about that, and I still cannot give you a precise answer of what's the threat behind the Temu, which is more, is it more for a Liverpool customer, or is it more for a Suburbia customer? Frankly, it's still too early to tell.
Great, that's helpful. Thank you so much.
Thank you.
Our next question comes from Nicolás Riva. Please state your company name and then ask your question.
Thanks for the chance to ask questions. Nicolás Riva from Bank of America. So I have two questions. The first one, if you can comment on your debt maturity for next year, the $300 million bond, which I believe is the only debt maturity that you have. In the past, you had said that the plan was to pay that bond using your liquidity, that you were not planning to refinance that in the bond markets. If you can confirm if that's still the case? That's my first question. And then my second question on your credit card business. The NPR ratio increased 50 basis points in the quarter. If you can discuss a bit your risk appetite at the moment.
I believe that you said earlier in the call that we should expect growth in your financial services business to decelerate in coming quarters. But if, if you can discuss a bit the prospects for growth in the credit card loan book in coming quarters. Thanks.
Yes. Thank you, Nicolás. Well, in terms of the maturity, you're absolutely right. I mean, we have a $300 million bonds, which is coming due on October 2024. It is swapped to pesos at around 13 pesos per dollar. So in pesos, is close to MXN 4 billion, more or less, a little bit less below that. And yes, we're planning to use our cash on hand to pay the bond. As things look right now, based on the financial plans that we have for next year, we don't envision that we will need any financing, new financing, to execute our plan.
So that's still what we have in our plans. Now, regarding the credit cards, , we continue to see very nice growth in our credit portfolio, almost 20% year-on-year. There are two drivers there. The first one has to do... or three drivers. The first one has to do with, of course, the performance of the retail side of the business, which has been posting good growth rates. The second one has to do with the share of the payment methods that we see in our stores.
As I said in my opening remarks, we're seeing very high share gains, both in the case of Liverpool and the case of Suburbia, with record high, , penetration of our own credit cards in the payment mix of both Liverpool and Suburbia. So that's the second driver. And the third driver has to do with the new products, , things like the Liverpool Cash personal loans that are growing nicely in the case of Liverpool or the Minipagos consumer credit for Suburbia. So that will be the third driver.
What I was saying regarding the outlook for the growth of the financial service business for next year is that we don't think that we will continue to see this 20% growth on the credit portfolio for many quarters, frankly. Most probably, the share gains in terms of the payments will stabilize. And so we think that the portfolio will be growing in 2024 below what we have seen in 2023. So that's why the revenues coming from the credit card will post lower growth rates because of the less dynamic, let's say, growth rates on the overall credit portfolio.
In terms of NPLs, the increase that we saw over a year ago, which is almost 60 basis points, that basically has to do with sort of a bubble that we saw in the entry rates, delinquency entry rates at the very start of the year. We will most likely, , write off that bubble now in Q4. So we expect to close the year, in terms of NPLs, a little bit below the 3.0% that we stated as a guidance at the start of the year. We'll probably be around 2.8-2.9% in December 2023. So that's gonna be good news. Still, , a very low NPL ratio compared to the historical standards.
After that bubble that we saw in the start of the year, we have seen healthy payments from our customers. We frankly don't see any need to be more conservative in terms of the origination or the appetite that we have to grow our portfolio.
Thanks very much, Enrique.
Thank you, Nicolás.
Our next question comes from Melissa Byun. Please state your company name and then ask your question. Melissa, you to unmute yourself. If you're on a phone, you're gonna need to use star six. Otherwise, on your unmute button.
Hi, I'm so sorry. I didn't realize I was muted. So good morning. Thank you so much for taking my question. Melissa Byun from Bank of America. When it comes to commercial real estate, what concepts are showing the greatest demand, and how are you thinking about occupancy rates and rental income moving forward? And then if I could just ask on the gross margin side, as you discussed, some of the mix and inventory levels and promotional, or need for markdowns, how much of a tailwind has the effects been? And can you just remind me if you have any sort of hedges going forward?
Yes, thank you, Melissa. Well, on the real estate front, what we see is that in terms of the fashion malls, the trends are more and more to have like, more entertainment, more services, in that regard nicer restaurants. So, I think that, there's a clear differentiation now in the successful fashion malls are the ones that have this very diverse mix of tenants and can offer the visitors to all these type of shopping centers a very diversified mix between retail and entertainment, being cinemas, very nice cinemas or a very nice restaurants and so on and so forth.
So, again, I think that the gap is widening in terms of the performance of these fashion models with this diversified business mix than the ones that are get behind that kind of diversification. In terms of occupancy rates, I still, we still have like, a way to go. We have certainly improved since the low levels that we achieved through the pandemic, where we had a lot, a lot of like, tenants that were leaving their space because they were having a tough time financially. Now, things are... But we still, , below the 92%.
We still have several shopping centers where they are maturing, that we were recently expanded or renovated. So that's one of the things that we are putting a lot of attention in terms of commercializing that space in order to reach 95%-97%, which is our eventual goal in terms of occupation. So that's more or less a color on the real estate side. And in terms of the growth margin side, yes, we certainly have had a tailwind in terms of FX, as you're explaining. We don't have any high hedges for... We only have hedges for the financial debt. We don't have any hedges for the merchandise mix.
We have been from kind of in a long position dollar to peso because like 15% of the cash on hand that we have is in dollars, but we not necessarily use it as a hedge on the merchandise. In fact, it has been having a negative impact because of the stronger the peso. And just recently, what we have seen is that particularly in some of the hardline categories, several brands where the customer looks at the prices both in the States and in Mexico have been adjusting the prices down in order to make sure that the gap that the customer sees is not as wide as at some point it was.
So we have seen that in the case of Apple, for example. But just one example, I mean, a lot of the suppliers that sell us that type of merchandise are taking a very thorough look to make sure that there's not a big differential between the prices that customers see in the U.S. versus Mexico.
Okay, thanks so much. That's great color.
Thank you.
Thanks. Our next question comes from Iñigo Rodríguez, from Afore Coppel.
Hello, can you hear me?
Yes, Iñigo. Loud and clear.
Thank you, Enrique, and congratulations on your results. I just have one quick question, and it's in regard to your BYD partnership. On the last earnings call, you mentioned that you were expecting to sell 17,000 units by year-end. Are you still confident about this number? And my other question is: Do you have any plans on expanding this business to other stores?
You are talking about, BYD, you said? Sorry.
That's, that's correct. Your BYD partnership.
Yes. Well, now, BYD has been, I mean, the sales level that we have seen in BYD have been below what we expected. What we have in mind right now for the full year for 2023 is that we will be selling around 350 units in total. So that's certainly well below what we had in mind at the beginning of the year. There are several factors that has to do with that. One is that there was a big delay, , in some of the openings that we had in terms of the exhibitions and dealerships.
The other one has to do with the fact that there have been also significant delays in the marketing campaign from the brand. And BYD has been taking some time in order to make sure they have, like, a larger base of dealerships in order to start positioning the brand. As I'm sure , BYD is basically nobody knows about that in Mexico. It's just a new brand. So that has also been a headwind in terms of the demand. And the final one has to do also with the models. I mean, there has been some delays in the less expensive models that we were planning to have.
So, that's more or less the picture in terms of BYD at this point in time. Today, we have 3 agencies and a few showrooms, and our plans for next year are to open 4 new dealerships and bring a new approach to the market, particularly the plug-in hybrids, which we don't have in our current offer. That will show me a big boost in terms of customer interest. So, I still very early in terms of BYD.
Thank you, Enrique, and again, congratulations on your results.
Thank you, Iñigo.
Thank you. That concludes our question and answer session. I would now like to hand the call back over to Enrique Güijosa for some closing remarks.
Thank you, Anila, and thank you all for your questions and making this very lively. And we'll see you with our Q4 results in a few months. Thank you very much. Have a good day.
That concludes today's call. You may now disconnect.