Earnings Call: Q1 2020

May 14, 2020

Good afternoon, ladies and gentlemen. Thank you for waiting. Welcome to Vivadirjo's conference call to discuss the results the call. It seems like gas could be an internet. And you can have access to it at our website, www.viva.com. Br/ir where you also find the company's presentation. The slide selection will be managed by you. The replay will be available after the call is finished. The company's press release is also available at its IR website. This call is being recorded and all participants will be in listen only mode during the company's presentation. After Via Varejo's remarks, there will be a Q and A session when further instructions will be given. Should you need assistance during this call please press star 0 to reach the operator. Before proceeding, we should mention that forward looking statements made during the conference call regarding business perspective projections and operating international goals are based on the beliefs and assumptions of Via Valisch's management as well as on information currently available to the company. Forward looking statements are not guarantee 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. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of the evaluation and cost results to differ materially from those expressed in such forward looking statements. With us today, Mr. Roberto, future burger, CEO of the company and Mr. Orenaldo Padilla, CFO and IR Officer. Now I would like to turn the floor to Mr. Roberto Pucciberger. Good afternoon, everyone. I would like to thank you very much for being here with us. In this call, I Hope everyone and also your families are doing well and are all healthy right now in this moment. That we are going through our society and everyone in the world is going through. I would like to start by repeating what we said in our last call in March talking about the fourth quarter of 2019. We already had the pandemic happening at the time, but I would like to say that since that since we understood what was happening out of the country, and that what could happen in Brazil, we have taken all protective measures in an anticipated fashion, whether for our employees or customers as well as for VFID agents. So at the time, we put together several committees in the company to tackle the issue. These committees are working since then since day 0, they are active right now fully operational and they are developing all the protocols needed for the different areas in the company so that we can go through the difficult moment. I think the mission that we have here today is to show you that in 10 months, it's possible to make a digital transformation of the largest retailer in the country. I think the figures are going to show you how far ahead we are in this transformation and how digital we are already at this time. We have taken over this company of bringing productivity to the strong assets the company already has. And at the same time, to make a huge digital transformation to manage and optimize even more on these assets. Today, we are going to show you with our figures. And the figures that we bring to you today, I can tell you that just a tech company could bring to you. You hardly will see a non digital company being able to disclosed this type of figures. And not only being a digital company, I think, to bring is these figures and has to be a digital company and a company that has assets, assets such as 85,000,000 customers that it's based, the most traditional credit assignment in Brazil, top of mind brand for over 14 years, a strong commercial know how great logistics and several other assets that our company has, the pre and post COVID numbers that we are going to bring to you, make it very clear that Via Varejo has placed the technology as the main player to ensure scalable growth, speed, And we can say that an important share of our digital transformation has been already executed and it allows us to compete side by side with the other players in the market, whether online pure online players or players that were referencing the digital transformation in the retail market in Brazil. Actually, we are going to show you here that even large retailers such as ourselves can be Agile, adaptable, and scalable, and even better. I will start the presentation on page number 2. And I have to mention about our corporate social responsibility. And everything that our cabozant Bahia foundation, order success for many years already is doing right now. We are working in a coordination with governments, communities, entities, several companies and different partners as well. With a lot of agility, we are taking several actions very quickly We have a very clear and strategic vision regarding sustainability and corporate social comparability as well. We know what is our role in society and what is our calling to work with a very well defined purpose. In terms of reputation, the Institute Chroma insights just published survey, and we are among the 10 top of mind brands, during this pandemic. Here we have some of the things that we have carried out during this period. We have always been very much engaged to the different communities in the country, whether because we have stores in these communities or because we have stores and social projects or just social projects. We have always had those. Our relationship has always been very close to them. And right now, that is even stronger. We are very happy about it. There are several companies that also engaged into it. And they found out more about the communities in Brazil and they know that they need help. And we understand that this is a legacy that is here to stay. These companies probably will be always be helping and we'll keep on helping. We have around BRL5.3 1,000,000 in donations to BRL1 1,000,000 for an emergency fund for the TMAV Entrepreneur. And that has to do with a small, very small loans for these teenage entrepreneurs can either start or continue their own businesses Also, we had a live with Sandy and Junior. We talked to them and we understood that the message that they conveyed had a lot to do with what we wanted to convey. So we partnered for this live. We had BRL15 million on this life that corresponds to over 1000 tons of food, and we donated around 70% of these 1000 tons. That went to Mesa Brazil and other charitable institutions as well. We have distributed over 4000 table, food basket. And also hygiene cleaning products gives 300 of those, also best mattresses, home appliance, electronics, for communities, hospitals, municipal, state and federal governments. Our logistics is very strong. We are helping also some initiatives with our logistics one of them was to repair ventilators done by the automaker, the auto industry. We helped with our logistics and also we are helping with logistics for fabrics for manufacturing 62,000 masks in a donate mask project. These are some of the examples of our action. Do we understand our social duty and how much responsibility we have at this moment? Now turning to page 3, I will turn to the highlights for the first quarter. We have reached $7,800,000,000 of GMV and 27 percent of that was on our online channel that represents 8 points of growth in the online penetration on top of the first quarter of 2019. Our bus growth and the online channel. For 1P, we grew 52% in the first quarter of 2020. And if we also isolate March, which has 10 or 11 days of closed stores, we would have over 60% growth. And then 3 Cs growth was 27% in the first quarter and 37% if we isolate just March. So there was an exponential growth in the number of active users in apps. We went from one point $5,000,000 in June of 2019 to $8,000,000 in March of 2020. And in April, we already reached $11,200,000. There is a chart up ahead, and I think you will be able to better understand how sustainable this growth it. On page number 4, we have a major highlight for the last reversal of BRL15 1,000,000 in the same quarter of last year to a net income in this quarter of BRL13 million. So we had a loss of BRL15 1,000,000. Now we had a net income of BRL13 and we, ran an estimate. And this estimate, we consider the results that we had up to the day when we closed the stores. We had 98% of our target met for March. And then we carried out those 10 remaining days out to the same projection of 98%. I'm sorry. We got disconnected. Let's just wait a while to come back. So that was BRL 1,900,000,000, a growth of 11.5% on top of the first quarter of 2019. Adjusted EBITDA margin and Padilla will go into the details, but it was 1.7 points above 1st Q 'nineteen, reaching R621 1,000,000, a growth of 22% of the EBITDA margin. Total GMV already mentioned BRL7.8000000000 to 27% coming from the online channel a growth of eight points above the first quarter of 2019. And in March alone, the online channel represented 34%. We ended the quarter with cash plus undiscounted credit card receivables summing up BRL 2,900,000,000. This figure is very important. Now talking about the market share on page 5, why we understand our digital transformation is already at the level in which we can compete side by side with the other players. We bring to you JSK and Confluence data. So we have week by week. So the last we have GSK's information, we started 13th week. That's when everything started. Growing 43% on the online category and the market, not including Via Varejo's growth, so that is market Minocia Varejo dropped 2% in 14th week. We grew 83% and market without Varejo grew 56 15th week, 120, 16th week, 3 37th week, which was published by GSK. So the 18th week should be published in the next few days. But in 17th, week, we grew 3.83 percent vis a vis 61% of the market growth. Again, that considering the variation. We have another source, which is concrete and concrete from the clear sales group. So for GSK is everything that is in the online power segment with the different companies from Brazil and all of them that change numbers with GfK. So here, we have 90% of the online companies under GfK. Compre and considers all the categories everything that goes through clear sales, it runs through comfy concrete. And everything that is online regardless the category, everything is here. Including food. So we start growing 148 percent vis a vis the market without Via Vadura is at 24%. And we have a growing curve in the 17th week. We reached 307% growth visibility, the market minus here at 76%. It's important to highlight that this growth that you see here places via variation in 17th week going from a share that we had of 20.4% before the Crisis to A share of 40 3 percent of everything that we have in our segment and the online categories. So our share had an exponential growth. And I can tell you that we are already digital because a company that's not digital and a company that doesn't have the assets that this company has would not be able to reach this quick growth and to allow that much flow of volume in other sales. So on slide number 7, we see here the similar web, also very known. That is another tool that we use to measure traffic. So we are the green line here. In April, we have 54.9%. And here, we are comparing ourselves to competitors whether online, core online competitors or other competitors that are referenced in online transformation. And here you can see that we have the highest growth in the period of time. That is thanks to a lot of work and dedication that we are doing since D00 when we took over the company I'll rework that we are doing in our tech area and everything that we have been doing in our channels, in our online channel so far. Still in the number of visits in the cellular lab, if we isolated the number of visits for the first quarter of the average, we had 100 and 80,000,000 visits. Our direct competitor has 148,000,000 in the same period. If I consider April, we had 88,000,000 visits our competitor has 54 minutes ahead. These seniors are available to the market This is these are not figures that we brought to you. The sources are there. So all these figures do have an origin. Now turning to the next slide. I think you can see it even more clearly here we have the traffic by similar web, by itself, that's not as relevant because it's also following up the growth of the MAU and the app. So we have retailers that are a little bit more focused and about higher concentration on the app. And I think that the sum of these two figures here bring us the real projection of what is happening to the evaluation. And we have grown in terms of visits in our app 3 45% in the first quarter, 4 50% if I consider March alone. Now looking at the chart in the bottom of the slide is clearer. You all remember we see here in the first and in a second call we decided that we have removed ourselves from the online sale because we were making important adjustments, there were problems creating noises with consumers. So in fact, we started accelerating our online sales in September. We started with 2,000,000 of active users in September. We ended December with 5200 we end the March with almost 8,000,000. And then we are basically adding 1,000,000 users a month up to now the end of March. So we scale April to 11,000,000 into 100,000. And the greatest news that we have is that up to May 12, We already have 12,000,000 and a half users that are active in our app. So I think it's, important to say here that we see how relevant All of this is when I look at core digital players, celebrating 18,000,000 of active users. We already have $12,500,000 in 10 months. And we also see retailers that are referenced in transformation very recently celebrating BRL 20,000,000,000. So I cannot give you any guidance, but given this projection, you can make your own estimate mention is that we are already mobile first. So when we add the penetration of insights an app that already represents 67% of our online GMV. So in April, 22% of our income came via app in May that increased a lot and tight as well. And that takes us to that penetration of 67% of our sales already coming from mobile. Other highlights here on the slide. Talking about the COVID period. We started April reaching 70% of our budget, our digital our original budget for April, we gained a lot of traction in the month of April. And the figures that we just presented about the share is they show it We ended April with 90% of everything that we sell of goods that we sold in April of 2019. So 90% of the amount of sales sold in April of 2019 has been done now 90% of that in April of 2020. So I think that the most relevant information is that, oh, that was the beginning of the crisis. It was only net shows that you would have a higher online demand, but the figures are showing, sustainability in our growth. If we consider May, that is among the best selling months in the year because of Mother's Day, that is the 2nd our 3rd best day in the year. Up to Mother's Day, we are at 10% higher than our total sales volume made in April of 'nineteen. I'm sorry. We got disconnected once again. Let's wait a little bit, please. So I'll I'm going to insist that this company is very digital to have sales growth on top of May of last year with 80% of the stores closed really. We are looking at this figure here with a lot of enthusiasm, and We are still maintaining our encouragement and our strength to add more users to our base. In some lives, I even said that we found a gold spot in this crisis. I already mentioned also that this team is very resilient in terms of moving fast. We have always been a transformation facing manual turbulences. And we adjusted the results very fast. We were not just complaining for even a day, we reacted immediately to see how we could do the strong migration to our digital segment, then the teams have this idea of another program called tax me on WhatsApp. That corresponds to many of our sales in a consistent fashion. The text me on WhatsApp as a nice feature. This is going to be one of the functionalities of our digital So, our seller is already digital. We have turned this key. We do not have conflict in this company anymore about the the physical seller and the online seller. That's a digital process, all right. And that helps us drive a lot, our number of active users. The online seller became a worldwide Facebook case. Now this is happening to bring in a number of consumers in this online world. There was a study released by Google a few days ago. And there you have a term that is called digital immigrants. And the digital immigrants are those that don't understand quite well how to purchase online. And they estimated the figure at the end of 2018 with over 100,000,000 people that is the largest part of the population. And they estimate that this figure is still very relevant in our current scenario. And the search for the phrase and how to purchase online has grown 198% in March. So that shows the relevance of what we have done. Now online sales became human. Customers that have a problem purchasing online. We just click on that button and they start interacting with our sales rep and our sales rep is going to be with this customer up to the final moment of the sale. Also during this crisis, We had another very important initiative. We launched our digital payment work. So that same payment work that they have in the stores and it's covered by you. It was also launched in a digital version. We've got our phase of 85,000,000 customers, we separated 4,500,000 of them and we enabled them to start the test. So these 4,500,000 customers are ready to go into our digital platforms and to purchase using the credit, system that we have. And this is an unprecedented advantage in the crisis moment and also for the post crisis as well. It's only natural that right now, the banks are going to reduce the credit card limits. For customers, everyone wants to avoid risks. And we have a strong base here of customers, and we know how to find credit in the company for Brazilian populations. So we do have a share gain here in the continuity of this digital payment book. Within a few months, this is going to be open for any customer that uses our platforms. We also had made a decision by the end of March of postponing Abrio's installment considering our consumers or our customers who are used to paying those installments and the stores. Even having done that, 62% of our customers to pay the payment book is somehow whether using bank apps or lottery branches, oral bank branches. And so that made us very happy about the quality of the credit that we assign to our customers and the loyalties that they have with our payment book. Our bacteria factory also has something we have signed an exporting deal to the U. S. And I'm sorry we lost the plan once again. That we had frozen investments. Indefinitely until we understood where they were heading to. However, we did not stop anything about IT investments, something around BRL300 1,000,000 this year, quite the opposite. We strongly accelerated the investment. And we believe we've walked out of this crisis far more digital than ever. On the next slide, he will show the case study of Facebook. So it's a world Facebook case published by them. Our initiative, text me on Whatsa. So it is having inclusion involving our seller team that becomes digital and also the inclusion of our consumers who were not digital but are becoming digital and also the inclusion of several other consumers several other retailers and the number of new consumers as we speak is growing exponentially. The main benefit to us is that once we overcome the crisis, Then we're going to have more than 20,000 sellers active in the stores, when there is no customer in the store, they can perform online sales fed by our CRM, which was fully reformatized with new decision making rules, all by being called by consumers in our platforms. And we also managed to perform online sale of our home 3P. Our marketplace, therefore, is going to be extremely powerful once our sellers perform the sales. Another very important piece of information is that even with digital payment books that were just implemented for the Casa Bahia banner, and soon we also be available to all consumers. This will also fund marketplace items. Asking you. So the main benefit we see today in the market of having a high number of sellers We understand marketplace is a big shopping mall. No exclusivity of store malls. The banners go to all malls. And they'll try to be more active in the malls where they have more people flow. We can see people traffic as a very strong progress evolving the digital payment book, which will also be at the service of sellers and our full logistics platform that I'll be referring to later on, which will also be at the service of our sellers. So as soon as we deploy improvements to our marketplace tool in June. We believe there will be a big exponential gain in marketplace. Several states already had locked down, decreased. So since on 18th, we already had stores being closed. So on the 18th, we started with 15% of the stores closed and that is, revenue, 1933, and the 20th, 46. And Then on the 21st, we had 100% of our physical stores closed. Therefore, there was an estimate of how much this loss would have been. Of course, this is a very conservative estimate. We went over our budget the date. And we believe that the loss of revenue in physical stores has been of BRL 726,000,000. In this period when we closed March. And that has caused an EBITDA impact of $97,000,000 $87,000,000 in our net income. If we had had a performance without the COVID. In fact, we would have a total GMP VIA of BRL 8,500,000,000, that shows us a very significant growth in the company. Another relevant data also coming from the lockdown is that we have taken several cash protection actions like, prepayment of receivable. And with that, we have, prepayment expenses with interest, of course. And in the last 2 weeks of March, spreads doubled. So we did have a detachment there of 34,000,000 extra in expenses because of that. Should we have that, our expenses would have been $284,000,000 4.10 percent on top of sales. We should say also that this result relates better our recurring performance. Now, here we compare the prior year. As I said, there are adjustments in both quarters. They are equivalent. Therefore, accounting comparison can be perfect. It is correct. So, on top of 2019, we have sold 227 $1,000,000,000 to 3.10 percent higher of gross profit is $30,700,000,000 vis a vis 27.6, an increase of expenses of 1.57 percent higher, an EBITDA higher in 1000000, 22% more 1.70 percentage points higher financial expenses because of what I mentioned and also because of a higher indebtedness in the last four quarters, 56% higher, 21% and a reversal of loss of $50,000,000 to net income of $13,000,000 for $63,000,000 comparing that and going to GMV, total GMV, considering that we hear considering physical stores and the e commerce and another observation here is that in the fourth quarter, we switched the GMV concept the Click and Collect is now under store sales in our performance KPI for sales. Because that reflects in a more precise fashion, the tax nature of our sale. So it's totally audited and it can be audited. And so if the consumer picks up the store and the store, the invoice will have that store and that tax ID number from the store. The store address and the tax ID of the store. So this was done in the fourth quarter of 2019. So as we mentioned, we have a growth of 3% in our GMP be not considering COVID effects, a growth of 13% showing in figures what Roberto talk about in terms of our recent performance. Okay. I have just a quick comment here. It's important because we understand GMV. And I know that how you're reading the companies right now, but GMV is not something that can be audited. So we try to provide absolute transparency to our GMV attaching it to and invoicing unit. So if tomorrow, at some moment, GMV can be audited. The reality that we have under our GMV will be very period. It can be anywhere on the top and the bottom or anywhere. A lot of things that happen in this market is there. And we want to provide full transparency to our GMV. And, you know, our online might even be damaged by that because the click on click and collect is an online sale that would be increasing our online And we know that is much better, but we chose to follow a full transparency path And that's why it's under the store then. Thank you, Roberto, and continuing then. The gross profits for brick and mortar stores were growing strongly with COVID as they had a drop of 7% and ARS5.722 but the trend was to have a growth close to 5%. So estimated BRL64.40 8,000,000 with a growth close to 5%. GMV, as Roberto has said, BRL 2,118,000,000,000, a growth of 46%. Now breaking down the GMV on the next page. So, yes, on that page. Yes, that page is still talking about gross profit as it has been shown a total growth of 21 percent in gross profit with SEK 2,110,000,000,000, 30.40 visavis27.62.60 better and the margin of merchandising and 2.7 better and credit operations margin. For SG And A, it's higher in 0.5 4%. Here, we had to invest in marketing because of the change in channels from physical stores to e Commerce. Or digital communication. And therefore, adjusted EBITDA $718,000,000 600 and 21 with the COVID. In fact, 9 80 and 10 30 a growth of 41% of the EBITDA in the quarter. Well, this summarizes the fact of the net income. As I said, we also have income tax return and EBIT. We have $50,000,000 loss in the first quarter of last year. We so to R13 $1,000,000 of profit this year. Without Covalou, we believe this would have been R100 $1,000,000 at least. Cash and debt, we ended at a position of BRL 2881,000,000,000 in cash and receivables not discounted. This is also a conservative position. We have approximately BRL300 million of receivables that are recurrent for B2B that doesn't add up here. We can also say that our liquidity is above BRL3.1 1,000,000,000 vis a vis the same amount of last year. Our bank debt of 917, the first quarter of 'nineteen to 2 Point 5,300,000,000. That is mainly because of the increase of indebtedness in the 1st, second, and third quarters of 2019. When the company has used up cash, net cash, for instance, of $2,203,000,000 to $828,000,000. Not cash, not that bad here. Next is live. Then we show what happened in terms of cash consumption between this is a quarter that is very seasonable. Seasonable, we started in, strong sales in the fourth quarter, especially Christmas and Black Friday, New Year's Eve and all the, New Year's sales in the 1st 2 weeks of January, a very high cash position. So on that snapshot, December 31, and it is only natural to have the cash consumption for payments to suppliers and the sales of the fourth quarter. So these payments usually happen on February March. So it is only natural to have a drop in our cash position because of this seasonality. We have brought to you this both quarters, because last year, the consumption was BRL 2,002,002,002,000,000,000 this quarter. Was BRL1.4 billion and showing there was a better cash management, especially because of the working capital management of the company with a lower consumption of around BRL800 million. And now the company is increasingly becoming more transparent in its operations. I do admit our balance sheet is very complex. Particularly for those who read it. Our operation is quite robust with credit to consumers and it's consolidated at least 8 or 9 accounts in our balance sheets in assets and liability accounts. So that's the position of our CDCI, our CDC, with a famous CASA by a payment book, the assets are perfectly explained on Page 24 of our quarterly statement and liabilities on Page 36. So I'm just showing the head of this operation. In other words, how much the company has as receivables from active payment books, receivables from customers and also to transfer to banks that fund the operation with us. So this operation from the moment the payment book happens, the next date is discounted and the money comes as cash, but customer has a debt to the company, and the company has a debt to the bank. So it's a transfer flow operation that goes on over 30 years now. And there is not a due date of RMB3700 that one day I'll have to work on. It's recurring. These are credit limits. In addition to the BRL3.700,000,000, I have other BRL1 1,000,000,000 approved banks for good customers, good payers, those were pre approved by the company. So in this position, by the end of March, we have to receive from our customers 3.549 and to transfer on lending to our partner banks like Safra Banco Do Brasil and Bradesco 3.7. So that's a debt conceded by many analysts, but we have to say that we also have an asset with high liquidity. Usually. We have some resilience when we receive CASBayer payment books, and that's a historical fact at the company. One third of these customers don't even have a checking account at the bank. So for those, maybe this is the only source of credit in the market. So that's why we prefer to have this payment. Like Roberto said in April, even though we postponed the payment for the end, 62% of customers paid in the month of May, We are watching and witnessing a growth receiving more than 30% for this indicator, we can say that we have very low risk of delinquent and deferred in our payment book operation. So just repeating that's historical for the company. So on this slide, I want to show the cash effect of the CDC accounts. Just to make it clear, what we mean by our receivables and on lending to banks. Last but not least, a couple of words on our inventories, one of the most successful decisions made by the company in early January when we first heard about COVID. And its impact in China, the company made a decision to protect the inventory position Please bear in mind that our inventories were all renewed. We eliminated low turnover STUs in 3 4 3rd and 4th quarters last year, our inventories are renewed and with a lot of potential for sale. So we're already going down owing to the sales volume, However, we have an ability say, and that's a common question to our IR department. No supply agreement with the company happens in dollars. So we don't have any exposure whatsoever with any stakeholder, particularly suppliers in dollars. Thank you, Padilla. So coming back now I would like to say that everything that happened to the company up to now does not consider several initiatives that will happen in the next 60 days. In Via Varejo day, we said that by midyear, we would bring several innovations. So we still have a lot of innovations to come. And they will further improve our performance. So when it comes to the online team, our tribes, so to speak, are all set That's how they call themselves now tribes. So they are already up and running and responding fast. So CDC online, text me on WhatsApp was a record time operation. Fewer than 4 days for Textmion Whatsapp. And in online, we have new apps coming along now in June, servicing more specifically in usability and speed, this will greatly improve our conversion in our apps so that's a very considerable change, an improvement. Off line, we have VMIs or Via Plus, which is our sales system, to our sellers. Already starting with recommendations and marketplace. So once consumers walk into the store and they will have a recommendation of what, theoretically, what that customer would be willing to buy I said in our latest call that our Head of Data is already on board and the company with a very significant improvement in this This will be in the hands of our sellers with the ability to perform and close the sale fully independently. With a POS, with a mobile phone in hand, and the same mobile phone. Will also be used to perform the online sale. In the same mobile phone when there is no physical store customer to perform the online sale. In our IT team, we already have 1200 people. So the tribes are all set We already have our BANQI team in the U. S. Based in the U. S. And we also have our new lab tech lab for logistics based in Rana with the arrival of ASAP Wab, who have the team on board. To have our tech lab with logistics. What about marketplace? We also have improvement for the next 60 days in a very significant manner for logistics on board and the daily operations of the tenants in our platform. So pretty soon we can have 10,000 sellers in per day, per day, if you want. And then it's our strategic decision. To see how fast we want to have more sellers and how we're going to qualify those sellers. Our decision right now, considering we have some constraints in the number of sellers that we can have, We've decided right now to privilege those sellers who already have a good relation with us and having strategic sellers in house. So we just closed a deal with Martins So you all know Martins, one of the greatest wholesales operations in Brazil. So there are several fronts where Martins is and will be joining hands also with other players. So we have significant gains for us and everything that involves cleaning, hygiene operations, food, So we go very deep into a new category right now in our marketplace. Like I said in the past, we don't believe that having a huge number of sellers, that's not necessarily the rule of the game. What's decisive is having good sellers. That's what will make you the winner of the game. That are many marketplaces in Diodes Crates right now. They are small sellers. They have supply problems. We are even invited to integrate marketplace of some of our competitors naturally. Does it make sense for us? We want consumers to come to us and experience our level of service. So we have conditions and opportunities to have customer loyalty. So we have all these improvements coming along. We used to say that it would happen midyear So this is midyear and in 60 days, we'll have these tools up and running. On the next page, I'm not going to be redundant. That's a big summary of our digitalization cycle. What I want to highlight and I never mentioned is that we have 250 stores open the number is growing from the 1st 2nd week of March. We started with 30, then 60, then 90, and Over April correcting myself, by the end of April in late April, we had approximately 2 twenty stores. And already reaching 250 stores. So in my opinion, we are very bullish about the whole transformation we've been managing to perform, but we're far from winning the game. Epidemix is still strong. And our advantage is that if we have long lockdowns that may happen, or even the stores that already open, maybe they'll have to be shut or maybe we'll have to expand. The time in which they remain shut. However, we have the ability to sell online. So we are ready in a new pace at the company, and then we can have full speed and sales in May maybe above what we posted last year. And now banking, we are really intensifying employment in BANKE will hit 1,000,000 downloads in late April. So this is our huge bet. We have plenty of news to happen with BAMKIE and huge opportunities to improve our relations with our consumers, with our sellers and those who are not direct consumers yet. So there is a big opportunity with BAN Key, and you give you more details next quarter. On the next slide, In the middle of the crisis, we acquired as a loss, not only linked to the crisis, we had previous negotiations, for a couple of months. So we've been considering several options in the market and we understood the best and most efficient option was as a walk. So here, we gained an immediate ability to work on our last mile. Today, we have 120,000,000 hams as a SEP log is already in many hops and in a short timeframe, we'll evolve to 180 many hops and as outlined tends to be in all of them pretty fast. So week after week, it is getting to new mini hubs bringing 2 main benefits. Firstly, the cost of delivery, be it in 1p when we have the goods very close to the customers. And it gives a lot of logistics cost dilution and also strong speed in delivery time. But as of log, now we can perform delivery within just a couple of hours once the sale is concluded. So the main point of delay is credit card security. Once the credit card is approved, then we are ready to deliver in 30 minutes 60 minutes comps depending on where or how far the customer is is from our mini hubs or stores. And also a significant improvement in 3P we gained the ability to operate through P Logistics and being an option to our marketplace. And with that, our freight chart. Remember, we've performed 2 deliveries per second. So our freight chart is very well negotiated. And we gained the ability to extend this chart to the marketplace with a huge benefit in cost production. So that's another reason for marketplace to be close to us. And we also have the condition to use our mini hubs to serve marketplace having as of why coordinating everything. So there is a strong evolution performed by the company, a strong digital maturity, and many things to come along. Now open the Q And A session. Have your questions asked all at once to wait for the company's answers. First question from Victor Saramoto from Credit Suisse. Victor Saragioso? Yes. I would like to start by asking a question to you, Roberto, regarding the e commerce performance. In the beginning of the call, Roberto, when you talked about May, it looks like you talked about a figure, but I couldn't understand very well. I got disconnected. But if you can go back and comment about this performance in May, thank you very much. I would appreciate. And second, about your e commerce. The e commerce grew a lot at the end of the first quarter and it's accelerating over the and 4 already. And if you can talk about that profitability, what was the behavior of the profitability? Was it better or not? That would be great if you could comment on that as well. Thank you. Okay. Victor, thank you very much for your question. Well, I thought, two things about May. I don't know what you meant about May then. The number of monthly active users that went up to 12,500,000 users. We ended April with 11,000,000 to 1000 in May, we have $12,500,000 in May 12. About May also, I talked about our May sales. With 80% of stores closed, we have sales up to Mother's Day, which is among the 3 best dates in the year. We already had 10% over May of last year. So if we compare to last year, the whole company with all the stores opened and, the online working, so up to Mother's Day, of this year, we had a 10% extra sales in 2020, of course. About the e commerce margin, what we are seeing right now is that, you know, obviously, this is not the same margin that we have in the brick and mortar world, but our online margin is better than the pre COVID online margin. So we are tapping into all this benefit that the company has in terms of volume of negotiation as well as pricing, which you already started adding, intelligence in our pricing. And we have a major progress over the year with a lot of analytics dedicated to pricing as well, but we've started happening on into a part of that. So we have an e commerce margin that is better than the margins coming from e commerce pre COVID. And also relevant here to understand what's happening to the company that is already having 80% of its revenue in the online but 65 of our expenses are variable, and most of those expenses do come from brick and mortar A relevant share of expenses are coming from a physical store, then these stores are closed. So several of these expenses are not there. And some of the expenses, for instance, we were able to renegotiate such as leases. Perfect, Roberto. Thank you, and congratulations on your performance. Victor, were you able to hear everything? We did have the information that your moments were we had disconnections. Okay. Let's turn to the second question. And I will ask again if everyone was able to hear us. Our second question is from Bank of America, Mr. Buck Fors. Good afternoon, everyone. Roberto, congratulations on the results. And I was able to hear everything. The gross margin improved better than what is expected. What is behind that? And what do you think about the gross margin from now on? And also, can you tell us about the relationship with suppliers and the support that you had for closing your stores And how do you compare that level of support to the rest of retailers? Good afternoon, Bob. And thank you for your questions. Well, gross margin relates a lot to the mix renovation. So over the second half of last year, we had out everything that was not a winning mix. We burned a lot of inventory and also the strength that this company has. This commercial team is very strong. This is in our core. We have a long term ship with the industry. So starting on my first call, when I got here, I do do that. We would quickly reestablish all that. We do not have a monthly view or quarterly view. We do have a long term view. Considering the volume that we have, yes, we do have the possibility of having a favorable condition and also related to the intelligence that we have as far as pricing is concerned and our online category. Also, all of this together, we the margin that we see right now. I think that when the stores were closed, And when the market understood what was going to happen, we had different types of actions coming from the Brazilian retailers. Some of them closed the DCs, some decreased receiving volumes. Some of them received and postponed payments, and then they brought the industry back to prepay and been charging a rate for that. We have seen everything, but we are following the same absolute transparency line of action that we have always had. It was the end of a quarter for some of the industries. We had our receivables 100 percent opened. So we did not hurt any of the industry in their quarterly end. And we had, it's a great understanding that, those that would have a good level of inventory and describes would gain share. And also those that would come out of the crisis had a good share of inventory would be winners as well. So when they look at isolated margins, you know, this relates to that partnership and, and the relationship that we have between the evaluation and the other industry players. Of course, some days are more difficult. Some days we have antagonic interest we do have a single interest, which is to move a large volume of items, and we always get to that common interest to close our deals. And I think that's how we got that great benefit. The next question is from Good afternoon, everyone. I have two questions. The first about logistics. Where you are, missioning the release, a target public of 85,000,000 people, which is quite considerable, would just like to understand the next steps in order to have this target public of 85 million people. Are you working on further? For instance, a program, contract program. Thank you. The 60% that we mentioned on Via Vallejo Day was already surpassed 48 hours If I'm not mistaken, it happened in the middle or early first quarter. We are already in that phase. So we already hit the target And now we have further challenges with the arrival of SF Log, we were to further strengthen delivery within 24 hours and within hours. So that's our next big challenge, and we already started to work on it. We moved from 47 of deliveries within 48 hours and it keeps on growing. We're not going to give a lot of detail, Richard, because there is a big strategy behind it, and we're still setting it up for Banki. Actually, it is already prepared. We are working on it right now and we intend to give more detail about Banti in our next call. If we say a lot right now, maybe we're going to give equipment to our competitors. About our strategy. Thank you, Roberto. Thank you. Good afternoon, everyone. Thank you for taking my question. My question is about MarketPlace. The plan is very clear. The investment that you made is clear. Maybe Roberto, you could mention the current status about the number of sellers. I know it's clear that the investment entails a capacity to increase or onboard 10,000 sellers per day. How do you see this evolution? I think you mentioned that it depends on the company's strategy. The idea is to bring partners first, improving the mix, But when should we expect to see this or how should we expect to see that in the future? So how many sellers do you have today and what is the plan of growth in the seller base? So to some extent, we managed to quantify in marketplace. So that's one question. And the second question has to do with your relations with suppliers and inventory management, we can clearly see based on the results and margins and sales that you really managed to make improvements to your inventories and partner with suppliers, which was of great help in this period, having this great market share. What about the future? If we consider a scenario that so uncertain. The economic activity data is so uncertain. So what about your strategy? When it comes to inventories and suppliers, also bear in mind that you had a plan to lower the amount of credit with suppliers. And I believe that today you're counting more on these credit lines to overcome the crisis. If you could comment on that as well, it would be great. Thank you. Let me begin by aggressive marketplace. We have approximately 7000 sellers today, 3,500,000 SKUs, approximately And based on this improvement that takes place in the platform that will happen within the next 60 days, then we'll have conditions to have exponential sellers in house. So like I said, we don't believe that seller volume is the answer. Our strategy is let us go for the best sellers in the market and invite them to be in our business and to use our traffic, our payment book operation, our image and our logistics in order to help sell their products. We don't intend to and freely. We want to assure quality because at the end of the day, the failed to deliver or a bad service provided by any seller will ruin our reputation. So we gain the ability to scale up and we make assessments. We don't have a fixed number. That's not a metric. Our metric is to have a strong growth in GMV, sorry, not 10,000 sellers per day, but per month, by mistake. And that's what we will manage to do once we improve our platform. 10,000 sellers per month. So we're not going to set a seller target what we want is to increase our GMV from everything that adds to our business, improving the level of service to our consumer, to make sure we have a stronger relation with this consumer and the greatest increase in our customer base. So that's what we'll be pursuing with marketplace. Please bear in mind just an additional detail we are going to improve our ability to have marketplace being sold by our more than 20,000 sellers in all our stores. I would say it's a humanized and boosted marketplace in addition to having more onboarding will also have all our sellers in transit and also with the ability to perform via payment book unlike any other player. As for supply. We keep on working our replenishment. We are selling a lot So like I said, in April, we performed something around 90% and in May, we are above last year's rates. And the supply cycle is effective. It's a normal supply cycle, so very strong in the volume of supply, but several industries they are supporting us. We have been going down our risk pre crisis because we were generating cash, but now we are using it again because we believe it makes sense to use all our options, credit options available in the market. So this is normal now with the industry Our SKU replenishment is also normal. We keep on replenishing our inventories as soon as we sell Thank you. Next question from Mr. Joseph Giordano, JPMorgan. Good afternoon, everyone. Hello, Roberto and Padilla. I hope you're doing well. My question has to do with the adaptation that the company has made. It was very fast. I would like to understand how these new relationships went. The new relationships that the company had to develop on the 1P side to work on a potential change. And how do you see the mix change in this online demand. And what is the behavior of this process pool in terms of tickets and frequency. I would like to understand that and how that changes the cost of service. And also, I would like to, talk about the significant traffic increase And it's nice to see how much of that came from an organic approach, accelerating marketing was helpful as well. So I would like to understand what is the face of this organic growth. And finally, on the direct consumer credit. Maybe that's a question for Padilla. I want to understand how your provisions work. When you have to postpone an installment, I understand that technically there are no delays, but I would like to understand if there is a provision because of an incremental risk considering that you leverage a little bit part of that credit. Hello, Joseph. Thank you for your question. So the performance of the mix as just as we put that together and we are working with our team for the digital and tech areas we also are working with our online commercial team. We have that team ready Since the third quarter of the end of the third quarter of last year, we had something here and they're coming in, but our base was already consolidated there. So I would say that We were preparing our assortment, our long tail of one thing, everything that we have here in the one thing. In terms of ticket, I can tell you that we have lower tickets. Yes. But we have a lot of high tickets. So on the online that we had in the past, we already see an important progress of our online average ticket because we improved a lot. The assortment of higher added value. Which was not a strong point in the past. Let me give you an example that it's easy to understand. We are the largest sellers of Apple products in Brazil, the largest iPhone sellers in Brazil, And that gained a lot of attraction in the online lately. This is a very high ticket. So we do not have a huge degradation there, and we are not having some promotions in terms of freight. We have a good freight revenue, I would say. Those sales, we don't have any expenses with the sales. This has been very healthy for a since we understood, right in the beginning, that we are going to grow a lot and be online and that we are going to improve our penetration we've prepared our online operations so that they could be profitable to the company. Now in terms of traffic, what I can tell you is that we have improved a lot, really alloy, our ROI, our return on investment. While we switched the rulers of our CRIM. And when we increase the use of app, then we are gaining quality because of that. In the quality in the traffic management, there's a lot of intelligence applied to it. And we tend and that's going to depend on our strategy But if I look at what we are gaining in terms of capacity, there is a chance to do much more with much less in a short period of time. Joseph, I know there is another question about the direct consumer long, very technical. And this is very good because it helps me in this education process. Of what is our credit operation and how we can read this operation correctly. So the first observation is that we are very different from banks. We have a provision load in the beginning of the contract, considering the historical risk of the average of those contracts of that average risk. So it is a very complex process and this provision is made in the beginning, not during the contract. Second, technically, that installment that was postponed is going to go to the end it's going to be the final installment. So it's the last installment in the contract. Another important topic is that we monitor our receivable all the time. So as we have shown, we had 6% of the payment book being paid via bank and 94% of the payments were done in the store and multiplied by 10. The whole receiving process via online and via bank as well. And any bank option bank apps and also our super app, which is banking. And we also have improved. And let me just remind you that 60, 70 days ago, we hired a new head for our credit operations. His name is Calabra. He's worked in Itau Santander, and he really is making a huge difference in our credit operations process. We also have a new collection professional. And all the process, all of that all of that has started in the beginning of the pandemic. So just as we made a lot of changes in our commercial processes. We also improved our collection process And so customers today can have a good service. They can renegotiate the contract automatically. We have also new collection companies to collect past, due accounts But the level of receivables for May is between 30% to 40% better than April, which was already surprising. And that makes us believe that at that level, payments, we will not have any pressures on top of our ADA, which is already posted in our balance sheet. Basically, that's it. From Mr. Ruben Coutel, Santander. Good afternoon. I would like to go back to gross margin. Just to try to understand, Padilla, the comments that you have made taken into consideration, the nonrecurring factor in the first quarter that you just mentioned with the e commerce increase and possibly with a lower contribution of credit operations, as e Commerce, the gaining share. Can you fact that the gross margin is going to be in that level of 30% in the next quarters. And also about marketing expenses. I think that, you are changing a little bit the way that you deal with, traditional media. Can you tell us how this is working? Your marketing expenses, if you're working differently there? I'm sorry. I missed the marketing. I could not understand the end of the question. Yes. Let me repeat. With the online channel growth, you are reviewing how you spend with marketing, depending on digital media, traditional media, or even the presence of traditional media is also important in the growth of this online channel. I would like to know if there is any room for efficiency gain here. Okay. Thank you for your questions. Well, the first question about the margin We are, I think we already understand what is the margin of this company for the past 2 quarters we are working on it. We cannot provide any guidance ahead, but what the company is executing in terms of margin provides you a good visibility of what is going to be the reality of this company. In terms of marketing investment, the company is to have a strong investment on the top of the funnel if we analyze the online segment. And would invest a lot in the moment of truth, in the conversion moment, at the moment of conversion more than in the in the, top of the funnel. So we started accessing our customers in all of the funnel stages So we are improving that right now, and we are associating that towards here and with customers that visit us and that the searches on our app and what side. And all of that is improving our conversion. So if we look ahead, I think it makes a lot of sense. And I would say that we'll keep on reinventing ourselves and also in the media when you're going to analyze what is more productive to us. And as our CRM, our data intelligence gains more traction. I would say things are going to be even more obvious to improve our conversion. So I think we have Change perspective on how we do it. Yes. Yes. I understood. Thank you. The next question is from Tobias Stingelin with Citi. Maybe we can move to the next question and if Tobias arrives, we can answer his question later. The next question is from Andrew Rubin with Morgan Stanley. Hi, thank you, and hope everyone's well. Two questions on stores. So how do you think about the store base from a strategic perspective, but how strong your online is, could you need fewer stores going forward And then on rent, can you talk through some of the negotiations, both for these months and perhaps any longer terms changes, reducing rates or moving to any variable structures? Good afternoon. Thank you for your when it comes to brick and mortar's store base, I think we're going to revisit many things at the company, there are many lessons learned. We used to have an outlook. Expected speed in the digital transformation and regain many months in just a couple of weeks So the answer is yes. Yes, we may revisit. And as a reminder, brick and mortar stores for us, were not only seen as a point of sale for us for a while, but also as an online relation point, for logistics purpose, last mile, click and collect. So yes, we'll definitely work on a strong assessment of the As for the cost of the store, in my opinion, we managed to have strong renegotiations for the times in which the doors of our stores are shut. Of the properties, both related parties and also third party real estate, and we understand that once the pandemic is over, there is a chance of having a surplus of good points of sale in good markets. So we had a plan to expand in markets where our footprint with brick and mortars is not so significant. Maybe this is going to be more inexpensive and maybe even our store complex can also be cheaper owing to this new moment that we may live post COVID crisis. So it will largely depend on what happens the day after, the day after the crisis. Our next Good afternoon. I hope you can hear me now. Alberto you said that you increased 10% in May. Despite many of the stores were shut down. What about the evolution in the market and what about the market share? So if you could give us more color about the evolution, it would be great and congratulations again. We don't have the market share number for May. But if we consider the past trend, we understand that there is still potential growth potential, strong potential for market share gain. Right. 80% of the stores are shut. So with those that are open, plus the online operations into Mother's Day, posted growth of 10% in the sales of merchandise year over year. Thank you. Just another question, considering you are growing despite so many stores shut. I believe most of online growth comes because retail is closed. What will happen to the total number of stores? Maybe you don't need 1000 stores. Maybe you can have only 700 or 800 brick and mortar stores as a hub of distribution. Maybe you won't need so many stores, What about that in the future and the growth? We are pondering a lot about all that. You're right. There are opportunities that are already visible to us. And I also believe that we can face even more opportunities. And the fact that the online seller is so operational today It makes us believe that not necessarily they have to be closed in one place or another. So we will have to reassess everything, Tobias. We're going step by step. And if there is an upside of the crisis is that it gave us the ability to do at all within 4 or 5 weeks. And not only that, there is a significant part of our sales that is taking place coming from new customers in our base, customers who were never with our brands neither brick and mortars nor online. So we have a new share of customers. Possibly customers. Hooking from our competitors and also a strong increase. Now that we help our customers go more online. Us online now. So it's a little bit of everything to be, as I know, this is not conclusive because we are right in the middle of the whole circumstance. So we are reassessing and a simple answer is yes. There are opportunities. May I just add something Tobias, if I may add to the comment about expenses, for instance, in March, the company did not use very well because many decisions on expenses were not made until mid May. But the federal government issued this provisional measure, then there was another discussion, and the company decided. To make use of this possibility of this new rule in order to have a big share of the company with labor contracts on hold. We had already used occasions, our bank, And in this case, the company assures 70% of the employee's payment. And this can be used as a fund for compensation. So there are no social charges, no taxes. And at the end of the day, there is a significant reduction in the cost of labor of the company. And renegotiations of rents and fees also bring significant sales savings to us. But that's month on month. April, May's still open, negotiations are still taking place And we are also considering the structural expenses of the company. And in a couple of days, we had 100% of our office At Home Office, and we're also considering a structural reduction with gains of opportunity everything is digital today at a company. Meetings documents are all digital signatures, reducing red tape and bureaucracy and therefore, bring in significant gains in terms of structural expenses, and we'll all capture that within the coming quarters. No, just adding Tobias just highlighting again. We have a strong consecration in the Southeast and we were still trying to increase our footprint in the North, helping with online logistics. So that our opportunities downwards and also upwards Great. Thank you very much and congratulations again. Thank you. Good morning, everyone. Congratulations on the results. An amazing the progress of the digital maturity of the company. I would like to go back to what Padilla just said. For my question. It's very interesting that, really, you had very few days to benefit from the measures announced by the Federal Administration. So I would like to focus on expenses because not only sales expenses have increased a little or little, not much, with the pandemic, but also, general and administrative expenses dropped 11 percent. And if you have not had the benefit yet, maybe in the second quarter, you will have a better operating leverage considering that sales, as Roberto mentioned, are going very well and even better, despite of having the stores closed. Is that correct? Is my train of thought correct, Padilla? Yes, you're right. Obviously, the margins are lower on the internet, although we are being able to grow margins then in the pre COVID period, but expenses related to those sales also are lower. So the company is working on it, and we are very much dedicated that to work on labor provisions and different types of provisions, you know, a whole block of expenses. This has started 6, 7, 8 months ago. And so now we start seeing the benefits, Daniela. And further on, I believe the benefits will be even higher, and the company is very much the focus on bringing down lawsuits, labor lawsuits, and also consumer lawsuits as well these were much higher than our competition, and we have been able to bring them down. And I believe that these expenses will even lower and more throughout 2020. And it's being distributed among the sales expenses, especially those 2 and also administrative expenses but these are the 2 main expenses blocks that we are tackling here. And these two expenses have a lot of, relations to the operating improvement of the company. They are related to the number of people and the quality of the work all the employees have here and also with customer satisfaction. So I would say if these two elements include the expenses will come down. Perfect. Thank you. So the set of expenses have a slight reduction as a percentage of sales, right, of around 22%, maybe a little bit higher. But you'll probably have room to reduce it even more from now on. And now, something else. That I would like to talk about. That line of other operating expenses also dropped a lot, especially vis a vis the 4th quarter when you had expenses related to that investigation and so on. So currently it's 0.9 of sales. Do you think that level 50,000,000 dollars, $60,000,000 is reasonable to forecast whether or to, you know, work with from now on or do you still have other expenses there? I was not able to identify it. I don't know where you allocated expenses related to COVID. In the stores you have already opened in PPEs, that type of thing, the additional expenses. Well, these expenses are not reflecting in March yet. They will come up, starting on April. Yes. There is room for reduction. I cannot provide you guidance here, but the trend of the company is to clean out those pest effects. So quarter on quarter we will be reducing that up to maybe the end of this year, beginning of next year, not having anything else and that these are older accounts. The company has an accounting policy that includes the cost of store renovations are posted like that. We are maintaining that policy. So that we can have comparisons done. But these are expenses that we highlight under a specific account to adjusted EBITDA. Of fact, that happened 1, 2 years ago, which expenses will happen in the current quarter. And that's why we leave it as it is, but the trend is to have that disappearing. Yes. Thank you very much. And once again, congratulations on your results. From Irma Escard from Goldman Sachs. Good afternoon, and thank you very much for taking my question. I have 2 final questions here. Or Padilla, can you comment how we can think about the financial results line for the rest of the year. Obviously, the first quarter had a relevant increase year on year. And I would like to understand how this should behave for the remaining of the year. And second question about tax assets, if you have any deadline, specific timing about monetization of those? I think that we can understand as a right result the one in which I bring to you the adjusted quarterly result. Of course, there was a lot of pressure because of the bank spread increase. At the end of March, we accelerated the receivables discounting to increase the liquidity of my cash position. We are already at a normal stage. We do not have the pressure of the market to have discounted receivables, which we had in the beginning of the pandemic, because we don't need to have such like so much liquidity in our cash. So we're not going to have as much pressure at the end of this quarter as I had at the end of this past quarter. So it's corrected to to say that the level of financial expenses should be the one that you find in our adjusted quarter about monetization. That is very relevant. This is a relevant asset of the company. We have a lot of cases of operating improvement that do bring benefits a lot of agreements with states that also their benefits during the quarter, we also had a small victories in our judiciary with our judiciary is that provide us gains regarding credit monetization. This is a very controlled account in the company. We did have the objective of providing liquidity. We do have that objective. We talked about that on the Investor Day. Our monetization curve is of around 7 years. We maintain that. We strengthened the company's structure. The company did not have a specific area. Or a department to manage taxes, we hired a professional from the market with 10 years of experience coming from, a large tax company and, therefore, worked with when worked with a hedge on the subject, This also has to do with the operating transaction of purchases and, failing filing. So we also added a tax intelligence along with the commercial and logistics areas so that we always could see what is the best possibility to buy, what is the best origin for the purchase and what is the best, destinations for that purchase. And within the company, what is the best destination for the sale as well? This involves a lot of complexity. It's a daily work and it happens in the commercial dynamic. And it is highly related to processes that increase the Click and Collect. So that increases our revenue for tax ID numbers of the stores and also improved the tax conditions of the large DCs, they do not accumulate credit by tax replacement starting a few years, a few months of last year. So this whole stack of activities with a lot of focus, especially related to our trading area in the company that allows us to believe that we will be well considering the company is very large. And we do have complex process almost every quarter I have gains or losses related to that, and that is the legal nature of some of the Congress. That's the only reason. But that's a very relevant topic for us now. And we believe that within 7 years, we will be able to monetize all our credits. Okay. Thank you very much. Good afternoon. Thank you very much for your questions. For taking my questions. I increased 10% including Mother's Day. And do you have enough date for April? Do you include, Mother's Day or not? And then if you have an update for April as well. Can you tell us about that? Good afternoon. What we said was that April of 2020 compared to April of 2019. We had 90% of sales. Yes. 90% of sales. My for May, up to Mother's Day, we are already gaining 10% vis a vis the same period of last year. Are you including Mother's Day? Yes. Yes. The other question about these over two hundred stores that you've opened, you said that sales are 100% of what they were before. The traffic is also the same. Or are you allocating part of your Internet sales that we can provide? Are you allocating that under zone sales as well? Because I've seen that some retailers, the flow is not changing, that traffic is not going back as fast as that fast. Some stores are not having much traffic. Yes. We do have a reduced traffic compared to what it was, but conversion just peaked. So these are customers that need to buy. So that walk in the store, we have that left. Of course, the customers that really needed they go and buy online. So the feedback is that, that those that go in the store because they really need to go to the store. They are calling all the protocols, social distancing, we are wearing masks when they go to the store. So this is being nice. The reopening is working well. So the selling of credit operations and services, and they have a high margin do they, are that normalized at the same level as we had before? So the impact of the gross margin is on the e commerce mix having a margin that is higher or not. Yes, that's the impact. And a final question. How do you how are running the new negotiations with suppliers? I know that you had strong sales 1P more than 3P. Our exchange rate is evaluated. So in the other call, you said that you had inventory to June. So I would say a negotiation should be far ahead, right? Can you tell us, Mauremba? We have We, as I said, we established a long term relationship with the industry. So there are a lot of things that we already have placed in terms of volume. And what I can tell you And I think that at the end of the day, your question is, how is the effects impacting Via Varejo? Yes, I think so. For the 3rd and 4th quarters, right? Well, I think that by far, we are not going to be the first ones to suffer any impact because we are very well positioned and we have a good level of inventory. So the risk there is to have the competition receiving, we don't want to bring the market down. And so we might have inventory levels positioned at a good dollar rate and the competitors will have to raise prices necessary. And I think that's thanks to the conference call for Via Varejo's results has ended. The IR department is available to address any further questions you might ask. Thank you very much for your participation and have a nice day.