Earnings Call: Q3 2021

Oct 20, 2021

Quarterly report

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 Libertori's Q3 2021 conference call. There will be a question and answer session after the speakers' opening remarks and instructions will be given at that time. Today, we have with us Mr. Enrique Ruizosa, CFO of Puerto De Legal Point Mr. Antonino Ritcal, Chief Digital Officer, Alberto Delibertoni Mr. Jose Antonio Diergo, Treasury and IR Director in Mr. Andre Gerynyan, Investor Relations Officer. We will be discussing the company's performance as per the earnings release for the Q3 2021 issued yesterday. If you did not receive the report, please contact the Resideo's IR department, and they will email it to you. Note that this call is for investors and analysts only. Investors from the media will not be taken, nor should the call be reported on. Any forward looking statements made during this call are based on the information that is currently available. They 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 Envato del Liberum's most recent annual report. Please refer to the disclaimer in the earnings release for guidance on this matter. I will now turn the call over to Mr. Enrique Riosa. Please go ahead. Thank you, Daniella. Good morning to everyone. Thanks for joining us and welcome to Liverpool's Q3 Antonio Guichard is joining us for this conference call. As you know, he is our Chief Digital Officer. I'm going to share with you the highlights of this business Right after I provide some perspective on the overall company results. Afterwards, and as usual, we will open the session for Q and A. Importantly, throughout the Q3 and similar to what we have observed in the previous one, all our stores and shopping centers were open And operating with few nonmaterial restrictions. We saw a significant increase in our retail revenues continue to 2020 as traffic to our stores continues to normalize. Dayport total sales were 21% above the same period ago, And our top line categories, in particular, increased their top line more than 30%, recovering some of the ground they lost due to the pandemic. Subodia's total sales on the other hand were 31% a year ago. If we compare same store sales against the Q3 of 2019 before the negative effects of the pandemic, the airport stands out as it posted a 9.2% increase. Our retail gross margin for the quarter was 30.7%, 5.5 percentage points above 2020. And this projects, number 1, A reduced promotional activity as last year we were still offering significant markdowns and separating employees in check. Number 2, a more profitable merchandise mix. And number 3, lower logistic expenses Home deliveries were down almost 30%. It is important to highlight that even if we compare our retail gross margin versus 2019 posted an 80 basis point improvement. Our credit business revenue was 13% below The Q3 of 2020, even though our gross credit portfolio grew 7%. The reduced volatility of our portfolio This is explained by a higher share of stockholders that pay the full balance at the end of the credit cycle. Lower interest rates applied to customers enrolled The release programs that were put in place at the early stages of the pandemic and finally, creating funding of riskier programs such as cash advances. During this quarter, an important milestone was achieved as the Board exceeded 1,000,000 500 Only 3 years after the spread of launch. The measures that we put in place to control risk continue delivering excellent results ARS 253,000,000, 90% below Likely to be the last quarter that we post such a low provision in our P and L. Our data research portfolio and 4 times are 90 plus days overdue banner. Our EBITDA for the quarter was 5.23% above 2019. Profitability is due to the above mentioning in exchange leverage And the low level of our debt situation. These were all partially offset by noise. Inventory is built up for the holiday season and, importantly, Balance as of December 30th was Ps. $24,001,000,000 or 34 percent of Algeria's original outstanding amount of This allowed us to flatten our debt maturity quarter. The tender offer resulted in a negative effect ARS 172,000,000. ARS 172,000,000. We decided to keep in our books the cross Currently, we chose not to unwind at this point. During September, we have Marcos request that call our construction suppliers It was taken place by the Ministry of Labor. No exception. So we expect to catch up in the next several months and start on September 28th. It's important to mention that We closed the Liverpool Plaza del Sol store that was basically across the street of the new one. Since we own this building, we will relocate the Surubia store that we have in In Porto Sur Urbia, we have opened 6 stores throughout the year, and we expect Our sales grew more than 7% versus last year. We get our operations closed. Comparing to 2019, We grew for more than 3 times. This important growth is mainly due to market Also, our cellular base product more than 40% by 2.5 times. And also 30% of those deliveries are done by our own staff the quality offered by the dealer full price. To mention, on average, Hello. The next one, please. So it's important to mention that we have implemented an important technology advantages to all of our channels. I would like to start by talking about our Google Cloud partnership. As you mentioned, we're the only Latin American company that has This has allowed us finally to exploit downtime inventory. The mix allow us to have 122 stores. The sensor fulfill most We have now implemented cost of 10 day deliveries. So now we're able to craft. Also, we can go to the next one. We're very proud to talk to you about personalization. And this way, they can have the omni channel order status happening offline and online in the As a payment method in the e commerce channel, also giving the rewards through this channel, and also we have the e wallet Monadero implementation. So our customer can use their own Monadero. The Subbuvia app, we renew all the technology that's supported Subbuvia.com. The technology that we've been working for Those are the final numbers for the operations during the last tranche. Thank you, Domingo. Finally, I would like to mention that our Board of Directors approved the payment of the dividends or Ps. 1.50 per share, our pending since our shareholders approved them On March 18, they will keep a important settlements for equal amounts. The first payment will be October 29th and the second payment will be on January 28, 2022. Thank you very much. Let's move now to Q and A, please. Thank you. We will now conduct a Q and A session. If you are connected via telephone, please dial star 9. 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 questions. We will now pause for questions. Our first question comes from the line of Anisak throughout the entire suite. Please state your question. Hi, team. Actually, my question is from that, The reduction in goods sold as a percentage of sales was really impressive. So I was wondering if you can provide some details on how much it's explained by mix improvement, Other categories, higher margin categories improving? And how much can be explained by that reduction in logistics costs? And what's the potential for further debottlenecking in the DQ? Thanks. Yes. Thank you, Vanessa. I would say that more or less, 1 third of the income improvement came From the logistics, reduced logistics expenses. The full service came because of Actually, it was a combination. I would say that we have more favorable mix because as we said, the top line senior We're growing 30% year on year and also so we have a significant growth of this previous year to 31%. But on the other hand also, we have been doing less promotions because our inventory is already in very good shape. And that has also helped us. So in one sense, the improvement will come from logistics and the order to service funds of our combination with lower margins and Okay. That's great. So when thinking about the outlook, what And we expect going forward, there's obviously too room for an incognito mix. I'm not sure if in our discounts or less promotions and there's still some room. And what about logistics costs? Well, yes, in terms of logistics costs, we have a number of initiatives But, I mean, the idea is obviously to make our participants just more productive. So we will continue to work, as we have said, for the last several quarters on increasing The share of the home release that we do directly from our stores still has a significant potential. And the improvements that Antonio mentioned in our technology, both on the app and the web, they allow us Basically to show our customers the inventory is actually in the store where they prefer to show They are very close to. So we believe that that will make, like, our customers choose The merchandise that is closer to their homes. And in that sense, we allow us to Delivery, that merchandise right from the store, which as we can tell out in our press release, the cost of home delivery Directly from the story is that 70% less expensive than the ones we do from a distribution center. So that's We think that with a normalization hope, hopefully we don't see a forced wave in the pandemic and the The traffic to the store continues to normalize. We can collect closed September around 26%. We're still way below the 45% that we have in the pandemic. I don't think we will go back to the 45%, but we expect to be In the low service for next year. So that also should help us in terms of delivery. And of course, as we have said, we are working In the fulfillment centers, we started through payment centers with hospitals who are running 2 of them By the middle of next year and the start of our planned economic projects in the Q2 of 20.20. So Most initiatives, Vanessa and VSO is to have a more productive, more efficient supply network and lower logistics costs. In terms of our margin, what I can tell you, our EBITDA margin, we think that we will close this year Around 15%. That will be still be like 150 basis points below The actual number for 2019 and for next year, we think that we will improve To around 5%, 15.6%. So we will see like a 50 basis points for next year EBITDA margin improvement. But we still it was like 100 basis points below the actual 2019. So We still have probably another couple of years working on the business that I just said in order to recover the loss around interest of EBITDA margin. Thank you. Our next question comes from Luis R. Villar from GBM. Please state your question. Guys, good morning and thanks for taking my question. I'm not letting you resolve. Did you just call that the announcement that you made Regarding the digital sorry, you launched the end of the quarter. Can you share with us maybe ballpark figures for directionally? First, how large are you planning seeing the delivery demand be in the future? And secondly, what changes in terms of Processes, logistics, maybe in the store. Are you put in place to ship the same day delivery and you should expect some pressure in margins Let me take a closer answer your question. On the amount of same day delivery, as Sandeep mentioned before, Our assembly delivery with the technology management that it's putting was closer to our customers based on their location order So that same day delivery is growing exponentially. We started the year with almost, Let's say, below 10% of our orders. The last month, we were able to go to almost 20% of our orders. So our same day delivery rates, it needs to continue in the next couple of months. Around 20% of all our orders being done on same day delivery. And you mentioned the process. Well, as Adika mentioned, the last mile delivery cost from the store is around 20% less Then fulfilled by another center. So yes, the process has changed completely to the store level. Now what we're doing is the stores We're built to receive merchandise and now the whole process has changed. The store has also Let's say, a small fulfillment center and they have changed all the processes to cost to take up orders From our logistics part within the store. So yes, the whole process of the 122 stores has changed. The whole technology has changed. And now we're expecting our senior leaders to be around 20%. Thank you, Anthony. So, I mean, would you say that that currently the 110 key stores, contractors, the 110 key stores having Maybe for business center within them? Yes, we can say that all the process within the stores has Change in order for them to be able to process order faster and to take out merchandise I would just highlight that, to the question, Luis, that just to clarify that we use our stores as fulfillment centers, but We're using basically the merchandise on the same store. So it's not like we're like closing part of the store And making our warehouses in this whole bigger, the idea is basically to leverage the inventory that we have already displayed For our customers, I mean, if we receive a digital order, it can be for sale using that same Merchant noise, I mean, just to clarify what we mean by using those programs as mini fulfillment centers. Our next question comes from Antonio Hernandez from Barclays. Please state your question. Hi, good morning. Thanks for taking my question and congrats on your results. My question is regarding logistics, digital supply chain disruption that is We wanted to have to get more light from you, maybe from a product mix perspective and also considering the Inflation phase since the war, are you expecting maybe a shortage of specific types of Products from the upcoming months, especially considering the sales season ahead. Yes. Thank you, Antonio. Well, the view that we have on our retail suppliers is that we're in a very good shape for the We have made what we can in order to advance our purchase orders As much as possible for the categories where we are seeing the shortages that you're mentioning globally because of the issues With the supply chains that are affecting, especially the Things will have a chip in them like the computers and laptops, cellular phones and so on and so forth. So, our lines have been very active going to our branch as much as possible to now purchase orders in order to secure The amount of product that we need for the holiday season. And again, we feel that we are in good shape On an overall basis, we are foreseeing some shortages in things like both of our, For example, Nike and Adidas, they have already told us that they produce a lot in countries like Japan or China Due to the fact that all of the solutions in the factories due to the pandemic, they are indeed facing some Supply restrictions. And in that case, we will probably have more 30%, 40% The stores that we have hoped for, both are you going to read based on what we think, but on a year over year basis, It's not going to be a normal table for the results we're expecting for the Q4. That's But basically, the most important in terms of our supply spells. Okay. And in terms of overall, like, hard line top line and electronics maybe. So those are the only highlights, I guess. And my follow-up would be regarding interest on competitors. I know you have different strategies. But are you expecting maybe a gross margin recovery in the was it by a couple of quarters? For the Yes. Now, we'll take a quick question. We have obviously We need to be able to proceed positive growth figures in our top line For the credit card, this is all the new measures that we put in place to control risk. We are saying that you know a very high priority To control our NPS, as we have explained in the beginning of the call and in our press release, we have reached record low numbers for NPS below 3%. That's the numbers that we have not seen for many, many years, probably more than 10 years. So the challenge now is to start growing our portfolio again. So we will continue to be, as you know, As always, we will start again in order to open some of the pocket corners that we have, for example, Cash advances, we have been very, very strict because of the risk profile of the customers that do use Those kind of problems. So we're trying we're already trying to free up some of those The growth will take place because of the pandemic. And we are indeed expecting that for next year, Our portfolio should grow in the low double digit number, close to 10%. And Our top line for the credit card business will reflect that growth in the portfolio. So that's The expectation that we have for basically next year, I don't think that things are going to change substantially in the Q4 of this year. But Our next question comes from Alvaro Garcia from Click and Collect, you mentioned, I mean, obviously, the great new initiatives. I was curious if you saw an acceleration And sales on the bank of sort of the better position that at the same day and the 2 hour, have you seen acceleration of sales and the debt currently Yes, we've seen quite an acceleration. It's a process that is new, but what we've seen is an important Raise in our conversion rates in all of our orders. So yes, it's going as we expected. We are still doing some fine tuning with Great. Thanks, Anthony. I guess my second question And for the soft line, you mentioned you are 30% year over year, but it still seems like you're you're below 2019 level, it appears that you have that data point. And just general comments on clothing generally, if you feel the consumer, as they get back September, maybe you see a little bit of difference in October. Do you see that category is increasing in dynamism or just still kind of stuff? Thank you very much. I think in general terms, we're, you know, like, very happy with the fact that we saw a quarter we saw an acceleration of the dynamics in All are online categories. Perhaps the only one that continues to stay depressed is the one that has to do with Cosmetics, no, with the people wearing women wearing masks. They're not very keen on wearing any You know, like a cosmetic. So that's definitely still kind of depressed. And also, like a formal attire is still like We see a little bit of recovery, but obviously, it's still well below the levels that we have in 2019. Just to give you some color on the Liverpool side of the business. In the pandemic, around 51% of our sales We're for, I think, called our top line divisions, men, women's, Children and cosmetics and fragrances, and we also doing that particular accessories. That number went all the way down to 43% In 2020 for obvious reasons. And this year, We expect to get back to around 47%. So we will still be like 4 percentage points the pandemic for the full year. So our expectation is that for 2022, we will get back, Probably not all the way back to the Q1, but close to 50%. And that should continue to be more favorable in terms of That's great color. Let's hope we hit that 51% Our next question comes from Ulises Zaragoza from JPMorgan. Please ask your question. Hi, guys. Thanks for the stage for questions here. So, first one follow-up there on the financial business part. So, Any color you can share here on where you see kind of the NPLs trending towards the end of the year? And then after that, we have questions for the front coming of us. Yes. Thank you, Jesus. Yes, we are expecting our NPLs to We're very basically the same level that we reported in the third quarter. So we're expecting a 94% NPL level by the end of this year. That in turn We resort in the coverage ratios of around 11.3% of our portfolio And if you compare against our overdue balance, it's going to be a coverage of to 4.2 times. So we're still expecting to close the year with a kind of a conservative coverage Because of the uncertainty surrounding the recovery, you know whether there's a foreign break, so we're going to close it here Again, with a clear conservative approach. And as I stated in my initial remarks, this will probably be the last You know, for the FTC, such a low figure for the provisions in our P and L, we are expecting to close the full year With a provision of around ARS 1,500,000,000. So that means that in the top quarter, We will post a provision of close to ARS1 1,000,000,000, which compares to the little bit more than ARS700 1,000,000,000 We have provision for the 1st 9 months of the year. So again, that's our expectation. And that basically reflects the fact that our portfolio Growth a lot, as you know, in the Q4. So that's more or less the color I can share. In what we expect to close this year That is very helpful. And thank you for that. And on the second question, I had to report from Tiena. So I wanted To get an update, I think, I thought you were here with us. So an update there on what you shared in the Investor Day. So there, That's right. So any color that you can share on how this has evolved, kind of where we stand right now and how relevant Thank you, Odiges. Well, on our identified customers, we can see a plan. The first steps where you can see it is on the personalization part that I talked a little bit about. And right now, we are Already implementing that, so you will see a different offering product recommendation based On the knowledge we have from you, that's already been in place and it's working right now. Monadero is one of the fundamental parts to get to We are trying to put them all into a digitalization strategy so we can get to know our customers better. And it's going according to plan. The pandemic, of course, and the foreclosure did put us on a step back, but we're catching up pretty fast. And yes, we are still on our 90% goal. We are on track. And the first steps are the ones that I mentioned before, personalization and the details that you have also opened us to achieve that goal. Our next question comes from the line of Joaquin Mei from Itau. Please state your question. To unmute yourself, Puckin, you must press star 6. Hi. Good morning, everyone. I'm Russ and Lou. And thank you, Paul. Most of my questions have been already answered, but No. Just trying to get a better sense of your understanding on how we see your loan The last couple of quarters is growing very high teens and the credit revenue is still dropping 15% in the quarter. So I'd like to understand the phone number in the sense of how much in these promotions are increasing as a portion of the loan group. Yes, Joaquin. Thank you. Yes, as you're pointing out, Mitsui, in the fact that there's like There's a lack of, you know, like consistency, let's say, on how the growth that we're seeing or lack of growth actually, or negative growth that risk On the top line for the credit card business and the fact that we are finally seeing some growth in the loan book. So we have that lack of alignment, let's say, with, as you perfectly know, usually we see a certain line of our credit card business growing very much So what we have seen is basically, on the addition of what you already said, Based on, you know, into the pandemic and you know the effect that we have In the riskier customers, we see now a very high margin Of our portfolio, which is, as you're saying, people that pay basically the full amount And then they don't generate any interest. So the fact that we went through this, like this turmoil because of the pandemic, We have basically lost, I would say, like a lot of customers, which had a riskier profile. But on the other hand, we're very profitable In the sense that we generated interest on them and also we were able to charge for late payment fees. That again doesn't happen with, obviously, with the Palagos. They don't generate any interest and didn't generate any late payment fee. So that's an important And in terms of Pascalevos, usually we're around 15%, 20% passing over our portfolio. And today, they're probably in the 30%, 35% range. So that's an important factor. The only important factor is the fact that We launched the relief programs, especially around May of last year. Now we continue to offer them You know that to have people running into hundreds of day on time. We offer them, you know, like Profit amount per month reach and pay us slightly lower interest rate than the one that we charge for Ethical that are using our Regarding line of credit, so they also have there like negative impact in the growth of the portfolio. And finally, as you're saying, also the fact that Leopold has been selling very well. We're also seeing That's not a major factor. It's also negative effect, a slightly higher mix of Sales with the non interest feature, no promotion. So also it's not a problem. So those 3 or 4 things are basically part of explaining. And finally, what is the other thing that I mentioned My initial remarks that we closed things like the PachelaBank, which is a very profitable program, Body is very risky for all these reasons. So we are now trying to note that we are consuming our COLOR scores. We have basically no calls in place for board origination and behavior. So that we think will help us to see an interesting point. And For next year, we're expecting the top line for our financial business will be growing very close Our next question comes from Andrew Rubin from Morgan Stanley. Please ask your question. Hi. Thanks very much for the question. I'm interested to hear a bit more about the technology hiring and talent. You did mention in the release that into some key functions. So I was just curious how you're seeing the availability of talent overall, maybe how far along you are in building out the tech team And some color on where you might still have the greatest need for either hiring internal talent or signing up external ventures. Thank you. Andrew, thanks for your question. Well, the availability of talent here in Mexico, yes, that is one of our toughest things to do. Fortunately, we've been able to, One, maintain the talent that we have. Our rotation is pretty low, but also Well, there's a lot of dispute in getting the correct talent. We've been able to do so. Fortunately, we still have a lot to go. Clara, with the also with the change in the law, we basically increased our team are tremendously. We grew more than, let's say, from 50% of our talent has increased. And yes, we're still trying to get some of the talent that we've been able to manage so far. That's why we also TeamMab with Google that we believe is one of the best tech companies. We've done an exclusive partnership with them and we're leveraging on their latest technology. And what they've been doing is we're working a lot with the U. S. Team, the Montanubu based team with Google in order to implement health of technology With the texting that Liverpool has and also with some of our texting that we have based in India, and that's helping us a lot. What are our greatest needs in technology wise? Well, just to continue to fortify that team. And also, we need to continue to improve. And as you know, the technology moves pretty fast. And now we feel very comfortable with what we're doing and the tech partners we have to keep up with that pace. And actually, we're very proud to say that right now, I believe we are at the Front line and technology advantages and the power and it is not to Clouzera, we need to continue to experiment with them. We need to continue to learn with the tech companies and we need to continue to Our next question comes from Bob Ford from Bank of America. Please state your questions. Bob, you are currently on mute. Thank you. Good morning, everybody, and congratulations on the quarter. Sunita, your marketplace growth It's very impressive. How should we think about that going forward? And what can you do to sustain that stronger momentum? And as part of that, are there ways that you can take advantage of USNCA's $100 tax fee limit and leverage that cost to order tax arbitrage that was stated? Bob, thank you for your question. Yes. How are we going to sustain our marketplace? Well, we've also, as mentioned on the previous question, Our team has grown also tremendously and that has been given us the greatest effect to continue moving forward. We see Marketplace as one of the stepping Points for Liverpool Growth. Our goals are impressive. Our goals are to grow at least 3 digit numbers for the next couple of years. So how are we going to maintain it with the new things that we have in place, with all the technology we also have in place and also to continue to evolve. We are also looking at the advantages of cross border. We're taking it separately. As you know, we are not a fully open marketplace. We take really good care of our customers and of our brand names. So yes, we are looking, we are reviewing into it and we're taking The best actions in order to take advantage of the the first quarter you mentioned before. And Anthony, when you think about, like, the elasticity of lead to sales. Right? Do you see opportunities to to maybe integrate some of the marketplace with Would Viparone logistics send millions for pickup? Well, our marketplace is fully integrated with Viparone. We're launching in the next couple of weeks the fulfill by option when it's the server could be Fulfilled by Liverpool that's going up live in the next couple of weeks. And all our stores have the omni channel experience. They have a tablet. I'm encouraged to say that around 20% of our marketplace orders are sold within the store. So we're already taking advantage of that. And we're now giving the full field buy options step by step when we're starting this year. Our next question comes from Bruno Wernicke from UBS. Please ask your question. Hello, everyone. Thank you very much And congratulations on results. So for my part, I would like to know what, more about the same day delivery, You know, now what patients is most available and customers having more human than that. And regarding Since the COVID situation evolves and volatility appears to be decreasing, just curious if you have any plans to accelerate investments Thank you for your question. Regarding the CENHIS delivery option, it's available in all regions across the country. Because as we've mentioned before, we're taking advantages of Our footprint. So now it's based on where the customer is, the real time technology taking the stores, as mentioned, as More fulfillment centers with the merchandise they are that they have on place. And that's for all regions, for all customers right now. And as we're live, and as mentioned before, we're expecting to be sending deliveries nationwide Close to 20% or above. In terms of CapEx, Your question, I mean, we have announced several months ago that we're planning to invest between ARS 7,000,000,000 to ARS 8,000,000,000 this year. But with the issues that I mentioned due to the new outsourcing growth, which caused us to slow down, Particularly for the full month of September and October, we think that we will end the year, This year between ARS 6,000,000,000 to ARS 7,000,000,000. So that's like ARS 1,000,000,000 below the And how that amount around 40% It's targeted to our logistics, in particular, the KNOTE project. And around another 15% is earmarked For technology, for IT. So all in, basically around 50% of workers investing is earmarked To logistics and IT, for next year, our taxes Flat, we're planning to invest between MXN 9,000,000,000 to MXN 10,000,000,000. And again, 40% is going to be delivered to logistics And around 15% is going to be earmarked for technology. So close to 55 In order to state no competitive and implement on the plans that we have announced. Okay. Thank you. We have time for one more question today from Irma Skars from Goldman Sachs. So just going back to the SG and A ratio, I was Curious, when you think about, you sort of compare your SG and A ratio for this quarter compared to 2018, it was obviously down in part because of the Lower provisional expenses of which you had already commented that that was obviously, to some extent, that's officially low and will normalize going forward. But When you look at some of the other lines, there was some help also from the various lease expenses of the Smaller line in the P and L. So I was curious whether we should also assume that that line is normalizing or if something That sort of was at play there. I was just curious, the others line, there's obviously a bit of different things across The sort of the travel expenses insurance. That line came up. So just for those two lines, variable leases, Maybe the census and others within the TSA just to think about the different moving parts and And the other lines, obviously, that we should think about, whether it's sort of staffing or electricity as either a source of efficiency or a source of pressure? And then a second question regarding the potential delivery capabilities that you've obviously felt and I think you can make a ton of sense. Am I right to sort of think that it also increases the complexity of inventory allocation Into the store because this is the New York REOs want to be careful not to disrupt inventory levels for the customers So that is still not the traditional in store traffic. You don't want to have Placing stock up because you're fulfilling online orders. So where do you think you are on the learning curve and What levers or learnings are you leveraging to ensure that you're not facing interruptions or inefficiencies there? Yes. Anthony, do you want to take your second question? Yes, perfect. Hi, Ernie. Regarding your question, yes, you mentioned it correctly right now, the catch is replenishment. It's how can we replenish the store fast, but there's 2 things that are going on. Right now, we're putting the offer closer to the demand And that's all our systems are integrated. All the forklift and replenishment systems that we have are now distributing the merchandise better. Yes, it is a catch for our logistics and a lot of pressure for our logistics to replenish its tourist patch. And that's Part of the whole distribution network that we're rebuilding and issuing, it's important to mention that we also signed up with a very important replenishment system that is going live in the next couple of months in Norway to close that gap. So far, the development is going well. But yes, we see that also as The new goal is to replenish our stores faster and we're taking all the measures to do that. And unfortunately, I believe it's going incorrectly. And the important thing is, as I mentioned, is to put the offer closer to the demand. And therefore, it will also give you a lot of advantages as List promotions, list markdowns because you have the correct offer in the correct store. On your first question, Irma, regarding SG and A, Jeff, I mean, if you see, SG and A, And we exclude the help that we have had in the other provision, of course, which was, of course, very, very important. And we also, as you know, exclude the depreciation. This year and A, the expense that we saw in the Q3 of 2021 shows an increase of 2% to 14% against 2020, Which is a little bit below the increase in the supply. And if you compare that to the same quarter, what, 2019, it's pretty much flat. I mean, the growth is only It's less than 1% because of our information that we are implementing in order to remain on the pressure that we're seeing On our expense items, I think that at that level of volume or label numbers that we're seeing is going to be very hard to maintain. I think that Before quarter in particular, last year, we had a one time effect where because of the very bad results that we have since the pandemic, Obviously, we didn't hit any of our goals in terms of profitability for the year. And that in turn resulted in no executive bonus. Basically, we didn't pay any executive bonus last year Because of the dismal results that we produce. So that, we reversed the provisions that we had For that item in Q4, for this year, it's going to be the other way around. We are Far away, I mean, far better than what we expected when we put in place our question. Back in April, when it was approved by the Board, We're expecting that not as good performance that we have seen basically And all our P and L items. So this year, we are very likely in several of our business units, Our executives will receive the most of the maximum amount of funds that they can receive as a valuable Bonus because of the performance. So, in very happy on the fact that we are seeing our For a bit this, I will be having a lot of pressure on the Q4 SG and A. For next year, We're expecting against we're seeing some pressures because of all the inflation demand that we are very well aware of. One of them is, obviously, we have just related to, as you know, like, how we spend in terms of potential materials, for example, So the price that we use in the stores, I'm not going to understand, but clearly it's increasing a lot. Electricity rates are also going up. Well, yes, we are seeing a lot of pressure, but that in turn will force us to take place on the efficient measures in order to make sure that SG and A Next year, continues to grow below our top line. And we that helps us to recover the That's very helpful. Thanks so much. Thank you. That concludes our question and answer session. I would now like and will now hand over to Mr. Enrique Wicosa to call for BioCommons. Well, I see thank you very much That concludes today's call. You may now disconnect.