Earnings Call: Q3 2020

Nov 12, 2020

Ladies and gentlemen, welcome to Via Varejo conference call to discuss the results for the third quarter of 2020. This call is being broadcast via internet at our website, ri.viavaresia.com.pr. The slight selection will be managed by you. The replay will be available after the call is finished. We would like to say that forward looking statements made during this conference call regarding business perspectives, projections, and operating financial goals are based on the beliefs and assumptions of the Abadeja's management as well as on information currently available. Forward looking statements are not guaranteed of performance. They involve risks, uncertainties, and assumptions because they relate to future events. And therefore, depend on circumstances that may or may not occur. With us today, Mister Roberto Futcher, CEO of company and mister Oribaldo Padilla CFO and I are officer. Now I turn the floor to Roberto. Good afternoon, everyone. I hope you're all doing well. Thank you very much for being with us in this conference call and for being interested in our company. Once again, I would like to start this call by thanking the great team of Via Varejo for everything that they have done so far. And this little over a year that we are head of the company. In fact, we have turned transformed this company. We have a strong team, a diverse, inclusive team, powered by challenges and really, in love by making our customers' dreams come through. I had to thank them would like to thank our millions of customers, whether the long term customers or the ones that are just coming in. I would also like to thank over 450,000 investors and shareholders that are with us in this transformation journey. We are very happy about the results that we are going to bring to you today. They, compromise everything that We are talking about every quarter to any one of the commitments that we have made so far. The good news for our team, which is powered by challenges and our customers that want to be well served in an omnichannel system. And also for our shareholders, wish to see, the shares going up. We is that we still have many opportunities to go forward to move forward to here. We are just in the beginning, and you will see the results we already have. Turning to page 2 to start the presentation itself. We have reached a all time record for Via Varejo. 10,000,000,000 in total GMV, a growth of 43% to face a fee the same quarter of last year. And with, something very important. We did not let go of profitability. We believe that it is possible to have sustainable growth with profitability. We had 4,000,000,000 in the online GMV. And as I said, 10,000,000,000 in total GMV. On slide number 3, looking at the highlights, for the third quarter. We more than doubled our online share. It was to 18.5 in the third quarter of 2019. This quarter, we ended at 41% of share. In that category, the stores are fully reopened now, and they started they were fully reopened by the end of the period. Almost all of them opened, we have grown 12.8% in same store sales. So we are comparing here open stores against opened the stores. So we've reverted completely the lockdown period, and we have excellent growth in our brick and mortar stores well. So we grow on the online. We reopen the stores. We continue growing on the online, and we grow a lot in the brick and mortar stores as well. On the online, we have grown 2 119% in the total of the 3rd quarter in one fee. 294 percent, very robust growth here, and 83% of growth in our 3 p. Also very strong. The total GMV for stores, Hurricane Motors Stores was 6,000,000,000, and the online GMV 4,000,000,000. I just have a comment here. GMV here, we are considering where the product is invoiced And here, we do not have canceled sales. It is net of canceled sales. Canceled sales is not sale, and it's not GMV. So we remove all that effect, and we show life as it is. Now turning to page 4. It's still on the main highlights for this third quarter of 2020. Well, text me on WhatsApp, It's something that we have created during the pandemic. It became a worldwide case, and it's still greatly successful. It had a share of 16% of the 3rd quarter GMV and 19% in September. If we consider September alone here and the excellent news here is that the text me on WhatsApp is, being used in 1p3p, which is that advantage that we talked about. We have our over 20,000 sales reps also working with 3 p. So you can see on the 1 p, we had a 17% of sales in the 3rd quarter. If we isolate September alone, 20% in 3p, a 12% in the quarter, And in September alone, it goes up 1.2 13%. It's important to say here that our sales rep basically 90% of our sales reps already have a mobile, device on their hands so they can transaction, the whole side of the sale, PMO bio device. If it the payment is on a credit card, they can have can they can receive the credit card on the shop floor. The consumer does not need to go to a cashier. And so everything is done electronically. So that is improving a lot. The store's flexibility, and it's going to encourage more and more an intensive use of our sales force to in to sell 1p online and 3p in our stores. Now turning to page 5. And here, we talk about marketplace. We had a GMV of 849,000,000 a growth of over 83% on top of last year and several highlights here. Shoes, books, fashion, but we also have pet, liquor, home, construction, toys, a beauty. All of them are growing a lot. And we see our continued improvement plan there. We improved our sellers. There are over 8000, and we have over 5,000,000 SKUs. There was an evolution on top of the second quarter of 2020. We had, and we still have the commitment of accelerating the onboarding. We have already improved it. We are able to have a a much greater volume than what we had but we will be in the ideal plan in the first quarter. That's when we're gonna go into the real time onboarding. We are already growing and evolving, and our great tech team decided that we could have other improvements with the onboarding. So we decided to develop that part of the platform in a more assertive fashion. And we thought that was a good movement to delay it a little bit. And so for the the first quarter, we will have a real time onboarding. And then and that's why we have a a delay on bringing in sellers. We are going to analyze the sellers quality, and we are going to bring in those sellers that make sense for Avaya Varejo's ecosystem and for our consumers. Now turning to the next page, we acquired I 9xp. This is a developer specialized in ecommerce over a 120 developers that we will dive into our developing stages. And so we will have drivers for marketplace, for logistics, And this is going to be another tech hub that we have in Sao Paulo. And, it's We are in Sao Paetano, but this hub is in Sao Paulo. So we are taking a leap here. We will gain more speed in the development process for VM. Turning to page 7. Here, we this we have a strict and a huge goal here. This is an important landmark so that everyone understands how we are looking at when we see Via Varejo. So when we talk about Go Beyond, Varejo, that has to do what you see in this page, we associated ourselves to the largest innovation hub in Brazil. It's called the street. And by that, we intend to connect directly the greater startup system. They already have 300 startups in their systems, but they map all of them throughout the country. Therefore, we are able to have an accelerated curatorship to understand which startups can a accelerate things that will take us beyond retail. I'll give you an example. We bought Zafelog in the beginning of the year. In the little over 6 months, and I'll talk more about that. But this is already the first carrier for last mile for Via Varejo. So we accelerated a a year and a half of development. And I think that accelerating via, development with that type of partnership We are also accelerating Brazil's development. We help the entrepreneurs that are, putting together their startups, having their ideas. So why not? They could come back to us also and accelerate via maybe in the future, we might have some unicorns in Via Varejo's ecosystem. Turning to page 8 and talking about logistics, I think it's important here to give you some color. We logistics has been discussed in the market a lot lately, and I think it's important to bring you some figures. We talk We usually say that we have logistics, advantages, and we should mention which advantages these are. Today, we have 27 DCs in Via Varejo. 1,950,000 square meters of DC is very well positioned throughout the country. In addition to that, we have 500 stores catering, to everyone else as a mini hubs. And so we have a a great extension of that as well. So we have 100,000 meters. And the last mile of our customers, we have 100,000 miles No. 100,000 meters in the last mile, but we have 1065 stores with 1,400,000 square meters of area, of a store area that actually work as a collection point for consumers. So if you do the math, We have 1,500,000 of square meters for an inventory area, for stocking area, and the last mile for consumers. So We have logistics centers that are doing the logistics connections with these stores, and we have all of these stores with this huge amount of square meters in the last mile. Therefore, we have a an unprecedented benefit, and that's where we are investing our tech capacity so that we can accelerate everything. The great news is that all that we have is already in our ecosystem. It's already in our SG and A. It's already discounted on our margin. On everything that you see in the the upper line. So I do not need to have additional costs to deliver the best logistics in the country. We are going to add tag layers to discuss deliveries in terms of hours throughout the country. Going into the details here, We have 500 menu hubs. Every time that we deliver using a menu hub, we decreasing 50% of the cost of the less mile when we compare that to other options that we have. The exact log is already connected to these 500 mini hubs and fully connected to Via Vadis. It is already the biggest a last mile carrier in the company. And, also, it provides logistics to the open sea because it connects to what we want for our logistics. And we wanted to embrace both our sellers as well as other providers that are in the market. 3 p sellers, they will have the same cost and delivery condition as we have additional. So we already have 200 sellers that are being tested. And over the first quarter, we will be scaling our logistics also to cater to our 3 p. The fulfillment pilot started September of 2020 is running very well. We have an industry on that going on on that pilot, and we are doing well. And over next year, we will have news for you. In terms of deliveries, the click and collect reached 34% of the deliveries now in September with all the stores already reopened. A little bit of what I said before. From 5th 40 to 50% of all deliveries volume that happens in Via Varejo already is going through the stores, whether the store is being used as a mini hub of the last mile or the store is appointed for the Click and Collect. We just opened our 27th distribution center in Para with 24,000 square meters. We are expanding to Parana now, in a few days. By the end of the year, we will have 11 stores there. And we already have a DC of 24,000 meters because we think it's going to be small very soon, and we have the possibility to expand it already. Turning to the next page. For the first time we are here disclosing the figures for banking. Banky is not even priced in the models, for Via Farage. We concluded this acquisition in May. We inserted it in our systems. We changed the format and the colors of the branches so that they could really, matched, it causes various colors and formats in here. We talk about its figures so that you will understand the potential of this business. Banky has already 1,000,000 of accounts that are have already been opened. And out of these 1,600,000 accounts were opened in the last 3 months. So even when we even having the stores closed, we were able to open 6000 counts. It already has 1,200,000,000 of credit operation already part of our payment books. Out of that, 685,000,000 came in the last 3 months. It started with 34% of contracts that were pay perverse. And now we are going over 53%. So when the consumers go to the store and open this credit operation. They are ready. Having the installments and then payments straight in the bank. It's 60% of those that chose to print the payment book are already choosing that new system. And what is good is that in addition to turning digital to credit possibility. We also have the sustainability impact here. That is great. We are talking about without having to print the credit contract and without having to print the payment book, We are saving 30 tons of paper over 1 year. So there is a fantastic journey here in terms of digitization. That's on the part of the customer and also it relates to sustainability. Out of these 1,000,000 customers, 430,000 of them are it with at least one transaction. The cost of acquisition for Banque is very low. It's lower than 15 Rales. It's easy, and it's affordable. It's cheap for us to bring in customers to Venkey. And remember that we had 600,000 customers in the last 3 months, and we still had some of the stores closed. And in this last quarter, things are a half, and in happening in an expedited fashion. We already have a 120,000,000 of TPV and out of that 81,000,000 happened in the last 3 months. We are very, happy about that. We are very excited about these figures, and we do believe that we can have bank as the digital wallet of the C class in Brazil we have several initiatives. We have several services there, and a lot of things are in the future and the pipeline for the future. Now talking about Casa Baya on the next page for the 15th time Casa Baya was awarded top of mind in Brazil. It, had 37% on that score. And here, we have an important piece of news. When we got in, right after that, we were also awarded a top of mind, but the competition were was very close to us. And what happened this year is that we got a all time record of top of mind, 37%. So we are now eight points ahead of the 2nd position in the market. We are working hard. We transformed causes by brand, by any new is now our, model, and it's embracing sustainability as well as well as the causes by causes. And in terms of brand, we are moving forward in an accelerated fashion. I'm going to talk about Black Friday 2020. We launched the campaign and we anticipated the campaign. We are the first ones to launch it. And our idea is try to dilute a black Friday so that we can have more control in in terms of crowding of too many people in the stores. We are doing that. We launched our campaign. Well, yes, they can. And we have the best news here on November first our the video of our campaign was the video in the YouTube that had the highest number of hits of of visualizations in the planet And in the volume of visualizations, we already have had 57,000,000 views So in fact, the Black Friday for and Casa's Baya are really matching and going together on our consumer's mind. Google has just disclosed the survey they ran. Is in the top 3 and the of the brands that are most associated to Black Friday. And the same survey last year, we were very far from being in that position. And the excellent news is that Casa is the brand that people look for more when they think about Black Friday. So we already are leading the surveys when and the search is when people think about Black Friday. So we are very well prepared for this Black Friday. Padilla, we'll talk more about that, but we already have 7,000,000,000 in inventory. That that's what we have today. To move forward to our Black Friday. Now turning to our next slide and talking about the stores and how we see the store's footprint. When we had the lockdown and we reopened and we had the authorization to reopen the stores. We decided not to reopen some stores around 10 to 12 of them. We did not open. So we had 4 or 5 stores. Sometimes on the same street, on the same region or or area, and we chose not to open 1 or or 2 on that same street. And then we ran an initial test with text me on WhatsApp. And with our CRM, more and more active, we tested to see if we had the ability to move customers from the closest stores to the other stores that were open. And the news is, again, excellent. We were able to move most of customers to the other open stores So we are making a decision of optimizing our portfolio where we have too much overlapping in terms of stores. This is not a simple decision because we would be closing profitable stores. Today, but we understood that we can close those stores and have the neighboring, store with the gain of productivities, we are moving towards that, and we have around 100 stores that are going, you know, through our evaluation, we have that possibility of optimization so we can have our stores portfolio being much more productive In terms of expansion, we are accelerated. We had a plan of 80 stores this year because of the pandemics we had to stop. We re resumed the plan, you know, weft or the pandemic decelerated. We are going to open 30 stores now in the fourth quarter. And out of those on the 19th, now we have 6 stores in Para now in December, 5 more, and we'll be going to the north of the country, then and we are sure that these are going to be huge hugely successful. But now we are just being very careful on how to do the opening, following all health care protocols so that we do not have too many people. And that's going to be hard because the expectation in in the region is very high to have cousins via there. On the next page, we have our form, how we see our business, we are a platform that is an omnichannel platform. We know that we are the company that is best prepared to bring the omnichannel to Brazilians when and where they want in our ecosystem, we have Bartita, which is crucial right now. It's the furniture selling. It's very high. We started the 3rd shift in the in the plant. It's working on its full capacity. So we have 27 DCs and 500 menu hubs of ziplock integrated to us a 1065 stores as the stores that relate themselves to customers, also stores that are a hub for click and collect and also a a hub, a logistic hub, the text me on WhatsApp may in the app and in the desktop and brick and mortar stores, both for 1p and 3p. Banking now is also in our ecosystem in a very accelerated fashion. We believe that just as marketplace, it will also bring recurrence to Via Varejo, and marketplace will be able to take advantage of all the hits And so banky will have a daily frequency to consumers when they become also when it becomes the digital wallet for consumers. We have now distributed participation in our system and also all the other tech hubs with I nine XP. All of that is around our core and our obsession. And making our customers' dreams come true. We have a team that is fully focused on this transformation on this evolution and the results that we bring to you today prove everything that we are talking to you so far. And we still have great opportunities, and there are many, and we haven't even touched them. We were preparing via Valle so that we could accelerate that evolution analyzing, looking at, multi channels and many other businesses in retail. I would turn the floor to Padilla, and he's gonna go in the details on our results. Thank you very much so far. Good afternoon, everyone. Let's talk about the highlights and the financial results in the third quarter. Let's turn to page 14 of our presentation total GMV stores online and 13 and 3 p. And here, we have the breakdown of the revenue per channel. And, also, the total when compared to last year, 10,000, 46 was the total GMV for the 3rd quarter of 22, any 3,041,000,000,000 43.4% growth. The online GMV, 4,000,000,000, a 121, vis a vis 1 to 93 last year, 2,800,000,000 more to 119% growth. Now breaking down the online GMV, 1 PGMP3,272,272,000,004,242, Higher,294,000,000,000 growth. GMV3p849, a growth of 386000000, 83 point 4 percentage growth. Stores, almost 6,000,000,000 in revenue, 214,000,000 more, 3.7% growth. In terms of on and off shares, we have grown from 18.5 to 41% in the total online of the company, a growth of 22%. That was the growth of share. The 1p20.7 from 11.9to32.63p going from 6.6to8.4, a growth of 180 and the store's low teen with approximately 82% from going from 82 percentage to almost 59 percentage drop of 22 percentage points. The results here on page 15, accounting. 10 the company total GMV 10,000,000,000. The gross revenue was 9,200,000,000. Grossnetrevenue or or gross profit 2.7or35percentsgnaone 10000000006 130,280.6, an EBITDA of 15.3, almost 1,200,000,000 financial income, much lower than last year's a 107,000,000 and net income of 590,000,000, set 7.6 percent. Here, we had a significant growth in all the lines with a strong, reduction in expenses. I will also bring to you what we call operating results on the next page. We will have here the adjustments, the nonrecurring one, revenues, and expenses that are not recurring in the same quarter of last year and this year and this quarter. As you all know, as we have disclosed, we also had a tech credits that were very relevant specifically for PIS and COFINS, ICMS as well in the base of Pias and COFINS. There was an evolution in terms of the understandings. Above this subject. And, therefore, we were allowed to recognized to post this credit in this quarter. There is a total impact of 490,000,000 in the net income. Net of this effect, we come to an operating result of BRL100 1,000,000 of net income and last year, a loss of 208. So here you have more details. It's also available in our release. In our release, you have more details about this calculation. I think now I think we can move to page 17 in this page here, we have the core performance of the company operational without the recurring effects in the 2 past quarters. So as presented through GMV3.41000000. Gross revenue, almost 27 $2,700,000,000 net revenue over $2,100,000,000 gross profit operation of 2.309, recurring 29.6 with a slight decrease in percentage terms. So basically here, We have 3 basic components in our gross profit. We have Mercantile gains from the sale of products. From the sale of services and also the financial revenue from our payment book. And this this is there is a difference here due to the accounting system we used we recognize revenue based on the volume of the portfolio because this persists during the duration of the contracts, there was a loss up for volume during the pandemic period because the company didn't originate payment books during the pandemic months, but in June July August, there was an increase. So I think by the end of November, we will be able to resume to normal levels. But in that quarter, the effect was negative, but it should be recovered by the end of the fourth quarter. Therefore, I would say that our recurring margin is slightly above 30% already considering this rebound. Another highlight is a strong dilution of expenses, mainly attributed to to this important volume. So our gross revenue grows by 40% expenses were 13.4% and despite the fact that we spent 206,000,000 more over the the net revenue, there was a 4.7% reduction, which is quite comfortable and also sustainable in our line of business, especially considering this new scenario, including online sales of about 40%. As a result, adjusted EBITDA was $627,000,000, meaning 8% when compared to 5.4% in the same quarter of last year. That represents a gain over BRL300 1,000,000. And also gains of 2.7 percentage points in terms of financial income here. In terms of in in nominal terms, there was a reduction of CHF 50,000,000 This was very much attributed to the follow on that occurred at the end of the 2nd quarter, we already present a very interesting compound rest, result in terms of reduction, in terms of the net revenue that is 3% or 2 percentage points, which points to a very positive effect in our results. Therefore, now we arrive at a 100,000,000 in net income, totally sustainable, operational 1.30 when compared to 208 in losses incurred last year. That means an improvement of SEK 309,000,000 growing almost 5 percentage points. Next page, I would also like to give you more details that drop in percentage of gross profit. But again, we see an important growth of CHF 503,000,000 in the half period. SG and A grew 4.7 percentage points meaning CHF 360,000,000 in efficiency gains in that quarter. And this generates CHF 233,000,000 of improvement or 2.7 percentage points of EBITDA gains. And therefore, we arrive at a 100,000,000 in net profits and considering the level of gross and net sales in the quarter represents an efficiency of 465,000,000 BRLs. Next page, here we thought it would be interesting to show you the impact on gross profit. Breaking it down. Last year, our gross profit was 31.4. There are 4 more relevant effects that should be pointed out. The first one is the loss of gross profit due to the changes in the mix from online and and offline. Online grew. So there was a 0.60 or 0.6% loss And here, the other effect that I mentioned in our payment book, the the financial margin due to the reduction in the portfolio during the pandemic months had a negative effect on our profit of CHF 243,000,000 3.10. But on the other hand, we had commercial gains last year in our supplier's account or drawdown risk where we we would draw vis a vis financial risks. Great part of that was eliminated in the in the end of the second quarter and along the third quarter. There's still a small portion to be realized, but there was a positive effect in terms of exchanging the mechanism of 41,000,000, which is 0.5%. At And what remains now is a mar a commercial gain with margins, better sales prices through pricing methodologies, which resulted in a return of over CHF 100,000,000. Therefore, with that, we want to show that our gross profit level is very sustainable and our competitive advantages Still remaining plays. We are the largest seller of furniture in Brazil with a gross margin much higher when compared to other categories. Our payment book and CDC is unbeatable. We have new contracts on a monthly basis, which is much higher when compared to our peers and higher to the final months of last year, November December, which used to be peak season for sales on installments. Therefore, we've been very competitive and very efficient during the pandemic period and even afterwards. Because we are operating in a more modern way, paperless and digital fully integrated to banquet. Now next page, page 20 here, we show that when it comes to efficiency or financial efficiency, the company posted a significant improvement. This is a very dynamic chart because it shows that last year, looking at the left side of this, to the left side of the slide. In the first half of the year, we consume 4 16,000,000. In this quarter alone, we grew 464,000,000. So quarter on quarter, Q2 versus Q3 shows a cash efficiency of $830,000,000 once you compare both periods. However, as the company is very net after the follow on, we put in motion several actions in our treasurer department, and one of them involved creating a supplier's portal. We allocate capital through the portal and suppliers can anticipate the payments from Via Varejo at an interest rate. I mean, this revenue is posted as financial revenue, but this portfolio is extremely net because it is posted against via Varejo itself. So we post this as cash. Therefore, this last bar that shows a cash of 8.481 is precisely the difference between CHF 605,000,000 in that portfolio of discounting receivables in the supplier's portal. Considering that effect, our cash position, you know, 2nd quarter versus 3rd quarter is much better against the consumption of 4 16. When you look at that, we see an efficiency of almost 1,500,000,000 in terms of cash generation. Now, next slide, We are constantly trying to look more visibility to our own CDC business. Here, we have 2 reconciliations in our release. We also have a an explanatory note in the top of the slide, you have the accounting view and in that accounting view, we indicate Item 6, page 28, item 13, page 38. So you will see receivables 3,640,000,000 and a the PCLD or the former of ALL, you see the amount there as well. So down below, we have management view. We have a CDCI, which is an intermediated CDC it was 3626, but this is a position that on the liabilities side has 104,000,000 of interest to be posted in the following month. And on the asset side, we have 974,000,000 to be calculated as revenue in the following months. This may lead you to believe that the the receivables portfolio is lower than that of, payable, but it's just the accounting effect between the 2 different revenues. Now down below, you'll have the management view in the third quarter, we have I mean, if I add up all the payment books and more than 4,000,000 active customers that are active in our portfolio, we would have 3,065 of receivables in the short run and EUR 474,000,000 of receivables in the long run. Therefore, the total is 3,539 still to be collected. From pay payment books maturing up to a 180 days. After a 180 days, it's turned into an accounting loss. So it is totally written off, but it remains active in our collection process. Therefore, this quarter, we ended the quarter with 1,000,000,000 of receivables in addition to the 3,000,000 dollars, $539,000,000. So altogether, we have 2 collect from our customers, $5,189,000,000 and EUR3.529, that will be transferred to our partnering banks. So we are consolidating the accounting view, the operating view or the managerial view, this this this breakdown is very is what makes the company so profitable. Thank you. Thank you, Padivia. Now we will jump to the Q and A session. The first one comes from from Victor and Pedro. First of all, they would like to understand our view about growth in 2021 and whether consumption, migration may impact sales for next year. Next year, is, I mean, we're very optimistic in terms of what is yet to come next year. So we are getting prepared for an excellent 2021. We don't believe that what happened now during the pandemic was just an anticipation of consumption because in if we take if we look at the total sales from different categories, more or less we would be selling the same thing this year, maybe a little bit more in some other categories, but not so much so that would, you know, steal consumption from next year. We don't believe in that. We are very optimistic with this fourth quarter. And we are again very optimistic looking forward. We gain 8 points of market share in the quarters when you look at JFK numbers and we continue to to gain, you know, share once you open all the categories. We will continue to share. We will grow the company in the market. And in addition to that, we will add our share gain, which has been consistent quarter on quarter. Next question. From Bank of America, Bob Ford, the question is whether we could comment on the scarcity of products in the market And what is our relationship with Martins in terms of our partnership with marketplace? Thank you, Bob. In fact, there is a supply problem in the market at the moment. And as you know, We have an annual relationship with the industry, so our inventory has 7,000,000,000, and we are ready to face the next fourth quarter, and we continue to receive merchandise. We are selling well. And by the same token, we are still receiving merchandise replenish our inventory. So maybe there is a lack of 1 or another product, but we are very well prepared to face the fourth quarter and at the end of the year, the holiday season. We talked to Martins about 2 months ago and he is amongst our top 30 sellers, 60% of his assortment is already included in our ecosystem, and we are expediting, you know, that move to have a 100% and we are close reaching top 10 very soon. Next question comes from Andrew from Morgan Stanley. What about Via Varejo's view in terms of, you know, M and A pretty much similar to what happened with Juspritu? How do we look at your strategy in regards to M And A. Well, Andrew, I can't tell you much because I can't you know, signal to the competition, but we are certainly looking at all the opportunities in the market. We are also looking at the company beyond retail Our stake at Distrito was not obvious. I mean, it wasn't obvious in a a regular landscape. But we look at that as something that can boost our ecosystem in several areas. We are looking at all the opportunities in the market. And if we understand that there is something that can boost our ecosystem, or if that can add some attributes or ecosystem, that's something that we will look more carefully. Next question from Itau, Thiago Macruz. What are the competitive advantages of Via Varejo? If you want to lead the market based world and if you feel like you want to be on equal footing amongst your peers, Thank you, Thiago. That's an excellent question. When I refer to our logistics, because I mean, it's easy to say that we have the largest logistics in the country, but once you put everything into figures and numbers, the advantage of all almost 1.5000000 Square Meters we have. When you talk about the last mile, you know, that we we do have the capacity to store everything, but when it comes to the last mile to consumer because it's not enough just to inaugurate, you know, distribution centers or large distribution centers because It's very difficult to operate logistics in Brazil. Therefore, I mean, it's important to have a distribution center, but it's important also to be close to our customers. This is also relevant, and we do have that capacity and the size. Therefore, I would say that this is a major differential, we are close to finalizing all of the other digital tiers to our logistics system. And once that is finalized and we also open that to 3 p, I think that I mean, a lot of people talk about same day delivery. I mean, here at Saia Lima or in Rio in LeBlanc, but when we talk about you know, the last mile or same day delivery, we would do that all over Brazil. And we are not very far from reaching goal. And the good news is that we already have all the assets in house. I don't have to acquire any additional asset. We already have it in house. All we have to do is move forward with our digital ecosystem, our IT system is working around the clock to make everything possible. So very soon, we will be able to offer same day delivery, but like an actual promise, for the entire country with great part of our assortment, another benefit is that I mean, we had a coach row barrier in the past because it was difficult for our sellers to be online, but because of the pandemic, we eliminated that barrier very quickly. Therefore, today, our sellers are digital. They are already selling 3 p items and they began selling it now and they already have, you know, 2 digit gains when he comes to 3 p. So once that they master that tool and they start adding that to their everyday work be it in terms of new sales or additional sales or online sales through WhatsApp. Which is another important differential. Certainly, our credit arm will be strengthen even further. And we will also start providing funding to marketplace items. No one else can offer said, we have almost 12,000,000 customers. We pre approved credit at Via Varejo. We are looked our CRM is extremely up to speed in terms of our relationship with these customers and now with bank, we are expediting this relationship further. So we have even a better way to relate to our customers and everything will be available to our marketplace customers and through the sellers because they will be able to have digital account at Banque and get funding through Banque. So this is just the beginning of a journey. And I'm certain that all of the results we posted so far, you know, contributes to solidifying via Vadages experience, but we are just at the beginning of this journey of what we can do with this ecosystem. When we arrived, people were saying, oh, these guys are lagging so much behind, but we are here to prove that this digital transformation occurred very weekly. We did everything in less than a year and a half. And we are also showing that the assets that the company have are very strong because if I operate writing, I focus on the operational side, execution side, and I focus on technology as well. Tago, I am certain that we will be disputing this marketplace market on equal footing very, very soon. And also very soon, we will surpass the competition. We will be better than them. Next question from El Abra from Reneebeth Howard. Two questions. I think the first question has to do with marketplace, but I mean, how big can you be in terms of 3P and in terms of store rationalization? Would there be any difference between the banners and what is the difference between digital and and non digital. I mean, I think the question about marketplace has been answered. We are not going to limit the size. Because if you look at what's available in the market today, if you have agents, doesn't doesn't have any impediment. There is no impediment. Nothing, prevents us from selling more because once I look at all my my competitive advantages, now I'm good to go. And, once again, This is already a given of Via Varejo. Our investment here is on IT. All of the assets are already in house The second question, Gabriel, what was it again? Is about store rationalization. And how do you see the balance between brick and mortar and online and whether there is any specific barrier looking forward? Well, I think this balance between, you know, physical and online, we are not going to grow one in detriment of the other. We see that as a single system. So the seller in the store making online sales, so the sale can be online or So we already see this as a single business, combining both. I mean, physical physical sales for Brazilian customers is still very important. They like to go to the store, but we want to be part of that journey whenever and however he wants it. So we will not going to impose any barrier. We will try to boost both. And you know, give that choice to the customer. In terms of store footprint, as I was saying, we had about 100 stores already mapped I don't wanna give you any details because the competition is really looking at these stores as well. Therefore, we try to be very careful we want these stores to go in the direction we want. And once we say that maybe, I mean, there are we are we are engaged in excellent negotiations with the owners and rental prices are falling, you know, to half Therefore, I would say that this is around a hundred stores, but no specific banner. We are looking at the occupation footprint for that particular region. Thank you, Roberto. Next question from Guilherbe Azis from Safra. Can you explain what were the recent improvements back marketplace onboarding and product delivery, whether there has any delays or whether things are moving at the right speed. The order track is okay. We often look at our numbers and we talk to all of the services that look at the that number is related to our consumers. So I will I'll tell, you know, look at, hey, Clement, a key to see what is happening. For quite some time, we are not at the top of that list of complaints because the number of complaints is coming down substantially, and we are increasing in terms of solving the problems of our customers. And as I said before, what we were lacking was just that the order tracking in the company, but we already solved that part. And the journey of new sellers has been moving quite well. We are adding 100 sellers every month we we were including between 800 to 1000 sellers every month, but this is by far not what we want because we were finalizing the onboarding journey and then the IT guys came and said, okay, if we wait 2 or 3 more months, we will be able to deliver this entire package. Including many other benefits when it comes to this relationship with sellers, and this will help us boost boost sales further. We decided that it that made sense. So execution is occurring in a very disciplined way because we don't wanna go back and then restart again. So, therefore, everything is very sound. Therefore, we decided that it would make sense to delay it a bit. So in the first quarter next year, we will have real time on border onboarding with any number of sellers we want to put on board. All you have to do is look at the sellers that are part of the other marketplaces, and I don't see why they shouldn't be with us. Considering our relevance, and I just gave you an example of what happened to our brands caused us by. Yeah. I mean, the results from Casa Baliya. It's just awesome. It's astonishing. It's not even Black Friday. We're just beginning the the Black Friday communication. So I don't see why all of the other sellers wouldn't like to join us. In addition, we are going to offer a lot of facilities, our client or our customer ecosystem, and everything we have will be at the disposal of our sellers. Our next question comes from Citibank from Tobias. He would just like to know the turnaround in brick and mortar stores and what has been done. Thank you, Tobias. We are moving fast in terms of physical stores. These 30 stores are coming with a new format. There are some important changes in terms of store positioning. We are also preparing, I mean, the stores are already operating under this new concept We are remodeling the current footprint. We change all of the facades of the stores. They already contemplate the new communication for Cazas Baliya, we are now refurbishing the stores and preparing them for this new store the way we envision. So it's a store that that resonates with customers and we are offering Click and Collect or the mini delivery hub. So I would say now that we are refurbishing the physical stores to prepare them for this new model. For you, Padilla, from Santander team. He mentions that in the third quarter, We had a temporary fight on our SG and A. Finally, a question for me. And he wants to know if we had any effect since this was in the 2nd quarter renegotiation of rents and legal expenses of provisional measures or if we already had the full impact in the 3rd quarter. If this is recurring or not, or any of you were we're going to have dilution in the future. Thank you. For the Santander team for this question. Finally, a question for me. People said that I'm I'm very serious here because Roberto is taking all the the questions. So thank you. Well, this level that we have of recurring expenses in this quarter, it it can be, you know, supported by the we we have room for that. Whenever when we increase gross, Revenue. I don't need I don't need to add anyone else here in our headquarters and any other areas. So it has to do with the revenue of 1 33p and in the stores. In the beginning of the quarter, yes, we did have some stores that were closed. We started July with stores that were closed. And that progressed by the mids of August. Probably then all the stores were open. This was a actual effect, then it is not relevant. So, really, it's not a recurring level of expenses. It's obvious that in the fourth quarter is the quarter where we expect to have a higher revenue. So greater dilution, our expenses breakdown is a little bit different from our competitors. We have the credit operations, and we have expenses, then also, ADA. And if we remove that ADA, if fact, we will already have the best SG and A of the market when we compare ourselves to the 3 or 4 largest players. So there was an efficiency gain in SG and A dilution and reduction. And I'm sure this will happen again in the 4th quarter. Thank you, Padilla. Now I will turn to the question of Joseph, JP Morgan. Three questions. I think this is still for you, Padilla. How can we think about the profitability in the next quarters considering the improving results. And what is the strategy to retain customers? So, considering that some companies are working with cashbacks, if we are going to move along those lines or not and how to think banky for, corporate clients. I will take the first question and then Roberto will take the other ones. I would say that this is very positive. This trend is positive. So if we look at the gross profit of improvement, because I am recovering, the profitability and the of our credit operations, our credit margin, credit margins. So I think the effect is positive already in the 4th quarter. The expenses dilution should continue as well. That level of 30, 30.5 percent is sustainable for gross gross profit. The SG and A then is something that is related with the mass of the gross revenue. If we add gross revenue, more dilution will be happening. So this also, points with a positive trend in terms of financial expenses also when we look at our main competitors, we are still leveraged. We have maintained a certain level of leverage because of, you know, safety at the end of the pandemics when this ends. So we have a cost there. This should be diluted over the year and year and a half. And that's also a positive trend. I would say then that the company has sound a sound base to maintain profitability and to reinvest that profitability in driving GMV and revenue just as Roberto said, we have several competitive advantages, and we are really using more and more each one of them in addition to new ones that we are adding to our ecosystem. Thank you. Joseph, well, about the first one, about the attraction and retention of new clients, about cashback, I think, we already said what we think the balance sheets are public. It's very easy to see what's happening to the gross profit of those that are doing it. We are being able to gain share 8.8 game of share in the segment without any type of cash back system, and we are increasing sales in an accelerated fashion. We are increasing sales, gaining share, and delivering profitability. I think that we are still far or or better. We have a long way to go in this journey, and there's a lot to to happen in the future. In terms of relationship with the customers. And I cannot disclose right now, but there is a lot to happen So I think we are in a very good journey to retain and to add new customers. And and that matches the growth that we are having. Your other question is about banking and corporate customers. Yes. Banky can connect to the sellers in the marketplace. We are concluding this journey. In the first quarter, we should have that already well directed, and we will have a number of facilities here or or or options. We we'll be able to finance their customers and the sellers themselves because they will, you know, have a relationship with us, and we will know what is the transaction volume. That they have with us. So that's going to be very easy to finance them if that's I just would like to add the first question about profitability. And, also, to go back to Daniela's question about the stores that we intend to optimize. It is very important to to say that retailers hate closing stores. So we are talking about optimization of our footprint. Today, we have technology. We tested this technology. We are recovering most of the revenue in the micro market and the of that store that we should be closing with the other stores. In in some areas, I have 7 stores in the same region, 5 stores in the same region. And the idea is to close one of them and capture all the sales that or most of the sales That would be done by the other stores, and we are going to use technology, CRM, marketing, text me on WhatsApp, and so on. In a way that the benefit will be a huge reduction of the fixed expenses of the closed stores. So here we also have a driver to improve profitability for 2021, 22. Well, Roberto, let me add to that. When we talk about stores optimization, just to make it clear, in some of the streets, let's imagine that we sell 100 with sixty stores. So the idea is to have a 5 or 4 stores selling the same 100. That's what we are talking about. The consumers will be all migrating to these, existing stores. And our brands are so strong and relevant, and we have tested that. In some of the streets, we have areas. Of traffic, of customers flow in in some parts of the street. And the the the fact that that we are in the beginning of the street we and 2 our other competitors. And just the fact of having closed that store, just dropped the sales of the 2 competitors that were there because we moved the flow of traffic to to the another area in the street that happened with Casa's Baya. Casa's Baya has the type of pow the of power it generates traffic. So when we decide to remove the store from one place and to bring customers to another place, I know maybe the the competition we have to move around as well because we're draining the traffic that was on that side of the street and bringing it to another area. Thank you, Roberto. Next question from Bradesco's team, Richard. They want us to to tell them which elements we see that can still be added to our path form as a compliment to the system. Hello, Richard. Thank you for your question, and you know, I will not answer that. Right? We are looking at everything that can change via maybe add a GMV with something that would make sense to V and to our consumers I cannot be assertive here in this answer because then we are would be disclosing too many elements of our strategic plan. I am sorry, but I cannot go deeper in this answer. Next question from XB. They and then they want to understand an an update of current sales in October November, both in the online and brick and mortar channels, the physical channels. I will repeat. This is the XP team. They are asking us an update for sales development in October and so far in November already aiming Black Friday at the end of the month. Both in the physical and digital channels. Very well. We are very happy about what we see now in the fourth quarter. I cannot give you details, but I can tell you that we are very optimistic. We like what we see so far. And we are very well prepared for the journey from now to the end of the year, whether regarding inventory levels, and that can be applied for both channels, digital, and physical stores. So whether inventory team's preparation, our whole ecosystem, our logistics, our communication, which is brilliant. So we are very optimistic about what is going to happen from now on. Up to the end of the year, and we are very happy about what has happened so far in this 4th quarter. Next question. UBS Gustavo's team. And I think this is for Padilla. How Do the accounts of suppliers work in the portal and how the portal has happened, the gross margin in the period? Okay. Well, the first question is very simple about the partnership account. These are agreements we make with the suppliers, and they're intermediated by a bank. The bank pays as supplier and the agreed date with the original due date. And the company then will pay the bank with an additional period of time. We had a significant volume on that type of transaction in the last quarters, then we have reduced to one 5th of what we had now in the third quarter. We have a residual amount, and we should end that. This is an instrument that is available. Many retailers make use of that type of possibility, but we rather not have it. About the supplier's portal. That is very simple. Our process is fully digital. The product came into my DC or got into Via Varejo somewhere. We confirmed that it was received, and then the invoice is is available to be paid within 69 to a 120 days as agreed. And then the supplier has the possibility of going into that portal and receiving it, and prepay it. And we obviously use a discount interest rate there, and that does not affect the commercial results that will affect the financial result. We generate an interest of revenue that go into our active interest account. So it doesn't affect our gross profit. This is a rate that can be negotiated usually lower than what they would be able to get in the market. Higher than what I am able to have in my treasury department and an investment. So it's a it's a win win negotiation. We have allocated initially an amount it has increased over the quarter. And so we ended with a little over 600,000,000 in September. Of businesses of that nature with our suppliers. So this is something that you know, I would be paying in 90 days. I pay with 30, and that is idol isolated in my accounting when everything is paid out. I canceled the transaction. So it's, risk 0. It's just a cash delay, we would say, and the liquidity is very high. We are open to increasing those limits, not only to suppliers but also in the future, in the near future, we want to work with the sellers, our own partners, so that we can help in their, operations. Funding their operations. It's a portal. It's a very simple. It's efficient. And it's already been used by us for a while. We didn't use last year because of cash issues in the beginning of this year because of the pandemic. But now In the second quarter 3rd quarter, it's a backup fully. Okay? Well, now I would like to know how is your delivery in 20 hours. We are growing. So 90% of everything that backlog does happens within the 25 hours. When the total volume of Via Varejo is around 30 to 35%. In the 24 hours. But as I said, we are a few months from adding that. We just need 1 or 2 extra tech layers to unlock and is talk talking about 24 hours. And then we will be talking about, you know, how many hours before the 24? So we are going to discuss same day delivery, and I am sure over the first half of the year by the end of the first half of the year. We'll be discussing in Brazil the same day delivery. Okay. Next question. And Irma has three questions. And Irma wants to understand how we see the store's market share. We have grown an ecommerce and she wants to understand how was the store's behavior? And from now on, how we see this potential share gain? Irma thank you very much. We gained 2 points of market share in the store That's where we have our strength. We are much stronger than in the competition. And even then, we were also able to gain share in the third quarter. So this is the road looking forward where we intend to gain share in every channel we operate. Roberto, we selected 4 questions from individuals who posted their questions through the platform. And all of the other questions will be answered after the call throughout the week because we received many questions. But now starting with these 4, First, Albano, he wants to know about the pricing strategy on the online channel and the brick and mortar stores and how pricing strategy can add value to the company. Thank you very much. I think this is another way to innovate and we are also including individuals in our results earnings call because they are very relevant to our company. Well, certainly it's very important. We already contracted one of the best tools in the world. It's already in the in its deployment phase. And everything we do today has a great potential to boost our company even further. I think that around the first quarter, the tool will be fully deployed. But again, I must say that our pricing dynamic right now is quite relevant and this is seen through the numbers of our gross profit. And certainly, we will be even more assertive and even more personalized when it comes to our customers once the tool is fully deployed. Next question from Orlando Costa. He wants to know whether we are seeking to expand our business into the restaurant business. Orlando. We have good knowledge of the food market because I have a background in hypermarket, Padilla as well. And, some of us have a a great track record working with the sale of food. Not restaurant per se, but we believe that yes, it's possible. We We are a bit concerned because we see a lot of people worried about frequency, trying to deliver perishables, and this is very challenging in Brazil. I believe that the service level is not improving on the contrary. And if we understand that we have a competitive edge to do that and if we see that that's what consumers want, That may be an avenue to be looked into in the future. From Felipe Ponces. He wants to know how we perceive the reduction of the emergency aid, whether that reduction has had any impact on your sales? Could it be we are not feeling anything? I mean, the reduction in the emergency aid has already occurred, but I continue to to sell. Well, we talked to chief analysts for rubber bags in Brazil. And in one of our last conversations, we were tries to hear that the savings level of consumers was increasing, meaning that they're not spending all their money, the money that they're getting right now. And that that's because consumers are not traveling that much. They are not leaving their homes that much. And so therefore, they're able to save more. Until now, 3rd quarter, as you could tell, we posted good results despite the reduction in the emergency And finally, Roberto, the last question, and I think this resonates with the final remarks, Denise Yavara, asks now that the turnover is over, what are the next challenges for Via Varejo's success? Thank you very much for your question. Our challenge was to move the company back on track, and it is now on track. Now? We are improving our bullet train, so this bullet train can move even faster. I believe I already talked about our ecosystem and all of the advantages we have And what happens to that ecosystem once I start adding all the digital layers that are now being developed? We we are gaining a new company every quarter. You know, rest assure I know that we are the company that is assets to do so. And this is the path that we will pursue. That's the name of the game. We have the assets to do that. We are is deploying all the necessary technology to unlock our assets and to to be able to be successful looking for, but there's still a lot to So far, those most part of our effort and our energy was geared towards, you know, doing the run of the mill operation and our insertion with those with, you know, startups like the street to allows us to think beyond retail and to think about the company in terms of making it generate differential so we can be ahead of the competition. We know for sure that the company has what it takes to do that. So with that, we conclude the Q And A session and now I'll give the floor back to Padilla for his final remarks. I would like to thank you all very much. And I must say that we continue to be very focused on this transformation journey of the company. We have the entire Via Vareza as a team fully committed and focus on fulfilling the dreams of our consumers. We are a people, a company of people and people who like to relate with other people. We are diligently working to focus and to serve our customers. I think that what happened this just paved the way of everything we set to you during the past quarters, but we still have a lot of room to cover. And we still have a lot of results and success to bring to this company looking forward. Thank you all very much.