Good morning, everyone. My name is Andrea, and I will be your operator today. All lines have been placed on mute to prevent any background noise. This is Liverpool's second quarter 2024 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. Gonzalo Gallegos, Chief Financial Officer, Mr. José Antonio Diego, Treasury and Investor Relations Director, and Mr. Enrique Griñán, Investor Relations Officer. There will be a discussion discussing the company's performance as per the earnings release for the second quarter of 2024 issued yesterday. If you did not receive the report, please contact Liverpool's IR Department, and they will be emailing it to you or download it at the IR's website. Please note that this call is for investors and analysts only.
The questions from all the media will not be taken, nor shall the call be reported on. Any forward-looking statements made during the earnings call are based on information that is currently available. They are subjected to risk 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 risk outlined in El Puerto de Liverpool'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. Gonzalo Gallegos.
Thank you, and good morning, everyone. Welcome to our second quarter 2024 conference call. I am pleased to share that all our business units delivered a strong performance during the quarter. Retail revenue increased almost two digits, and margins showed solid improvements year-over-year. The credit portfolio continues to deliver significant growth, with NPLs still below pre-pandemic levels, even though we are monitoring NPL growth rate. Normalized real estate revenue was strong, and additionally, a favorable exchange rate helped to boost net profits significantly. Also, our main projects remain on track. During the second quarter, consolidated revenue of MXN 52 billion increased 9.8% year-over-year. Retail revenue was 9.5% above a year ago, and we continue to achieve double-digit growth rates in financial services, with an 18.4% increase.
Normalized real estate revenue was 12.7% higher than a year ago, excluding a MXN 225 million one time benefit explained last year related to our Villahermosa shopping mall. Including this effect, reported real estate revenue was 7% below a year ago. Same-store sales for Liverpool grew 6.5%. Approximately 70% of this growth was driven by higher traffic. Second quarter sales results include a negative seasonal adjustment as seen in March instead of April. We are also facing a challenging base period, as same-store sales during the second quarter of 2023 grew over 9%. During the quarter, we had three special sales events: Mother's Day, Hot Sale, and Father's Day, with encouraging results. Revenue growth was also driven by strong growth of our marketplace and value-added services. On a category basis, cosmetics and sportswear continued to grow above average, while electronics and children's apparel were below average.
Suburbia had another positive quarter, delivering same-store sales of 8.2%, almost entirely driven by higher traffic, facing a similar negative adjustment due to Easter. These results are driven by our continued focus on improving the shopping experience, which translates to higher sales. For perspective, ANTAD department stores reported a 5.9% increase in same-store sales during the second quarter. Total ANTAD apparel and footwear categories grew same-store less than 1%, while general merchandise increased 5.8%. Gross margin during the quarter was 33%, a full 100 basis points versus last year due to a healthy inventory position and enhancements to our promotional activity. Inventory position at the end of the quarter grew 8.4% versus last year, slightly lower than sales growth. In financial services, the top line increased 18.4% versus a year ago, mainly due to an increase in our net credit portfolio of 18.7%.
We increased the number of Liverpool cardholders 8.4% to reach over MXN 7.5 million. On the other hand, Suburbia grew its cardholder base 16% to reach MXN 1.7 million. Share of sales with our own credit cards during the second quarter was 51% in Liverpool, 50 basis points above a year ago, while in Suburbia reached 33%, 90 basis points above a year ago. Normalized revenue from our shopping centers was 12.7%, which includes the effect of the acquisition of the Altama shopping mall, increases in lease spread and parking revenue, as well as an occupancy growth of 1.2 percentage points to reach 93.5%. Our consolidated gross margin of 40.6% was almost 1.1 percentage points above a year ago, mainly due to improvement in our retail margin as well as a more favorable business segment mix. Operating expenses without bad debt provisions and depreciation grew 18% year-on-year.
The main factors behind this increase were higher minimum wages, holidays and pension reforms, hiring in digital and technology, and new stores. We are taking actions to offset negative impacts, such as hiring restrictions in our corporate staff areas and overall headcount rationalization. As a result, consolidated operating income of MXN 6.2 billion grew 32.2% year-over-year. We closed quarter two with an NPL ratio of 3.5%, an increase of 54 basis points above a year ago. The NPL ratio for Liverpool was 3.3% and 6.7% for Suburbia. It is important to highlight that this level of NPLs is below pre-pandemic levels. We are closely monitoring the increase in NPLs as we are taking proactive steps to prevent a potential deterioration of the portfolio, particularly in higher-risk segments, such as implementing refinancing plans with high-debt customers.
This quarter, we posted a bad debt provision of MXN 1 billion, 18.4% above last year, due to an overall portfolio growth and NPL increase. Our coverage ratio at the end of the quarter was 9.4% of the gross credit portfolio, while the ending balance of the bad debt reserve represented 2.9 times the NPL balance. Q2 EBITDA of MXN 9.3 billion was 6.7% above a year ago. EBITDA margin was 17.8%, 52 basis points below last year. Excluding last year's one-time benefit in the real estate business, normalized EBITDA growth is 9%, with an EBITDA margin contraction of 22 basis points due to higher operating expenses. Second quarter net profit of MXN 6.2 billion was 32.2% year-on-year, reflecting the strong operating results, lower financing costs, and a more favorable exchange rate.
To note, Q2 net profit results include a one-time benefit of MXN 1.4 billion related to exchange rate variation due to a partially dollarized cash position. Furthermore, cumulative EBITDA is MXN 15.2 billion, 9.4% above a year ago, while cumulative net profit reached MXN 9.1 billion, 32.6% above a year ago. Turning to our digital channel, GMV in the second quarter was 17.4% above a year ago. It is important to note that we conducted a change during our Hot Sale, as promotions were offered in both the digital and physical channels, which negatively impacted the former. However, this strategy reflected a more consistent shopping experience and an overall positive result. The digital share for Liverpool grew to almost 29%, 179 basis points above last year. Monthly active users for Liverpool Pocket remained steady.
Our marketplace GMV during the second quarter grew 58% year-over-year, and we closed the quarter with 71% more SKUs and 12% more sellers. In the case of Suburbia, our Q2 digital share reached 6.6% of sales, an increase of 1.8 x. Monthly active users in the Suburbia app increased 6.5%. We now have a digital kiosk in more than 95% of our stores, as we continue to roll out fulfillment capabilities for digital orders. During the second quarter, digital orders that were delivered in 48 hours or less accounted for 54% of total. The share of click and collect was 42%, 3.8 percentage points above the same period last year, and direct store deliveries were 35%, 3.2 percentage points above a year ago. Moving to other items, CAPEx during the quarter was MXN 2.2 billion, reflecting a cumulative investment of MXN 5.1 billion, 1.5 x higher than a year ago.
Approximately 30% of the investment has been in our real estate business, mainly due to the acquisition of the Altama shopping mall. An additional 30% of the investment was in an Arco Norte project, while the balance is focused on new stores, remodeling, and expansion projects. Cash flow from operations during the quarter was a positive MXN 4.7 billion. This was an improvement of MXN 2.5 billion versus the same period of 2023 due to improved results and lower working capital, partially offset by credit portfolio demands. At the end of the quarter, cash on hand was MXN 22 billion, and our net debt-to-EBITDA ratio is close to zero. Regarding dividends, in our March 12th stockholders' annual meeting, an amount close to MXN 4 billion was approved to be distributed. This figure is equivalent to 20% of the full year 2023 net profit.
The first installment of MXN 1.77 per share was paid on May 24, and the remainder of MXN 1.18 per share will be paid on October 11. In terms of new stores, during the quarter, we opened one new Suburbia store at Cuernavaca, our second in the city. We also opened six new Liverpool Express units to reach a total of 29 of this new format. BYD continues growing. Car sales during the quarter were over 1,500 units, significantly above our expectation. For perspective, we expect to reach our full-year target early in the third quarter. Last month, we opened a new showroom in Coapa in Mexico City. We now have five locations in the Mexico City metro area, and we are very excited about the growth prospects of this business.
Finally, during May and June, Fitch Ratings and S&P Global Ratings ratified credit ratings of Liverpool, both on the global and national scales. The former affirmed the BBB+ rating, and the latter the BBB rating on a global scale, and both agencies ratified the AAA rating on a national scale with stable outlook. Summing it up, we have accomplished a lot, and we are targeting even more. Now, let's move into our Q and A. Thank you.
Mr. Gallegos is asking us to speak. Go ahead, Mr. Gallegos.
Thank you. One quick clarification. I just said that we sold 1,500 cars in the quarter, and that figure is for the full year, which is still above our expectation. Now, let's move into our Q and A.
We will now conduct a Q and 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 Irma Sgarz from the line of Irma Sgarz. Please state your full company and your name and ask your question.
Yes. Hi. Thank you. It's Irma Sgarz from Goldman Sachs. Thanks for taking my question. Maybe the first question is just when you think of sort of into the back half of the consumption outlook, obviously, it's been pretty favorable so far, and you made some highlights that were useful and obviously gained some share also compared to ANTAD peers in the second quarter.
But when you sort of, I know it's early days to speak about July, but when you just generally think about how you're planning inventories and promotions for the back half, what consumption environment are you expecting? Are you expecting continued strength and stability, or is there anything that you're monitoring at this point, also from a perspective of FX moves that sort of happened more recently? And then the second question drilling maybe a little bit more down into the category performance. I think if I understood it correctly, you mentioned that beauty and cosmetics and apparel and fashion all did very well compared to an outperformed electronics category in the second quarter.
Is that something that you sort of attribute to maybe some of that electronic sale having happened more in the online channel and that you potentially, in those categories, maybe, if I may say so, lost some share? I'm just trying to sort of see how you think you've performed specifically in the electronics and durables category compared to ANTAD peers or compared to the market overall, including other online channels in the second quarter and any conclusions that you draw from that. Thank you.
Thank you, Irma. Regarding the first question, the overall consumption outlook, we have seen an overall decrease in consumption. So sales are coming in slightly below our expectation. However, margin has been the opposite. It has been very strong. So the combination between sales and margin is in line with our target.
And we expect that trend to continue in the second half of the year. Now, moving to the category performance, as you said, we have had very strong performance in cosmetics and beauty sections and the overall sports apparel sections. And on the other hand, the children's apparel has been a little below our expectation. And talking about electronics, it's hard to say. Electronic sales are very much influenced by sports events. And as you know, the summer has a lot of sports events between the Euro and the Copa America and the Olympics. So the comparison base period may shift from one year to the next. However, we are taking some actions regarding inventory and pricing and promotions to change the momentum for the second semester.
Great. Thank you. Do you feel that potentially you may have? Is that something that you sort of see in the overall market, those trends, or do you think that potentially you may have lost some share to some online competitors in the electronics category specifically?
I think the overall dynamics of the market apply to the market as a whole. And regarding the share, no, we don't believe we're losing share, at least not significantly in that segment. And we don't expect to do so in the foreseeable future.
Okay. Perfect. Thank you so much.
Thank you.
Our next question comes from the line of Rahi Parikh. Please state your full name and company name and ask your question.
Great. Yep. This is Rahi Parikh for Ben from Barclays. Yeah. So just for also e-commerce, maybe besides electronics, how do you think your initiatives overall have performed against your internal expectations? I know you said you have more initiatives for electronics, but for other categories as well, especially at Suburbia, given increased competition from Chinese e-commerce players. Thank you.
Well, during the quarter, we have three big events. We had Mother's Day, we had Hot Sale, and we had also Father's Day. Overall, we are happy with the results. I think we have changed some—we have conducted some adjustments in the sense to have more progressive discounts to be able to take some actions in the specific categories as the sales events progress. In the case of Hot Sale, we did a change. We offered the same discounts online and offline to give the customers a more transparent approach to the sales event. Overall, it had a positive result.
So I think with these changes, the overall promotional activity delivered strong results in sales, but also in margin, and the combination of both was in line with our expectation.
Great. Thank you.
Our next question comes from the line of Daniela Muñoz from HSBC. Please ask your question.
Hello, everyone. Congratulations on the results, and thanks for taking my question. I just wanted to go over the outlook for the financial part of the business. Your NPLs over 90 days went up to 3.5%. That's a significant increase year-over-year and also quarter-over-quarter. So what are the trends or the outlook going forward, given that you have increased your loan loss provision? So if you could comment a little bit about what's going on in terms of the consumer indebtedness, that would be great. And how are you managing it?
Yes. Thank you.
As we have shared, we intend to return to our pre-pandemic NPL levels of 4%-5%. Having said that, the growth rate is above our expectation, and that's why we are closely monitoring it so we can prevent deterioration on the health of the overall portfolio. As for the future, at the beginning of the year, we had shared guidance for the end of the year of around 3% of NPLs. Now we think it will be closer to 3.3%. As you can imagine, this implies that we expect to absorb an increase in NPL provisions, but we are expecting to offset that with additional revenue. As an overall market, we think that that's related to an overall increase in credit cards in the market. We estimate that the growth of the overall credit cards in the Mexican market is close to an additional 15 million cards.
So we think that's translating into higher NPLs. And that's why we are expecting a higher NPL for the end of the year.
Thank you. But just to follow up on that, does that mean the 50 million cards, are they Liverpool cards or cards in the market in general?
No. It's overall in the markets. And it's 15 million, 1.5. And it's more related to the new fintechs entering the market rather than Liverpool cards.
Got it.
What we think is that with overall more credit available in the market, customers are more pressured to take on additional credit.
Understood. Thank you, Gonzalo, for that follow-up explanation. And does that mean that Liverpool also had to become more credit cautious in terms of the new concessions or approval rate?
Sorry. Not at the moment. I think today we see that as a yellow light. So we're taking some actions like making refinancing plans for high-debt customers. And so making minor adjustments at the moment, but clearly we're closely monitoring the overall health of the portfolio.
Clear. Thanks a lot.
Thank you.
Thank you. That concludes our question and answer session. I would now like to hand the call back over to Gonzalo Gallegos for some closing remarks.
Thank you, everyone, for your time, and see you next quarter. Take care.
That concludes today's call. You may now disconnect.