Good afternoon, everyone. Welcome to Organización Soriana's third quarter 2026 earnings conference call. With us today are Mr. Rodrigo Benet Córdova, CFO of Organización Soriana, and Ms. Claudia González Romero, Head of Investor Relations for Organización Soriana. Together, they will be discussing the financial performance for the third quarter of 2026 and providing a summary of the latest news on the company. At the end of the presentation, there will be a Q&A session to answer any questions you might have. We would like to mention that all lines have been placed on mute as to prevent any background noise. At the beginning of the Q&A session, we will provide instructions as to how you may participate in today's conference call. Please note that the conference call may be recorded. I will now turn the conference over to Mr. Rodrigo Benet Córdova, CFO of Organización Soriana. Please go ahead.
Good afternoon, everyone, and thank you for joining us again in this conference call regarding the financial results. To start, and before discussing our results, I would like to share with you a little our perspective on the current consumer environment in Mexico and some of the trends that we are observing across the market. The consumption in Mexico has been very challenging during the quarter. Despite moderating inflation, consumers remain under financial pressure and continue to manage their spending very carefully and remain very focused on price. We are seeing shoppers prioritizing essential items, making purchasing decisions more careful, much more than previous periods. As a result, competition across the retail sector remains very intense, with all the players competing for a limited share of consumer spending. Given this market condition, our same-store sales declined 3.6% during the quarter.
This result reflects both the broader consumption trends affecting the industry, the challenges within our commercial execution, and the net effect of the 18 units closed as part of the efficiency program that we previously announced. Our focus remains on enhancing the value proposition and driving a sustained improvement in sales performance based on an action plan per store and location throughout the country, maintaining operational excellence in product availability, and increasing our competitiveness in core categories. With that context in mind, we can move to our third quarter performance. Regarding the top line of the income statement, the company reached MXN 40.8 billion as a total income, showing a decrease of 4.3% compared with the same quarter of last year. Moving from overall sales per channel, I would like to highlight that the supermarket format is outperforming.
We observe a client obviously with better socio-economic level, with more confident and constant consumption, less affected in transaction and number of articles by ticket, mainly compared with the formats that are focused in the low-end concept. In the same way, City Club has an important increase in sales consecutively in the last two quarters, in addition to a double-digit increase in the e-commerce channel of the membership club. Talking about the e-commerce, also during the third quarter, our e-commerce business continued to strengthen its position as an important sales channel within the grocery retail sector, driven by the growing adoption of omnichannel shopping, greater consumer demand, and the continued development of home delivery and in-store pickup services.
Compared to the same quarter of last year, our channels, considering the Soriana app and Soriana web, reached an increase of 35% in sales and a 40% increase in the number of orders, intensifying competition between digital platforms and the traditional channels. Actually, in Mexico, in general, sales conducted exclusively through the internet increased 17% year-over-year compared with the 3.2% growth that we saw in the retail sales in the country, according to the latest INEGI Economic Indicators Policy. This performance highlights the stronger momentum of this digital commerce, where we are completely active, investing year- by- year.
Following with the income, also the other important business, the real estate business, show an increase of 7.5% in the quarter and an occupancy rate of 91% due to several projects with banks, cafeterias, fitness clubs, and other new services that we are adding as part of the value proposition of our shopping malls. Going down into the P&L, the gross profit reached MXN 10.2 billion, with a decrease of 4.3% and an expansion of 10 basis points. The improvement in gross margin is the result of shrinkage management improvements, both in sales and in the stores, good relationship and negotiation with the suppliers in Julio Regalado campaign, and increasing our sales in the private brand due to more than 300 new SKUs in 33 categories that, as you know, have much better margin than the commercial brand.
Regarding the operating expenses, it showed a decrease of 2.4% versus the same quarter of last year, reaching MXN 7.9 billion. This decrease in the expense is mainly attributable to indirect costs like maintenance, travel expenses, cleaning services, and marketing, in which we have accomplished a lot of efficiency, as happened also in the last year. As consequence of the deviation just mentioned, the EBITDA of the quarter reached an amount of MXN 2.3 billion that implies or represents a margin of 5.7%. On the other hand, and regarding the financial item, the net financial cost closed in MXN 532 million, an important decrease of 18% versus the same quarter of last year, basically as a consequence of a lower financial rate interest and also as a reduction in the debt, mainly related with a much better efficiency in the working capital.
As a result of the items previously mentioned, the net income reached MXN 473 million. That implies a decrease of 19% in the quarter and a MXN 2.3 billion, showing an increase of 18% in cumulative figures. As an update of the CapEx for the year, it's important to mention that the company is accelerating the remodeling plans along the country. In fact, this year we have completed 23 store upgrades and reinforcements, further improving the shopping environment and overall customer experience, resulting in average in a +20% in sales. As of the end of the quarter, the company already invested MXN 2.6 billion. This amount also includes the investment in three new stores. Actually, today we are celebrating the opening in Poza Rica of a new hypermarket, while two other additional stores are scheduled to open in Nuevo León.
One of these will open in November of this year, and it is a key project developed in partnership with City Club and Sodimac to be delivered in other two phases. The other store currently under construction is expected to open in the beginning of next year. We are very confident that both projects will be highly successful and will be adding a little more than 8,000 sq m sales area, creating nearly to a little more than 650 new direct jobs. Also important to mention that as part of the efficiency program, two of the stores that we were closed during the year, it will be converted during the next year into Sodimac stores.
Finally, we are glad to comment about the FAZT alliance, the most ambitious project regarding fast charging stations, where we have already paid for 34 sites in operation, and we continue with the goal for more than 1,000 stations for the year 2030. Looking at this year as a whole, 2026 so far has been marked by a lower demand recovery and a very competitive retail environment. In this context, we are balancing the need to drive sales performance while remaining disciplined in how we manage profitability and cash generation. As we move into the fourth quarter, we expect consumer spending patterns to remain very cautious. However, key seasonal events such as the Buen Fin and the holiday season could provide important opportunities to improve our performance.
We are entering this final period of the year with a clear plan focused on driving traffic, improving conversion, and capturing a larger share of household spending. Obviously, the main opportunity is to increase the sales per square meter. In parallel, we will continue to focus on operating efficiency, discipline, expense management, working capital optimization, and a very prudent capital allocation. We close out this year, our priority is simple: to improve our commercial momentum while preserving the financial discipline of the business. The environment remains challenging, but we are confident in the long-term opportunities in the Mexican retail and in our ability to strengthen our position over the time. Our team is full focused on executing the action needed to return to profitable growth and create sustainable value for our shareholders. Thank you very much for your continued support, and now we can go to the Q&A session.
We will now start the Q&A session. If you have a question, please enter star eight on your telephone keypad. In case your question has been answered, you may cancel it by pressing star eight again. The first question is from Ms. Melissa Byun from Bank of America. Please go ahead.
Hi, Rodrigo. Thanks for taking the question. I wanted to know if you could give an update on October sales and then give a breakdown of traffic and ticket in the quarter and comment on regional trends. In your opening remarks, you mentioned that you faced some challenges in commercial execution. Can you please expand on that theme and whether that is something that you are addressing now going into the fourth quarter? Thanks. I am not sure if you were able to hear me.
Yeah. Sorry, Ms. Melissa.
Oh, okay.
I was in mute sorry for that.
I understand.
Talking about the. Talking about the response for the first question about the disclosure of the same-store sales, mainly it's a decrease in transactions, Ms. Melissa. We can say that we have practically a flat ticket. The view that you see in the same-store sale is mainly decrease in traffic, that again, is the one that we are focused on, and we are trying to recover the trust of the consumer and mainly working on that. Actually, it's related with the second question about the commercial execution. Basically, what we are seeing, and this is probably the second or the third quarter that I talk about that, is that we continue having a very accurate measuring of the competitiveness against the other players in the market. To be honest, we continue seeing that, mathematically speaking, we are really good in competitiveness.
We have decreased particularly the prices of more than 300 basic products in the last 12 months, in which we are assuring that we can deliver to our clients the best price. Again, we believe that we have to continue working in the perception. Obviously, you know that we are basically in our hypermarket, that is the main format, a high and low player that have their different perceptions in commercial terms with the client. So, we are working to adjust that and to be very efficient in show promotions that really have a positive impact in the perception in the long term, and not only for the particular promotion, but in the long-term perception about prices and the value delivered to our client. That is the things in which we are working on.
We believe that we are in the right track. Actually, I will link this with the third question about the updates in the same-store sales of October, in which we are seeing an important change in the trend with a very important positive change going up, in which probably we will be. If we talk about the difference of the same-store sales of the quarter against the ANTAD, you will see an important difference. What we are seeing with the first result that we have as of today of October is that we believe, obviously, we don't have the information on the other players, but basically, our estimation is that we can, particularly in October, eliminate completely or 98% the difference against the competitors in same-store sales. I mean, it's just one month. We cannot say that the commercial strategy is already a success or taking place.
It's just the first month in which we start to see an important change in the trends against our competitors. What we are positive, and we will continue with that. Again, the changes that we have to make is medium to long-term changes. Gain, again, the confidence of the client, and particularly the perception of being the best option is not something that just happen in a couple of months, but we believe that we are in the right track. And October, as of today, looks to be a much better month.
That's very encouraging. Thank you.
Thank you very much for your question. Our next question is from Mr. David Yotta from S&P Global. Please go ahead.
Sorry. If you can repeat the question, because I don't know, we are having some troubles with the call, but we can't he ar you.
Our next question is from Mr. Ricardo Ancira from GBM. Please go ahead.
Hi, Rodrigo. Thank you for the space for questions. Just a quick one from my side on the tax rate. Looking at it, we are seeing a sharp increase compared to last year. Could you provide a little more color on the cause, and how should we look at it going forward? Hi, I am not sure if you can hear me.
Hello, Ricardo. We cannot hear you. If you can repeat the question.
Do you hear me now? Can you hear me now? Hi, Rodrigo. Can you hear me now?
Yes.
Oh, sorry.
We do hear you. We might be having some technical difficulties on the side of Mr. Benet.
Don't worry. Can you hear me now?
[Non-English content]
Mr. Benet? Mr. Benet?
Sorry, Ricardo. We are talking with the conference call operator provider. If we can switch to another line, just give us a couple of minutes, please.
Thank you very much. I know.
We are reestablishing connection with Soriana.
[Non-English content]
Sorry, Ricardo. I think that we have some troubles with the conference provider. If you can repeat the question, please.
Hi, Rodrigo. Don't worry about it. If you can hear me now, just a quick question from my side. Looking at the tax rate, we're seeing a sharp increase as compared to last year. Could you maybe provide a bit more color on that, and how should we look at it going forward?
Sure. Basically, the difference in the tax rate is coming from the deferred tax, not from the cash tax. It's a different comparative basis. in 2025, we have some benefits that we applied from 2024 period that we don't have in this year. That is the main difference. If you see the disclosure of the whole tax provision, you will see that the cash tax is basically flat, and the important change is in the deferred tax. Again, it's because a difference in the comparative basis, in which in 2025, we have a one-time benefit. It's not something that we are expecting to see as a continuous base. Basically, the tax rate that you are seeing right now is the one that we are expecting going into the future, Ricardo.
Perfect. Very clear. Thank you very much.
Thank you very much for your question. Our next question is from Mr. Miguel Ulloa from BBVA. Please, go ahead.
Hi, Rodrigo, Claudia. Thanks for taking my question. I have a couple on my side. Could you give us an idea of same-store sales growth, excluding the stores closed? The second one would be regarding the tax side. Do you have an initial assessment of the impact of the tax reform or the potential limitation on deductions? Thank you very much.
Sure. Basically, as you know, Miguel, the stores that we closed were stores that obviously have not the best performance, that actually we take the decisions because we saw two opportunities. First of all, improve the EBITDA and start to help the profitability of the company, while we see opportunity to take that sales in the other stores that are surrounded, the ones that we are closing. As I comment, the closing program obviously have an impact. It will have impact of around MXN 350 million in the quarter. In cumulative terms, it's basically the double of that, close to MXN 800 million. What we are seeing is two important things.
First of all, we are expecting that the effect in EBITDA of the closure of the stores that we performed in the last 12 months will help us in around MXN 400 million as a whole year, once that is completely implemented. Basically, the benefit is not only because we are more efficient in the expense side, but also because we are converted that stores into real estate development or even into Sodimac stores. As you know, it's a combination. Right now, you will see Soriana making a combination of remodeling the stores, investing into new stores, but also transforming that stores that we believe that doesn't have too much sense to continue with the operation because we have other stores in the same area in which we can be more efficient, and we will continue with that.
Talking about the second question, Miguel, obviously we are very worried. I think that the retail sector, along other sectors, that have a low margin as a definition of the business, because it's part of the business, I think that everyone knows that the retail sector, particularly food retail, is very big sales, very low margins. It's the way of being of the sector. All sectors that have this structure, it will be much more affected with the new income law or tax reform, particularly because the way in which works the change rule in the deduction. We are worried. Obviously, we are in very active talks with the government in order to make us understand the impact that this could have. We still doesn't have the final number, but it will be important. We are really, really worried.
I think that this worry is not only for Soriana, it's for the whole sector. Again, as another sector, I think that just yesterday, the automotive sector, and probably last week, other sectors sent letters to the president because obviously the impact is important. So, we are working on that. It will be an important one, but still we are in talks with the government.
Thank you, Rodrigo. The second one, if I may, regarding store closures. Are you expecting to continue the program next year, and how many stores could be affected on this?
No. In this moment, we are not seeing another couple of stores in the program. Basically, what is still remaining is to make the opening of the two Sodimac stores that are coming from closures of Soriana stores. But for the next year, as of today, we are not planning more closures. What we are planning is more remodeling stores, more openings, and probably some reduction of sales area, increasing the real estate deals.
Clear. Thank you very much.
Thank you very much for your question. Our next question is from Ms. Gabriela Lehman from Goldman Sachs. Please go ahead. Ms. Lehman, please make sure your phone is not on mute so that we may hear your question. As a reminder, if you have a question, please enter star eight on your telephone keypad. That was the last question. I will now hand over to Mr. Rodrigo Benet Córdova for final comments.
Well, again, thank you very much for joining in this conference call. Please, if you have any other questions, just send us an email to Claudia or to me, and we will be glad to respond as soon as possible. Thank you very much, and have a good weekend. Bye.
Organización Soriana would like to thank you for participating in today's conference call. You may now disconnect.