Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to Via Varejo's conference call to discuss the results for the fourth quarter of 2019. This call is being broadcast via internet at our website, www.viavarejo.com.br/ir, where you'll 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 question and answer session. Further instructions will be given. Should you need assistance during this call, please press star zero to reach the operator.
Before proceeding, we should mention that forward-looking statements made during this conference call regarding business perspectives of Via Varejo, as well as projection operating and financial goals, are based on the beliefs and assumptions of the company's management, as well as on information currently available. 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 Via Varejo and cause results to differ materially from those expressed in such forward-looking statements. We will have with us Mr. Roberto Fulcherberguer, CEO of the company, and Mr. Orivaldo Padilha, CFO and IR Officer. I would like to turn the floor to Mr. Roberto Fulcherberguer.
Good afternoon, everyone. I would like to thank you for being interested in our conference call. I hope everyone is taking care of yourselves and of your families in this moment we are going through. We are going through a very difficult moment, a period of time differently from all adversities we have already faced. This team of Via Varejo has a lot of baggage, a lot of experience, and we have faced many crises. This is a different one. It's not an industry crisis. It's not from the city, from the state, and actually, it's not even a Brazilian crisis. It's a world crisis. I just would like to say that I want to quote something that is not I said, but a quote now.
Those that will come out better of this crisis not necessarily will be the most intelligent or the ones that have the best cash position, but rather the ones that have the greatest ability to adapt to the moment and to prepare to a restart. I know that the secret right now will be the ability to adapt and the seniority of the team that is ahead of the decisions and the decision-making capacity. I will give you a brief presentation about our company. I think this is valid because we have been hearing a lot of things about the company in the past two weeks. We have taken this company by the end of June of 2019. When we took over, we had over 40,000 consumers trying to get their money back because of deliveries that had not been delivered for many months.
Many were still problems of the past year's Black Friday. Our stores were in a horrible state of conservation. Our team here at Via didn't believe that much that it would be different now, and that it would be for real this time. In 2019, the market was sure that we were going to go down during the Black Friday, that we would not be able to deliver the products we sold on our Black Friday, and that we would take too long in our journey to increase our share in digital sales. On top of it all, we were also a victim of a fraud allegation, which demanded a lot of energy from this management in order to cater to all the government agencies and groups that were created in the company so that we could move forward with the investigation.
2019 had a lot of adversities and many challenges. I'm here to tell you that this is behind us, this is past. This last six months of 2019, what we have done all the time was to adapt ourselves to the need that each moment demanded. We never lost sight of where we wanted to be, and that's where we are now. Despite of everything that is happening today, I cannot not celebrate what has been done in the last six months. We have done all that facing all the adversities I mentioned and many others that we ended up facing along the way. Imagine what this team will be able to do, and is already doing, now that we can focus 100% of our energy in the business, in our present and in our future.
Adaptation ability, quick decision-making, courage to face the challenges, to make the short-term deliveries, but always aiming the future. I can assure you that here at Via Varejo, we have that in abundance. The results we are going to bring to you today is proof of that. Having all that in mind, I should mention some things of our current moment. A lot has been said about this company in the past few weeks, and I have some things to say and some facts to mention. Our reality with our partners did not start yesterday. Some banks have worked with this company for decades, and they do know the company, and they trust in what is being done in this company. At this moment, in fact, we are actually being able to see who are our strategic and long-term partners, and which are the main ones.
The main banks have called us and they told us what is coming ahead is not going to be easy. We are here, we'll be together, and count on us. Our credit lines have been maintained. Our credit operations that provide service to society, and that makes it easier for the underprivileged to have more access, that's still operating, and we have taken several attitudes here. For instance, we decided to postpone the installments for April so that consumers would have an extra amount of money in this moment. The three banks that work with us in our credit operations are already contacting us, and we are talking in order to make all adjustments to adjust our receivables flow to the flow of transfer that we'll have to send them. We do not have a problem here.
We also have financing lines that the company has used for a long period of time to extend the terms from the industry to the bank. We were talking about that. We were not using those lines anymore because we changed the company's trajectory. This company is again generating cash, so we wouldn't need to use those credit lines anymore. Now we are back to using them because it makes sense and the lines were there available for us. In addition to that, we are also working with the banks on all the postponements of that type of flow that makes sense. We have a sound cash position. We have an excellent, and let me repeat that, we have an excellent inventory position. We have a healthy inventory level.
In the fourth quarter, we ended the process of clearing our inventories. The best news of all is that our inventory is at a BRL 38 billion cost. We have a great inventory, and we are still receiving merchandise that really makes sense to us. We are also maintaining active contact with all the industry partners. Remember what I told you in our first meeting here, one of our first attitudes was to reestablish our strategic relationship with the industry. This is a long-term relationship and with interest and mutual benefits. This relationship is more than established, and it is extremely strong. Yes, we are going through a very difficult moment, but I am sure that we'll come out of this moment much stronger and much more digital than when we came in to this moment.
Today, thinking about the health of our employees, our back office has over 95% of people working in home office. The other day, someone said, or Benchimol from XP said that his company was much more productive having everyone at home. That's true for us as well. We are much more functional and even more objective than what we used to be. I can tell you that when everything goes back to normal, our operating way is not going to be the same. We are already designing a new way of operating based on this moment. Our sales team from the stores, they are all at home because 100% of our stores are closed. This team could be at home and not thinking about sales because you cannot sell anything when the stores are closed. That's not how we think here at Via Varejo.
Our ability to adapt allowed us to develop in one week a solution so that our salesperson could sell without leaving their homes. We started the test with 80 sales reps. By yesterday, we had over 1,000 sales reps in all the regions, and we already have this tool ready to go so that in the next coming days, over 20,000 employees and salespersons will be able to sell from their homes. This is possible because our CRM is very functional. It uses all our base with over 80 million customers, and it triggers that to our salespersons' offers with possible needs adjusted to each one of our customers. Our sales reps start a WhatsApp conversation, and when the sales are concluded at the sales rep using our system, then they send a link to our customer.
The customer will click on this link that will take this customer to our homepage. By the end, the conclusion stage of that sale, they only have to add the payment and the credit card information. We have sales reps that are happy because they're still making their commission. The customer is happy because they were able to buy from a sales rep that they know for years and not leaving their homes. We have our logistics fully prepared for delivery. Our logistics is operational, and it's stronger than ever. Another initiative that we learned from adversities is that we have two sites for customer service, and one of them has been closed last week. Even knowing that customer service sites should not be closed, we ended up having to close that. It has been reopened, but when we had the problem, we also foresaw the solution.
We adapted our system for those that understand the most about customer service to cater to customers. These are our 1,050 managers that are at home. They are prepared and ready to cater to consumers in all demands of post-sales that they might have. We already have prepared our emergency plan for customer service, and that is being done for those that better understand about customers, who are our store managers. These are just some of the initiatives, and many others will come, and I have no question about it. About our CapEx, of course, it's frozen right now. There is something in this company that has not come to a halt. Our IT team that has over 1,200 professionals, they are working their home squads, and they are focusing in expediting our transformation initiative. We have not removed one cent from our IT investment.
I know I took a little bit longer in these opening words, but I thought it was important to tell you about what we are, about what we have, so that you better understand us. Another comment before I turn the floor to Padilha. Will Via Varejo really have a problem, or are we going to adjust ourselves and come out of this moment much better than when we came in? For me, the answer is simple, and you will be able to see the response in the operating results that Padilha is going to talk about right now. I'll turn the floor to Padilha. Thank you.
Good afternoon, everyone. Once again, thank you very much for participating and for being interested in our earnings results for the fourth quarter.
Starting by the investigation slide, I think that all of you know that the company has received a fraud allegation, which was then sent by the board of directors. A special investigation committee was formed, and this committee hired lawyers and specialized companies that would take care of this type of subject. As Roberto said, that has taken a lot of the time of this management. Also there was a high cost to it, and we'll talk more about that shortly. We have been able to maintain the market up to date in all the different stages of this investigation. In fact, this week, since yesterday, actually, the report was submitted to the board of directors, and then we considered the subject solved. All the impact of these allegations and all the context is already posted in this end of year, in this quarter.
Among all the impacts, in addition to fraud, we also adjusted in the results BRL 1.4 billion. This is a very complex and technical subject. The company recommends that you read carefully the Material Fact that was published, where you will find all the information the company can disclose at this moment. After this first topic, let's start on the results of the fourth quarter. This next slide, we have the fourth quarter of 2019, the operating aspects. We have removed all the effects of adjustments in the fourth quarter that we consider to be non-operating or non-recurring. Here then, we have just an operational assessment. Well, having said that, these are our highlights. The main relevant highlight is the reversal.
When we compare that to the fourth quarter of the prior year, we have a reversal of loss of BRL 282 million to net operating income of BRL 78 million. Gross margin of 30.2%. It was then up of 3.7 bps when compared to 4Q 2018, and that amounted to BRL 2.3 billion. Adjusted EBITDA margin of 8% in the fourth quarter, almost two times more than fourth quarter of 2018. In the end of the quarter, with cash, including unsold credit card receivables, in the amount of BRL 4.4 billion. These are the initial highlights, the financial highlights. On the next page, we have operating highlights. All of you know that we had the largest Black Friday in Brazil, selling in 24 hours, BRL 1.1 billion, and all of that has been delivered in seven days. 48% of what was sold on that day were online sales.
In the quarter and in December, we had our direct online or 1P having a very robust growth, 68% in December. 29% in the fourth quarter. Remember, all the improvements, the platform, with all the improvements that we have made, that has worked for 32 days in the quarter. That's why we are highlighting this fact of one being December, of a 68% growth vis-à-vis 2018. 3P as well, 69% growth vis-à-vis December 2018, 68% in the quarter. Two other important data that are very interesting. Exponential growth of active users in our app of 1.4 million in June to 5.3 million in December of 2019. This was the most downloaded app on Black Friday, both for Casas Bahia as well as Pontofrio. On the next page, we start talking about the results themselves. Here we have the accounting results. We're comparing the accounting results to IFRS 16.
This was a year where the company had a lot of transformation. It's very difficult to look at it as a whole because there was a difficult performance in the first quarter, then all the impact of the results accounting and all the adjustments made on the fourth quarter. The accounting result is sales of BRL 31.2 billion in 2019. 122% better than 2018. A gross profit of 28.6%. SG&A 25.3%. Adjusted EBITDA 4.2%, and loss of 1.4%. Remember here, we have all the effects of the adjustments that we already mentioned. On the next page, we go back to fourth quarter once again. In here we reconcile that. We leave the accounting results when we do the non-recurring adjustment, reaching what we believe to be the operating result. Here are the adjustments. It's very summarized.
We had a total of contingency and write-offs of the digital deposits. As you can see here, credits of fees and fines, BRL 19 million. Investigation expenses, BRL 13 million. Cnova provision, BRL 16 million. Impairment of PP&E, BRL 76 million. The total impact of the EBITDA is BRL 1.2 billion. That way, on the next page, we start on the operating results, perfectly can compare the operating results of the two quarters, 2018 and 2019. Okay, in terms of operating results for 4Q 2019, the company had BRL 9.3 billion of gross sales, an improvement of BRL 635 million, a growth of 7%.
Gross profit of 30.2%, an improvement of 3.7 basis points. Reaching BRL 2.293 billion, an improvement of BRL 303 million. SG&A as a company, in spite of higher revenue of BRL 665 million, there was a reduction to 22.7%, a drop of 0.4 percentage points. BRL 89 million less.
Adjusted EBITDA, very robust, 8%, BRL 605 million, an improvement of BRL 289 million, 91% better vis-à-vis the same quarter of the prior year, 3.8 percentage points of improvement. In the last line, the net revenue, BRL 78 million, 1% of margin, BRL 360 million in improvements. On the next page, we are going to break down the gross revenue. We are already talking about total GMV both years under the same concept. We were at BRL 8,728 million to BRL 9,363 million, up 7%. In brick-and-mortar stores, we have gone from BRL 7,043 million to BRL 7,091 million, 1% growth. Remember that, once again, we had the largest Black Friday in Brazil, 48% of the online sales, 52% of the offline sales.
GMV, 1P plus 3P of BRL 1.684 billion to BRL 2.272 billion, an increase of 35%, highlighting that in the quarter and also December, which had a growth of 68% vis-à-vis December 2018. Next page, we have the breakdown for our GMV then. We have that GMV of BRL 1.684 billion in 2018, going to BRL 2.272 billion in 4Q 2019, up 35%. GMV 1P reached BRL 1.724 billion, up 29%, and also we have 78% growth in December. 3P a growth of 58% in the quarter. Remember that throughout the whole year, 3P had strong numbers, and in the quarter it reaches a 58%. Also I highlighted December, it reached a 69% growth. Next slide. We talk about gross profit as G&A and adjusted EBITDA. Gross profit, as I mentioned, we had BRL 2.292 billion, 30.2%.
The highlight here that shows that really this was a close margin, very important, that in this quarter we concluded the process that we had started in the third quarter of clearing and adjusting our inventory levels. We had fire sale of BRL 400 million products that had a slow turnover. Obviously, with a margin that was almost zero. If we had a normal margin in these products, we would have reached in the quarter to a margin of 31.2%. The next chart also, we go back to expenses. On the next chart is by the growth in revenue. As we said, with revenue, part of our expenses is variable and indexed to sales. Even then we were able to reduce 0.5% with a nominal reduction.
EBITDA of BRL 605 million, 8%, an EBITDA margin that is very robust, obviously considering a more relevant quarter in terms of sales with a significant increase of 3.8 percentage points. Next page. Next page, just highlighting what we said before, a positive result in EBIT. BRL 546 million better in EBIT vis-a-vis the previous year. Moving from a negative into a positive one at BRL 130 million. Lastly, we have net income of BRL 78 million, and that's the operating concept with a total reversal compared to what we posted in the same quarter of last year. The next slide, debt. We can show that there was a drop of R$1 billion in our cash position compared to Q4 2018, but still very robust of BRL 4.3 billion. I'll explain on the next slide the reason why we had a reduction. Debt from BRL 924 to R$2.155 billion.
Our net cash, BRL 4.4 billion to BRL 2.2 billion. A reduction of BRL 2.2 billion in our net cash position. The explanation is on the next slide. There was nothing more important except for that the company burned cash in the first three quarters and starting to generate cash in Q4. The net cash position in third quarter and 2019, an improvement of BRL 1.5 billion. Vis-a-vis the same period of the previous year, a reduction of BRL 2.2 billion.
Mainly explained by a reduction of payment terms involving suppliers via bank. In reality, we have the strategy like Roberto explained well, and all cash generation was used to pay additional lines via bank, suppliers via bank. These lines were not reduced. They keep on being available and can be accessed by the company. On the next slide, our inventory position. A priority in this management ever since we arrived.
A lot of care with the cash position, inventory position, high quality inventory, no low turnover items, and SKUs with a huge potential for sale. In the second quarter of 2019, we had nearly BRL 5 billion. In the third quarter, a reduction of approximately BRL 500 million. Now we are flat in a position of 77 days with BRL 4.5 billion. Now, when compared to the fourth quarter of 2018, also a reduction of five points and stable at 77 days. Basically, these are the points that are the highlights, the financial highlights. I turn the floor back to Roberto.
Just coming back and to explain our cycle, starting from number one. We had a strong recovery and renovation in our brick-and-mortar experience. We provided a lot of stability in our online platform. We greatly improved our conversion rate. We improved the flow and about 5% growth in our GMV. What about marketing? Like Padilha said before, we post a growth of 175% in the app hits in December. 27% sales already happen on app. More than seven million active users now in January. This is the latest information in January. February is growing right now, and it was the most downloaded app on Black Friday. Our social media engagement is very intense.
What about payment book? Like we said before, we started increasing the share of credit and payment book, increasing 1.6 in our share. It keeps on being our goal. In the commercial and product area, we had a big rise in our margin, even though we had to sell a significant part of our inventory, which was not adequate to our assortment, increasing 8.7 points in gross margin and increased by 8% our furniture sales. What about delivery terms and deadlines? We keep on improving our performance in delivery. We already have 24 hours with 28% of deliveries and 48 hours with 47%, and we are already pretty close to give another leap in these indicators. We doubled the volume shipped by our mini hubs, which makes all the difference to last mile.
As soon as we go through this period that we are right now, we expect to double the number of mini hubs. We are ready to do that. Our plan, our expansion plan is between 70-90 stores. Actually, it is frozen right now, naturally, but we already have the points of sale and maybe even better points, better locations for the future. As for people, we radically changed the attractiveness axis of the company. We have the cool project, Projeto Legal, is a winning bet. New talents were willing to come to our transformation project. The coolest thing about it is that many people said, "Well, São Carlos, third city may be a barrier." We know now that we know how to work with home office, that was the last wall that has to fall. Now we have extremely significant talent attraction.
At the core is our customer. This is the reason why we're here. That's why we're doing everything we're doing, and we want to delight our customers every day to make sure they stick to us throughout our cycle and throughout their lives. On the next slide, let me tell you more about the exponential growth in our apps. If you think about June 2019 to January 2020, we grew more than 400% in number of MAUs. At the bottom of the chart, we can see the monthly active user. In January, 7,000,400, and in sales, the share in Q4 2019 was 17%, and now in February 2020 is already 27% our GMV. Please note that we have deliveries expected for near future, maybe mid-year.
Like I said, in Via Varejo Day, we're going to have new apps and unique usability, and I have no doubt that it's only going to strengthen our improvement. Visit growth in Q4, we have 175%, and in February, we exceeded 300% growth. I have no doubt that we are on the right track, and we have a lot of room for improvement. There is a lot about to come. I say again, no investment stopped in IT. The whole team is involved. Home offices are connected, worker squads. We are strongly engaged to benefit from this moment in which we can all focus more strongly so we can expedite our transformation process. On the next slide about the evolution of the platform and digitalization. Like I said before, we already have more than 1,200 employees in our technology in Brazil.
We also have our lab with the Airfox team based in the U.S. It's a big attraction hub to us, both in terms of new technologies and also new startup companies that can plug to our system and also teams to run our business. This is going fine, very well, and we're already reaping the fruits of these connections. What about online? Like I said, new apps up to June, focusing on usability and speed. In offline brick-and-mortar stores or physical stores are going more and more digital. In Via Mais or Via Plus, by mid-year or July, we expect to start doing a marketplace and by all our sellers on the store. It makes a huge difference. We'll have more than 20,000 sellers boosting our marketplace. Also new mobiles, POSs.
It's going to be in our sellers' hands, it's going to bring significant improvement because it will add a lot of functionality and much different from what we see in the market today. A new experience. The use of Wi-Fi in the store help us understand who our customer is, who is getting to the store. We can follow the customer from the moment he walks through the door, and we can already activate the seller, who usually sees this customer, the seller will have the sales history of the customer, the customer's needs based on our CRM. That's that connection. The brick-and-mortar seller contacting the customer by the name and being supported by technology. The seller can go to the store door and say, "Hello, Mrs. Smith. What about the TV that I sold you six months ago?
Maybe it's about time we buy a new fridge. Intelligence in the hands of our sellers and also the marketplace. We have significant improvement on the way in order to make our sellers' life easier when they interact with our business. On the next slide, we have data culture and intelligence applied to business. We have other fronts that are already doing well. Pricing is one of them. We'll have new update processes and also new business rules with much more variables. Variations when it comes to the limit of SKU by region. In logistics, we also have demand forecast, so we can also work on inventory advance to all our stores, over 1,071 stores. A lot of intelligence involved. In freight, we have new business rules for cost and delivery times. We still have a lot of novelty coming in.
In payment book, we are getting ourselves ready. The IT team is leading the credit area, the payment books, already working on new payment book engines to our business. We clearly have a lot of opportunity, a lot of headway here, it's going to be the point of uniqueness, even greater now at Via Varejo. In marketing, we have a full revision of the contract rules involving attraction, activation, loyalty, and customer recurrence. We are very much engaged in following our customer's journey. On the next page, banQi. The rollout in Brazil was already started. Today, 511 stores, obviously it is on hold now. Once we start again, we can have the rollout 100% Casas Bahia. What about news? We already have Android and iOS version available, integration with the Casas Bahia app. We have a lot of news coming in.
The Airfox team in Boston is very active in the lab, so that they will promptly bring a package of improvement and news in our super app, which will be banQi. Now I would like to give you the chance to ask us questions so we can answer them. Thank you very much for now.
We are now opening the floor for questions and answers. We kindly ask you to make all questions at once and wait for the company's answer. If you want to ask questions, please dial star one. The first question is from Robert Ford, Bank of America. Robert, please go on.
Good afternoon, everyone. Congratulations on the innovation. I understand that you have reduced a little bit on the extended warranty. What is going to be like the service revenue in the long-term piece? Also, can you tell us what you're doing to mitigate the pending issue of the credit operations when this quarantine is over? Thank you.
Hello, Robert. Thank you very much for your question. No, we have not reduced in anything the selling of extended warranty. We are very active. This is an important revenue for us, and we are still working on those sales and driving those sales, and they are very active. If I well understood, I think I did not understand your second question. I'm sorry. What are you doing to mitigate the problem of when the quarantine is over? Okay. We do not have a major concern. Of course, that we are concerned, but we have one of the lowest delinquency rates in the market. Our consumers are loyal to us, and they have a long-term relationship to us.
This installment of April that we postponed, we postponed for the last installment of that customer, so that this customer does not need to go back to the store and they have to pay two installments at once, because probably customers would not be prepared for that. For now, that's what we have done. We understand.
Trying to understand how this quarantine will go and how long we'll have the stores closed. We'll be analyzing our actions depending on the needs from now on.
Thank you.
Our next question is from Tobias Stingelin from Citibank. Mr. Tobias, the floor is yours.
Good morning. Thank you very much for this opportunity. I would like to know about this investigation last year. At the time, you were talking about a credit of BRL 600 million. These were tax credits that you thought that might be able to recover in a slight short term, if this would be a counterpart to the provision. How is this tax credit? This is my first question. My second question, I would like to know, Roberto, that one of your first initiatives was to renovate the stores.
We see the clear results, especially in the online, but it's difficult to see that on the stores, the sales in the fourth quarter. Of course, it's difficult to say now because the stores are closed. Can you tell us how the store sales were up to January, February, and mid March, so that we can have an idea of the performance of the brick-and-mortar stores before everything that was happening? Finally, another question. You talked about what you're doing, about your cash, and maybe Fabio could tell us a little bit more about how you were working with suppliers. Your cash position by the end of the year might be a little bit different, especially considering your suppliers. If you can tell us a little bit more about that, and I would appreciate, and sorry for so many questions and congratulations on your results.
Tobias, thank you very much for your three questions. I will answer two of them. The tax credits that we mentioned and the material fact that we disclosed in December are still available. There are legal issues involved so that we can post those credits to our books. This is a right that we have, but that's going to depend on these legal conditions. It's a little bit over BRL 600 million. It's still there, yes. In the short term, in legal conditions, maybe a few quarters. It might happen in this quarter because one of them would depend on the final ruling. Well, right now our judiciary is also closed, right? The other one also depends on some legal issues or some legal conditions so that it would become active in the company and we post that credit in our cash.
This could happen in the next quarters. Now the cash question, I know this is something that the market also questions, and we have posted some information last week to all investors so that we could already address possible questions that you could have at that time about our cash position. Obviously, since this coronavirus crisis started in the beginning of the year, the company is taking several protection measures in terms of results and cash. The first one, as Roberto said, was not accepting a dollar-denominated increase. All our inventory is at the dollar at the prior rate. We did not buy in dollar-denominated currency. All our orders are placed in reals. We do not have any exposure or anything that is related to FX variation.
We worked a lot in these past weeks to ensure full availability of our inventory levels as well as providing a lot of quality. Related to that moment, the focus was to maintain the supply and inventory levels and the negotiated commercial conditions. Our cash position, it's obvious that I think that we need to have a deeper knowledge about the market and on how Via Varejo operates. Via Varejo has a complexity because with our balance sheet, we also have several financial operations, sometimes it's difficult to evaluate the balance sheet in a dynamic fashion, what is really happening. In fact, we have, for instance, in CDC, we receive from customers, we transfer to the bank. This is a process where we receive and transfer to the bank, that is the natural flow of payment.
The prior question, how the delinquency is, all the stores are closed, 95% of our direct consumer credit, it happens in the store. In April, we already anticipated ourselves and had authorized our customers to postpone those installments to the end of the payment. Of course, this transfer will not be happening to the bank. The flow will be interrupted and accelerated or accelerated and interrupted as customers go back to paying the payments in the stores. Also, 5% of our customers pay in the bank or on the internet. This number should go up to 10%, and we are also making several system adjustments and also via banking, so that our customers can do the electronic payment.
Starting on May therefore, we are going to skip April's installment, then in May, our customer will also be able to make payments in the payment book via some electronic product, via electronically. About direct consumer credit, it is a significant amount and a lot of the analyst is just seasonal liabilities, but I have an active also, or, and I receive from customers, and I transfer to the three major banks that help us there. Now also, we have payment accounts to suppliers. I have two major accounts. You can see that in our quarterly return. I have what I call pure supplier, direct supplier, and that is where I get 60, 90, 120 days to pay. Also, payment postponement via banks of the suppliers or via banks from Via Varejo. The limit with the banks is a rotating limit. It is never due. It is maintained.
I pay, I receive, I pay, I receive, and I add other payments to suppliers in a regular turnover. We don't have a problem of maintaining that whole amount because on the assets I have BRL 5.1 billion in inventory. In our current position, BRL 4.5 billion in the position we have in December and that at a retail price, and that's important for analysts to know, our inventory is in the book at no tax cost or the cost free of tax. When I turn that into sales, I add the 30% of gross margin and 10% of taxes. That turns into a receivable, BRL 5 billion of inventory turns into a receivable or cash or sales of BRL 8 billion. I have the sum of the payables to suppliers and payables to banks, which is lower than the inventory converted to sale price.
Of course, when the whole country came to a halt, this flow also stops. Depending on how long the crisis lasts, that's going to be the period of time in which the process will not be working, will be stopped as well. The cash position is just as robust as it was in December 31st. We do not have any problems. We have not interrupted anything so far. All our accounts are being paid on the due dates and there's nothing that has been done by the company so far because we are waiting for the crisis to go over as soon as possible.
Yes. Just a follow-up. This transfer from the three banks. You said that the April installment is going to go to the end of the payment book. Have you negotiated that with the banks as well?
We have. The banks have agreed with it. We are just working on transition technical details, transmission of information because all the flow is controlled customer by customer, installment by installment. It's fully matched flow. When I said that the banks called and said that "We are with you and count on us," this is not just something that they said. It really happened and it's happening. The great interaction is happening. I say it again, this is not a problem in the industry. This is not a problem at Via Varejo. This is a problem that the market has. The market has come to a halt. Now, about your second question, the sales performance in brick-and-mortar stores.
Unfortunately, all of that happened because we were gaining traction in the brick-and-mortar stores. The figures were nice for brick-and-mortar stores, but unfortunately we have been impacted by the stores closing.
Perfect. Thank you. Okay, is this in line to what you imagined in the beginning of the year?
It was above what we have thought.
Okay. Thank you. Thanks once again.
Thank you for your questions, Tobias.
Our next question is from Andrew Ruben. Morgan Stanley. Please hold while we come to your line so you can ask your question.
Good afternoon. Thank you for your question. There is an interpreter who is going to translate it back to you in English. Online was positively affected. Online sales are growing, and our main goal was to maintain our logistics, which is very strong and we want it to be active right now. We are doing everything in our power so it can be possible also health-wise, and we are being successful. Yes, online is becoming more relevant, more significant right now, and also being catered by our logistics area.
The next question is from Mr. Joseph Giordano from JP Morgan. Please go ahead, sir. Good afternoon, everyone.
Thank you for taking my question. When you think about the change in the commercial strategy and the inventory gross margin, considering the third quarter and the fourth quarter, I'd like to better understand from you how high could this margin be additionally owing to the activity to clean up the low-quality inventory. Should we consider a stronger operation? My second question has to do about the former base of customers. I would like to understand if these are new customers, because when we look at the industry, particularly traditional and online behaviors, this is likely different. I'd like to understand supplying online, how many items can you measure that are on the list? Also to understand if it is 1P or non-core and how could this all contribute to sales right now in this more challenging moment.
Lastly, if we consider this sensitive point in the market with retail closing the doors, could you help us quantify the operating cost at the base of the company? It would help in understanding how you've been negotiating the lease and rent, because one of the major partners of the company holds a significant share of it. Thank you.
Joseph, thank you for your questions. Answering one by one. When it comes to the quality of the inventory, we already started the first quarter with a healthy condition, and Padilha showed you a calculation in the presentation showing that the inventory by the end of the year, net of the impact of the health measures, the gross margin will be around 1.2. As for the future, we are within the previous guidance. I cannot give you accurate numbers right now about how greater the margin can be.
I can tell you that we are very confident that we have the right inventory in-house, and that we are becoming more and more operational. If we can have more IT implemented, maybe we can have even more opportunities, but it's hard to say anything right now. As for the customer base, if we have new customers or not, I think we have both. We have 85 million customers in our base that have already walked through our stores. That's the bulk of the population. There's a lot about customer recovery as well. If we consider all our problems from the past, we lost some customers, and now we're strongly recovering our base. We can clearly see customers that are coming back. We also have a lot of new customers in our base. We have a little bit of everything taking place right now.
There is a mix. As for categories, the answer is yes. We are improving. However, there is still a lot of room for improvement. We already had a lot of improvement in assortment, and now we're fine-tuning this improvement. We still have a couple of things to add. There is no doubt that the long tail, the huge thing will be marketplace from the moment we can deploy the improvements that are necessary to our sellers. Our relationship with sellers today is more challenging. Our platform is old, so there is a lot of improvement to come in the following months. I believe this is going to help us a lot in the long tail as we manage to activate even more sales based on the assumption that 100% of our sales force in brick and mortars will soon sell marketplace long tail.
I can anticipate something. It will be really hard at this company to measure what is GMV and what is sales. There is this discussion, is brick-and-mortar sales GMV or not? We are trying to have a limit experience. At the limit, in the threshold, things will be a little bit confusing. There would be a huge benefit for the company considering this combination between online and brick and mortars. As for rents, obviously, now that the stores are closed, it is true that we have to do something about the value paid for the rents. Many shopping malls already given signs of what the directions will be, we also be proactive in our decision-making process. Just one comment about Michael Klein's, our shareholder's stores.
Everything we do for all rents that are not owned by the Klein family, things will be the same as we have with the Klein family. To be honest with you, I hope the family will be keeping their eyes open and also very much engaged in these turbulent times because closed stores don't bring any benefit to our revenues.
Okay. Can you help us quantify the fixed cost of the company so we can better understand the impact? Thank you.
Padilha speaking. About 35% of our cash expenses are fixed expenses. All the rest are directly related to the sales volume. Just to support the data, a big share of it, or a significant part of it, is personnel. Firstly, we are keeping an eye on our social role of not to bring more damage to the country additionally to what we already have.
We're very much concerned with our employees so they can keep up. The government already issued an order and expected to have another provisional measure soon. Maybe there will be incentives to lower the cost while these operations are closed. Incentives both in terms of taxes related to the payroll and also maybe incentives with the payroll per se. We don't have an answer right now. We already have an action plan, but we're just waiting for the new provisional measure that is expected to come out soon.
Perfect. Thank you very much, Roberto and Padilha.
Question from Daniela. Daniela, please.
Good afternoon, everyone. Thank you very much for taking my question. I thought that you just commented from Roberto in the beginning about the ability to recover operations once everything goes back to normal. Can you tell us a little bit how was this store closing process and how this recovery will be, how fast you will be able to reopen the stores? Another question, that's for Padilha. I have a hard time reconciling the non-recurring adjustments on page seven to this total, and now to the income statement. I don't know if Gabriel can call me later on to talk about that, or if you can comment on it. Some things are in the income statement, some things are in the balance sheet. I'm a little bit confused.
Hello, thank you for your question. We had a process to close the stores. On Saturday, we had 65% of the stores that have been closed because that was how it was determined. At 11:00 A.M., we decided to close all the stores because there was no spirit to keep them open. Decided then in two hours, we were able to close all the stores. In three or four hours, our marketing team created a video so that on Saturday night, we could disclose that, and also with the decision of postponing the installment for April's installment being postponed. Also, we were able to remove the most dangerous inventory from the stores. We removed the high added value items, and we picked them up from most of the stores, considering we have empty streets and there is a risk of people breaking into the stores.
We have done that already. Now the recovery, as soon as the recovery decision is made, we are able to recover operations on the same day. Our logistics cargo is ready to go back to replenishing the stores in the next minute of this recovery decision is made. The team is fully prepared, and they're standing at home. We are actually working. We are active. We are standing at home so that the engines are still warm. We go back as soon as this is defined, as this recovery is defined. Also, we have our inventory levels fully prepared to go back to working in an accelerated pace. About your second question, I think they will call you after this. Is that right? They can give you the details. Yes.
For you, Daniela, and for the other ones that would like to understand that. As I said, there is a technical legal accounting process there, and there are too many details, and Gabriel and also our finance team can help you to go over further details. I would like to take this opportunity to say that since day zero that we have taken over here this company, we are fully transparent, and we talk to all analysts, investors that call us. I would like to ask you, if you have any questions about our figures, please call us. We are here to provide you the best understanding possible about our business. Everything that is possible to be said, we will be telling you so that the report has the best quality possible. The information really states the company's reality.
Okay. Thank you very much.
Next question from Gustavo Oliveira from UBS. Mr. Gustavo.
Good afternoon, everyone, and thank you. Everything is very clear, but I would like to understand about your strategy right now and the strategy that you are choosing to reduce payment terms for suppliers. In the beginning of the conference call, you also said that you're talking to a lot of people. People are helping. You talked about the bank and the operations for the payment book, and I would like to understand, what is the conversation like with your suppliers? I know that you're not buying now. The stores are closed. You have the right level of inventory. You will have to talk to the suppliers when the stores reopen. How is that going?
Hello, Gustavo, and thank you for your question, questions, actually. The first one, we are not reducing payment terms with suppliers. We were doing the following. The use of postponement that we had with the bank, and this was an operation that the company was doing recurrently. In fact, considering that the company is already back to generating cash, we were in a very calculated fashion, little by little reducing that need and using the company's cash to support that, not needing to extend that with the banks, because that would generate an additional cost. What we have done right now as a protective measure is that we reestablished the use of these credit lines with the bank. Now, about suppliers and manufacturers, we did not cancel our replenishment.
Our commitment with the suppliers from March has been maintained, and we are starting to talk about what's going to come after March. We're still in the beginnings of the conversations with all of the manufacturers. First, we are trying to understand. I think the market is giving us signs in terms of timing. We need a few extra days to understand how far this lockdown will be happening so that we can have a more structured conversation. That's going to happen starting next week.
About the provisional measures coming from the federal administration and with being more clear in the labor side of it, when do you expect to have that definition coming from the government? What are the main things that you would expect to have?
Well, actually, we understand that at any moment, it should be published. We understand that the government and the federal administration is worried about this, and they are worried about people. What we expect is that we will need help right now. We need help in order to avoid any risks regarding people's employment. I think a lot has been done. There is postponement of taxes. The federal taxes have been postponed. I think other things will come out. I don't know what. As soon as things come out, and if you want to know, you can call us, and we can tell you how we are going to proceed based on the provisional measure that was published and what is the path that we are taking.
Thank you very much.
Our next question is from Thiago Macruz, Goldman Sachs. Please go ahead, sir.
Hello, everyone. Good afternoon. Thank you for taking my questions. We have three questions and some follow-up questions. First, Roberto's comment. In the future, you see a mixture, an overlap between brick-and-mortar sales and GMV. If you think about the negative aspects in Q4, do you see any unification of the channels or not yet? Second question about Padilha's comment. You mentioned the breakdown between fixed and variable SG&A. We want to understand also for the core, more specifically to the cost of production. The third question, we know things can change anytime, but Padilha was a strong focus when you took over the operation. If we think about COVID, what are the options and the strategy for this new category?
Can you just repeat the third question? We couldn't get it well.
The third question is about Padilha. We know things are very fluid, and it also depends on what will happen in the next couple of days. You were focusing a lot on furniture. It was one of the strategic pillars of the company. Considering that production stopped and stores are closed, what do you see for this category?
Let me start by answering the last question.
The good surprise is that part of the increase of 8% that we had in furniture sales came from the online operations. We're being very successful selling online too. As for the furniture uptake, well, it depends more on brick and mortars. It will depend on when we go back to our brick and mortars operations. We have some speed up processes. Some processes were already swift, and the plant, the manufacturing facility belongs to us, so we can make any immediate decision to make things happen again. As for the mix or cannibalization of customers, like I said, we have 85 million customers in our base. With 85 million, it is impossible to prevent them from changing from brick and mortars to online and the other way around. Fortunately, we see both ways.
Online customers who are migrating into brick-and-mortars and brick-and-mortars migrating into online. Like I also said a while ago, we have a lot of inflow of new customers in our online base. A lot of the app downloads are related to new customers. I don't believe there is a concern about cannibalization. We already increasing same store sales in Q1. Unfortunately, we were impacted right now. When it comes to brick-and-mortars performance, actually we took the company over in June. Like I said in previous calls, we have so many customers at 1,500 stores and employees, a physical structure that we have to manage. It takes long. In the first quarter, well, we saved Q4. It was doing well. In the first quarter, we were above the number that we expected to achieve.
It is positive. Answering your question about SG&A. Thiago, I'm sorry, I didn't understand your question about the breakdown on SG&A.
Padilha, I think you mentioned the breakdown of SG&A and COVID as well.
I will ask Gabriel to answer the question. I don't have all the data with me, okay?
Our next question is from Pedro Fagundes, XP Investments. Please go ahead, sir.
Good afternoon, Roberto and Padilha. Thank you for taking my question. I have two questions only. The first question is the following: I'd like to better understand from you the more recent evolution of progress of the commercial strategy and competition in the online channel. What you see right now that other retailers are fully focusing on this channel. Do you see any radical change? I know this channel already has a more aggressive commercial strategy, but I'd like to understand the recent trend.
My second question is just about the guidance. Do you foresee any change in the guidance? These are my questions. Thank you.
Good afternoon, Pedro. Thank you for your questions. As for the newest evolution when it comes to commercial online and margin, we don't see any big difference. Nothing worth commenting. Things are doing well. As for the guidance, we have no condition whatsoever to think about it. We have no idea how things will evolve or unfold. First, we have to understand how long this is going to take. Once everything is resumed, maybe we can gauge again and assess the real impacts on our guidance, and also how we can set it up again if necessary.
Great. Thank you. Just one last question. As for store renovation this year, do you maintain the previous outlook when it comes to the number of renovations?
Like I said, everything is on hold right now. Firstly, we have to understand up to when the circumstance will go. One thing, if it takes only 15 or 20 days, totally different is if it takes three months. As we speak, it's too early to say anything. What is happening right now is that things are on hold. The only thing that we didn't stop doing when it comes to investments is investing in our IT force.
Great. Thank you.
Next question from Felipe Reboredo from Banco Safra. Please, Mr. Felipe.
Good afternoon, everyone. Thank you very much for the opportunity of asking a question. Just a follow-up. You said that the sales team is focused in selling from their homes. I would like to know if you have a metric, how much they're being able to tap into in terms of the online when compared to brick and mortar stores, just to have an idea. Thank you.
We do not have any metrics, but we can tell you that this is a promising line. We will have 100% of our sales reps in that mode of sale. In the next 24 hours, 100% of our sales force should be up and running and prepared for that. The test was very promising. That's what I can tell you right now.
Perfect. Thank you very much.
Thank you for your question. Next question from Victor Saragiotto from Credit Suisse. Please, the floor is yours, sir.
Good afternoon. I have a quick question. There was an announcement to the market a few months ago, and now it has been confirmed, about the accounting fraud. We would like to know how much of that was a fraud, how much of that was an error. Also, we would like to know if the company will seek for any type of repair for that.
Good afternoon. As I said in the beginning, the explanation is published in the material fact. If you need help understanding it, please let me know, or you can also talk to Gabriel. We do not know yet how the future will be and what will be the next step of this process. We do not have a final evaluation from our legal advisors.
Thank you, Padilha, very much.
Next question.
Our next question is from Paula from Cantor. Please go ahead. Paula, please.
Thank you for taking my question. Could you better explain the inventory levels now that brick-and-mortar stores a re expected to be closed for a couple of months. Do you think you can work on the inventories? Secondly, do you think in the short term, you need a capital increase? If so, what are the reasons that might lead to this cash increase or cash call?
Thank you for your question, Paula. When it comes to the inventories, it is not possible to say anything yet. We don't envisage a scenario for months, but if it happens, please remember we don't have perishables and we don't have collections in our inventory, unlike other retailers with significant stock inventory levels. The maximum that might happen is to take longer to sell if we stick only to online. That's the only risk to our inventory. With regards to follow- on, the company doesn't see any window nor possibility for it right now and considering all the protection measures that I mentioned before.
We are confident that we'll be overcoming this moment with the current cash position at the company right now.
Perfect. Thank you.
This concludes the Q&A session. We would like to give the floor back to the company's management for the final remarks.
Thank you all for the interest in our company, also for your questions. I would like to stress what I said in the beginning. It will not be common times. The obvious is not obvious at this moment, but we have a team that is fully prepared to face and to deal with everything that is not obvious, which is what we have already done in a few months. We are ahead of the company. I also would like to thank the members of the board of directors who have supported us fully so that we can maintain our agility and the flow to the operations as the moment requires. Thank you all very much. I hope you all stay healthy and take care. Thank you very much. The conference call for the results of Via Varejo has ended.
The IR department is available to address any further questions you might have. Thank you very much for your participation, and have a nice day.