Good afternoon, ladies and gentlemen. Thank you for waiting. Welcome to Via Varejo conference call to discuss the results for the fourth quarter and the year of 2018. This call is being broadcasted via internet at our website www.viavarejo.com.br/ir, where you will also find the company's presentation. Live selection will be managed by you. The replay will be available after the call is finished. The company's press release is available at its IR website. 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, when further instructions will be given. Should you need assistance during this call, please press star-zero to reach the operator.
For proceeding, we should mention that forward-looking statements made during this conference call regarding business perspectives, projections, and operating and financial goals are based on the beliefs and assumptions of Via Varejo'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 Via Varejo and cause results to differ materially from those expressed in such forward-looking statements. Now, I'd like to turn the floor to Mr. Peter Estermann, CEO of the company.
Good afternoon, everyone. Thank you very much for being with us in this earnings call for 2018. I have here our CFO with me, Felipe Negrão. Our call today is going to be separated into different moments. Felipe will talk about 2018 results, and then I will talk about what we are doing in the company in order to deliver the results that we are estimating for this year, as well as to talk about the continuity of our omni-channel strategy. I'll start by turning the floor to Felipe, so that he can comment on the results for 2018. Good afternoon, everyone. Thank you very much for being with us. Let's start talking about the results for 2018. On slide number two. In 2018, we had a growth of our consolidated gross revenue of 5.2%, reaching BRL 30.6 billion.
Brick-and-mortar stores, we had a growth of our gross revenue of 4.6%, and the online revenue, we also had an increase in our gross revenue of 10.7%. On slide number three.
On the online, we had a GMV growth of 10.2%. Invoiced GMV for 3P had an increase of 4.3%, and the performance of invoiced GMV for 1P had a growth of 11.3%. Also, in 2018, there was a significant moment in our click and collect, a very important differential once our brick-and-mortar stores are an important asset for Via Varejo. Turning to slide number four. Gross margin had a drop as a result of a lower margin in products sold, a lower share of our direct consumer credit, because we're more selective in our credit policy. We are maximizing the cash margin of the company, and also a lower share for services. We had efficiency gains in SG&A, several lines that went from 25.5%-25.1% of our net revenue.
We expect to have an even improvement in this result, thanks to all of the measures that we have implemented and are rolling out in 2019. Because of all that, our adjusted EBITDA margin dropped to 4.6%. Slide number five. Our net financial result before statements improved from 3% to 2.8% of our net revenue. We had a net loss of BRL 267 million in 2018. Slide number six. Company is maintaining its sound cash position with a net cash of BRL 4.4 billion. I turn the floor to Peter, who will talk about the business perspective of the company. Thank you, Felipe. Very well.
The topics I would like to highlight today, they are directly related to our execution agenda that is fully focused in the improvement of the purchasing experience of our customers, both in the brick-and-mortar stores as well as the online stores, also in delivering results. The results that we're committing ourselves to deliver to you today. I will basically talk about four main pillars. We are already working on these pillars since the beginning of this year. The first one is to increase revenue in all channels, brick-and-mortar and online, and to have the generation of cash margin. The second one is related to the improvement of the operations, both for B&M and e-commerce. The third one is implementation of all the initiatives to reduce expenses that are not affecting the level of service and not affecting the purchasing experience of our customers.
The fourth is the continuity of our omni-channel strategy that we have started at the end of 2016. Talking about the first pillar, which is the growth of revenue in both channels with the cash margin generation, I would like to say that this pillar and this increase in revenue is fully supported by our commercial strategy. As main drivers here, we have to work in the right offers with aggressive prices in order to bring in traffic of customers to our stores to increase the sales conversion rate. Also with a significant participation, a significant share of media here. The second driver is focused in a sales mix that will favor the margins to try to offset the strategy of aggressive offers. There, we are focusing specifically in two categories that we understand that will make a big difference in the results.
The first one is furniture. Furniture category, you know that we have the largest furniture factory in Latin America, and we are the largest retailers of furniture selling in Brazil. We have here an important competitive advantage because most of our products are manufactured in our own stores or in our own factories. Here we have a significant margin differential. This category, we started accelerating since the beginning of the year, and it's already showing an important and positive share contributing to improve our margin. The second category is home appliances and electroelectronics, and this has an important margin as well. We have a team focused in order to have a greater penetration of that category in our sales mix. We are also reviewing our payment means strategy for all categories of products and price ranges.
We want to adjust installments and credit assignment to each one of these price ranges and category of products. We also are working in a very expedited fashion in order to optimize our relationship with suppliers. We always say that we cannot change the game without working with suppliers. This is a joint work in our sales planning so that we can optimize the production cycle in the industry and a clear understanding of our strategy regarding categories and product mixes and which one of them can bring a competitive advantage to our suppliers. Basically, the idea here is to be able to be more competitive. We have a very low level of stockout, especially in the high turnaround products. We are also realigning incentives for our sales force. This is really a realignment. It's not a change.
This is a realignment of incentives, and that is focused on sales conversion now. In a product mix that will accelerate our margin improvement and also financial services and credit operations that are crucial for the company's margin. About improvement in the operations, which is our second pillar, we'll be concentrating our efforts in the operating stability of the systems in which we have been working since the end of 2017. This has been very strong in 2018. Integration of the platforms and in the development of the new systems. We did have a few problems, as you know, in the operating stability. The main focus that we have now for the short term is for the company to recover that operating stability, both in our brick-and-mortar stores as well as in the online.
Here we talk basically about our new system, VMS, which is our brick-and-mortar store operating system. I can tell you that it is already stabilized. The level of operation has improved a lot in the last 45 days, and we are already back fully operating in the system. You remember that we had to remove the long tail operation at the beginning of the year because of systems instability, but we are back to the long tail again, and the system is operating in a stable fashion with a very positive impact in brick-and-mortar store sales as well. We still have an important front. It's to stabilize our app and also our e-commerce platform. I can tell you that in the last two weeks, the stability has already improved a lot, but we still have an important work to do ahead.
I also said that we put together some war rooms to define and to work on those instabilities. I can already tell you that B&M stores are operating at a very satisfactory level of stability. We already see that showing in the store environment as well as it comes out via our sales force. From all the war rooms that we have created, we have deactivated, and we are deactivating this week, three of those war rooms. When we deactivate a war room, it means that we have reached the level of stability, and we were able to address the main problems we had. The war rooms that we have stabilized were Click and Collect, Fraud, and Marketplace.
By the end of this week, we will be leaving the war room for these three areas, and we will be back operating with these systems and the products vertical, and that means that they are stabilized. The next ones in line that we have to go back to work, they relate to Orders, Development, and Freight. We have gone forward on those, but we still have some work to do, and we understand that part of that war room, I believe that in the next 30 days, we'll be able to deactivate, and the remaining we should take up to the end of May. We still have three important war rooms ongoing fully, which one is related to mobile, and that is the stability of our app and the stability of the marketplace platform, and also the marketplace in and out platforms.
These three war rooms will move on for a little longer, but we already have positive signs of important improvements. The third pillar, which is expenses reduction, is fully ongoing. The implementation is expedited. We have done in January all needed adjustments to our back-office structure. This is a stage that is done. We are reviewing IT contracts, software, and other agreements. Our legal area is working, and our legal platform is working in a stable fashion. We have a lot of efficiency in the process management, and there is a reduction in the new lawsuits. You remember, this is important in the revenue of the company, and it starts to show important reductions there. We have another crucial front working on the reduction of the cost of occupations.
Here, basically the leases of our B&M stores and some BCs as well, and we do have here also expenses to be reduced in consulting services. Finally, I would like to talk about the continuity of our omnichannel strategy. We have concluded our first stage of Via Única. You were with us throughout last year, and we do have the opportunity to work and to grow a lot in using the information. Now our data center is stabilized, and we are already having more assertiveness in terms of customized offers to our customers. Also another front of continuous improvement, we have our CRM to improve our marketing efficiency. We have several learnings that are already bringing positive results to the company, and also the use and the improvement of our platform for the app to improve the shopping experience and also sales conversion in the online.
The marketplace platform, as I said, we have important steps there. Marketplace is growing significantly year on year. The platform is already operating in a more stable fashion. We have new products coming in, new sellers coming into the platform. That's already happening in a much better efficiency when compared to what we have in the past. Finally, in our omnichannel strategy, we will tackle the third wave of the credit platform, and Felipe can give you additional details on that later on. To conclude, I would like to say that just today we have announced to the market a few guidance regarding the results we expect for 2019.
I would like to say that our team is focused, very optimistic, and I can tell you that the team does believe that we can deliver the guidance that we provided today that is based in facts and data and the analysis of all opportunities that we have to implement and also in the execution capacity of our team. We do estimate a growth in brick and mortar stores of two percentage points above inflation, IPCA. This is an indicator that will accelerate, will increase over the year. We will have a continuous improvement quarter-on-quarter. Also here, we expect to have an expansion of 20%-25% of the invoice GMV this year.
We believe, the whole team believes, that we will be able to deliver this growth and adjusted EBITDA margin over 3%. Based on the initiatives that I have already mentioned, we have already working at these levels of EBITDA, and I believe that we can just go back to delivering results that we have delivered in the past. 6% of EBITDA in the year. In order to do that, of course, that will have appeared in the third and fourth quarter, better figures than in this one. To end our guidance, we have an estimate to invest between BRL 550 million and BRL 600 million of investment this year. This still stresses the commitment of the company to deliver long-term results for the company. Once again, before I open the floor to the Q&A session, I would like to stress that we are very optimistic and confident.
We believe we will be able to deliver the guidance based on everything that we have analyzed and assessed so far, and also in the delivery capacity that the team has. Now I will turn the floor to Q&A session.
Now we would like to open for questions. Could you please ask all your questions at once and wait for the company's answer. In order to ask a question, please press star one. Thiago Macruz from Itaú.
Good afternoon. This is Vinicius, in fact. Thank you for the question. We saw a drop in the gross margin of year-on-year, impacted by promotions and also financial products. How much of the 450 BPS was due to promotion? How much were the impact of direct consumer loans and services? I would like to know your view for 2019 about logistics, adaptation, and legal claims, et cetera.
Good afternoon. This is Felipe Negrão. The first question. Well, there were 3 components in the reduction of the gross margin. The first one, as you said yourself, is the reduction of credit assignment. Maximizing the cash margin of the company, and because of that, we had this high approval rate, that is to say, higher than 50%. When we talk about credit card, it is lower than 20%. Credit plus financial services is very much linked to credit, because this is much better than in the credit operations and in other products, and you calculate about 70 basis points in gross margin. This is the number. There are many other facts, and we do not give a disclosure for that.
Part was due to that, and there is another part that is the inventory reduction. From the third to the fourth quarter of 2017, you have the situation inventories, and in this year, there was a reduction in the inventory levels. Why do we have this result? As a first point, we have the bonuses. When you buy from suppliers, there is a part of the bonus that is a sellout, and this is allocated to the result. We had the situation regarding bonuses with the impact on the reduction of the bonus margin. This is a one-off expense. This is a one-off cost. Going back, we started increasing inventory levels when we had the market already improving, when we had a perspective of the company where we had a possibility of buying. We wanted to have more inventory.
We wanted to make sure we had enough inventory. That was something that we needed to do. That was the best option for the company at the time. The inventory levels went down. That happens in second, the fixed costs. Part of that is related to leases, and leases do have fixed costs. These fixed costs, I apportion it, I dilute it according to the volume of merchandise. Since the fixed cost allocated by product now is higher because I have less products, less merchandise there. For 2017, products went into the inventory. Now since I am de-stocking this cost, it turned and they are showing in the results, therefore, that also impacts stock reduction. It was something needed for the company. We needed to do that in the long term, and this is something positive.
Regarding SG&A and expenses and other expenses here, BRL 551 million. What part of that BRL 74 million, we believe that's 21. That's BRL 74 million coming from the write-off of assets, software development, and the stores that we have closed, and non-performing stores. Assets write-off. Also the sale of one or another asset that we ended up selling. Here we have an accounting write-off as well. We have another line with related parties. There was an agreement, and we are more efficient in some criteria that we had here. We had a loss of BRL 82 million. I believe this is going to be the last agreement we signed. We are reviewing all topics in the contract, and I don't think there's anything else to be returned here to the Klein family. Restructuring expenses.
Up to the third quarter of 2018, we used to close a store or to have an expense because of the company's restructuring, and that expense would go to other expenses, other operating expenses. Even when people would sue the company and we would have legal judicial expenses because of lawsuits, that would go into the operating expenses in the company, rather in sales or administrative. For us, since these expenses are related to restructuring, they have to go to other expenses and other operating expenses. That's why we did this reclassification in the third quarter in the year that has no impact. That's why we are now reclassifying that from the first to the third quarter and to the fourth quarter.
Okay, it's very clear. Thank you very much. Mr. Ruben Couto from Santander has a question.
Good morning or good afternoon. Thank you very much. A follow-up on this question regarding the expectation or what do you estimate for expenses in 2019? Can you give us more color there? Also, I understand that 2018 is over, the focus is on 2019, but can you also give us more color, what happened with the products, with the merchandise in the fourth quarter? Why didn't it bring sales of Black Friday and Christmas? The problems you had have been addressed. Do you believe you have a better reaction in the beginning of the year? Can you tell us what happened at the end of the year? Should we expect to see something more normalized? I will address the first part of your question, and Peter will talk about the second part.
First, we are not providing guidance, neither of net income and nor of the other revenues. These revenues are part of the EBITDA. On the other hand, if we compare that to the level of results and we go back to page seven, adjusted EBITDA, we can see that in 2017, we had BRL 340. That was high. In 2018, BRL 551 million, also very high. It tends to be reduced for some reasons. The main one, and I think that first, the two years we had a write-off, and because of this agreement that we had with the Klein family, we believe this will no longer be there. Second, we had restructuring expenses. 2015 and 2016, we had a reduction in the number of personnel in our headcount. Also from then on, we had expenses in the legal area, and those expenses have been reduced significantly.
We did also have many lawsuits, and we had opportunities to improve them in the company so that these lawsuits won't happen anymore. We don't have any employee suing the company, and therefore we have a possibility of gains, whether by the new law, by documentation, or how we manage our headcount every day. If we look ahead, we expect to have a reduction there as well. It's very important to stress that the whole management of the company, and also considering the compensation of the company, all of us have an important KPI here, which is net income. Anything that changes in the company, that will affect the net income and also adjusted net income. We are fully aligned to well manage this line.
About the margin result of the last quarter. Everybody knows that the last quarter has quite a big seasonable impact because of Black Friday and Christmas, and in the brick-and-mortar stores. We had a Black Friday in terms of sales that was as we expected. Nevertheless, the margin was lower. There was a very competitive situation in the market, and this impacted our volume that was concentrated in brick-and-mortar stores. It was the same level that we expected, this is what I mean. For 2019-You saw or you heard in my remarks that we radically changed our commercial strategy. That is to say, today, our commercial team has a target and for sales and for cash margin as well. We're working with a much more assertive offering policy and with a focus on products and mix that is quite different from the one that we had before.
What I can tell you is that the answer is yes, we are being able to grow our top line with a recomposition of our margin. What we expect is that we will continue in this direction and, of course, with better results. Thank you very much. Ms. Jordana from JP Morgan would like to ask a question. Good afternoon, everyone, and thank you for the question. I have two questions. I would like to know the evolution of both growth and commercial margin over the first two months of the year. Can we see some positive change already? Peter talked about improvement in payment means and the composition of margin products. What about the strategy of Airfox Fintech vis-a-vis credit? Thank you. Thank you. I would like to let Felipe answer afterwards about payment means and fintech.
I think this is a very timely question because things are going on very well. They're evolving quite well, and Felipe will give you details. In relation to the outlook of sales and margin growth, what I can tell you is that in the brick-and-mortar stores, we have found the path for sales already with better margin results than we had before. I would say that brick-and-mortar stores today, we can tell you that we are on the right track. We have already found the right track, and we are making the necessary adjustments so that we can have the margin according to what we expect. In online, we already see more positive results in the last couple of weeks, and we need a little bit more consistency in these results so that we may be 100% sure that we are on the right track.
Our feeling and what we are able to analyze in terms of the evolution already happening in the first few weeks of the year is quite positive. We believe that this path is very promising. Of course, you cannot change the game overnight, we need consistent deliveries quarter after quarter. This is our objective, and we're working on that, and we have good expectations regarding this. Good afternoon, Diego. Regarding installment and how we are working with that, together with Faisal, the Commercial Director, Commercial Officer, we are activating a few things for credit cards in general. We had a more promotional policy and a lot of non-interest-bearing installments. For each product, we are checking now how many installments, and after a certain number of installments, we start to charge interest. This is the first point.
How to do that without causing an impact on our sales, this is something. In direct consumer loans, the interest rates, we have always worked at the company in a way that my area, credit area, we establish the interest rate that we are going to charge, and this interest rate, as it is distributed, the average weighted interest rate, you ultimately do this distribution. Today, the average rate that we have is around 7% per month, and this is for all products end-to-end, with only a little bit or a slight variation between one and the other. Faisal is doing the distribution of the 7% among products that have a higher rate and then the ones that have a lower rate. We have a balance in our credit operations. Regarding the strategy for direct consumer loans, what is important about that?
Now we are getting into a phase which is very important because we already have automatic credit in a major part of that, how can we do that without waiving the quality of credit? What are we doing? This is a very important initiative. At the stores, we have a different credit assignment process at the store. In the past, you got to the store and you had to, "Oh, I want a direct consumer loan." We analyzed the credit. First of the credit, we said, "Well, okay, we're going to give you credit." The small part, we did not assign the credit. Many people were standing in line there for quite a long time, and when they got to their turn, then they didn't have the credit approved.
Today, we have already changed because the salespeople didn't have stimulus in order to offer the direct consumer loan. Now you just put there your taxpayer number, and immediately you have the result of your credit approval or not. Assertiveness in the credit assignment operations, once the person applies, is much bigger, and this helps the salesperson to make a better offer for credit at the store. This is very important this year. We have better credit this way, and we can increase the participation of direct consumer loan, not waiving the quality of credit. The second point that is not going to give results as quickly as that, is a digital online credit assignment. We started with a website, and first for our employees, and we always streamline the process, and we correct this and that, but it is already on.
After our employees, we are going to open this opportunity for the pre-approved credit. Afterwards, in a stage 3, we are going to open for the public in general. We can increase the participation of credit operations, which is profitable for the company, not waiving the quality. Lastly, we have pilot in two stores. We have good news about that. People who ask to download the app for Airfox, and this is very productive for the company. It is working quite well. We already have the new brand for Airfox. We told you that we were going to change the brand, and we will be launching this new brand around the second part of this year. Now we are planning the launch of this new brand. Then we will have the prepaid card with Airfox.
This week, at the beginning of next week, in March, we will decide about the banner, the flag. This will be very good business for us, and this will help us a lot in terms of growing Airfox and with funds from Via Varejo for this growth.
Just a follow-up about Airfox. Do you intend to do a bigger integration with GPA between Digital and Cnova? Do you think they should be totally segregated?
Well, this is a very difficult question. We are always evaluating opportunities so that we may leverage our businesses. Whenever we see an opportunity regarding synergies or any other opportunity that has to do with the expectations on the part of each one of the companies, we assess on an ongoing basis. We have not decided anything about that yet. Thank you.
Rute Oliveira from UBS would like to ask a question.
Good afternoon, everybody. Thank you, Felipe and Peter. The first question had to do with the two categories that you mentioned. You mentioned furniture and home appliances. What is the installed capacity of Bartira? In one of our talks in the past, I jotted down that you had almost 100% installed capacity already. I don't know whether you're working with products that have a higher margin or whether you want to increase penetration of your sales, and that would mean an increase in CapEx. Your CapEx for production is already at a considerable level. Peter, what about mobile phones, smartphones? This category is quite profitable, and you didn't say anything about that.
Was it because there is no big marginal gain, or is there an impact of the Lei do Bem, the law of good, as we call it? What about the evolution of the Lei do Bem and the impact on your sales margin? These are my questions. Thank you.
Well, the first one is the following. At Bartira, we are working in two shifts. This means that we still have opportunities to increase our production. The second point is the Poli. We have been working in order to have a better strength in the entry-level products, and this is fundamental for you to have this build traffic into the stores. On the other hand, we are also working with higher ticket. You have the two strategies going in parallel, and we have installed capacity to increase production further.
We do not need any additional CapEx in order to increase production capacity of Bartira. What we have in Bartira are some investments that are not significant in order to remove bottlenecks in production and improve operating efficiency and having a better cost, ultimately. Bartira is very well operated, and the plant has had an incredible improvement in the last couple of years, and this brings us an even bigger competitive advantage. We are very bullish about Bartira. Regarding the smartphones, as you said, this is a category that is already very pervasive, both online and in brick-and-mortar stores. Now you will see the launch of the new product and the whole industry in the next three months. We'll be launching new products. We'll be introducing new products to the market.
We are bullish, we are still very strong in smartphones, and we will continue to be so. This is an extremely important category, plus it gives us very good margins. Regarding the Lei do Bem, that law, I want to be very clear and transparent. I don't know what you have been hearing in the market, the Lei do Bem is not something that happens automatically. There is an endeavor that is needed in order to transfer it to the prices, we are making strides in this direction, and we are not transferring all of it yet. I believe that this new moment that the industry is living could favor the acceleration of the inclusion of Lei do Bem in the final price of our products. This takes time. This is not going to be done overnight.
This margin did not expand, I understand, because of the Lei do Bem. I don't know whether it is right to imagine that this margin would go down, or it is already so down in the fourth quarter that it became easier.
I would like to understand this, because you said 6%, if you adjust based on the others. If you take away the adjustments of the other ones, this is a rather modest guidance for your margin. Are you considering an ongoing effect of gross margin with no recovery? Do you see an impact on your gross margin beside the Lei do Bem impact? What do you see for this first quarter?
As I said, there are opportunities ahead of us. The discussion about the change in prices and the transfer to the margin, you know how it works.
If we wish to grow, if we want to increase our market share, there is a balance between what to transfer to the margin and what to transfer because of competitive reasons. We are paying keen attention to that, and this is a challenge that we face. How can we grow sales and bring margin together with this growth in sales? It will depend on how the market behaves, how much margin, how much competitiveness. This is a game that we have to play all the time. The base is quite challenging, and our guidance of 6% EBITDA, consolidated EBITDA for the year, is challenging because you know that, as we said before, there is a growth trend of the EBITDA quarter after quarter. In order to get to this average of six, we have to accelerate in the third and the fourth quarter.
This is a challenge that we discuss a lot about internally. Our team is very comfortable with the fact that we have so many initiatives in place and so many actions that it makes us comfortable in terms of delivering the 6%. The base is not easy, and the challenge is not easy. This is a big challenge. We will deliver, certainly.
That's clear, Peter. Thank you very much.
Pedro Fajnzylber from Bradesco BBI has a question.
Good afternoon, everyone, and thank you for taking my question. I would like to have a follow-up regarding the online. Can you go into details there, please? It's about the main bottlenecks that you find and which are your priorities in this channel. I think we see a lot happening at the same time. You have the stability of the system, the competitiveness, the changes regarding freight, the rollout of the full commerce. If you can tell us, in your opinion, what was the main bottleneck for you at the end of the year, and what are your priorities for 2019? That would make it much more clear for us. Second, about a comment made by Peter in the beginning, the focus on media.
Should we expect any changes in the marketing policies of the company? Any specific focus on any specific channel or commercial strategy, something related to the app? If you can tell us anything on that, it would be great as well. Thanks.
Thank you, Pedro, for your question. First question, the main bottleneck. Well, we had two important impacts at the end of the year in the online. We started the year with these same two bottlenecks having a significant impact on sales. The first one was stock out. We ended the year and started the year with a high level of stock out. That has held back sales. We reduced the stock out by half that we had in the beginning of the year, and we are still reducing it.
This is an internal work of category management and focus on the commercial strategy. That is, which are the products that I will have offers, which products I will adjust prices, and so on. This work is going forward. We expect that in the beginning of March, we have that level of stock-out addressed at the levels that we need to expedite sales. This is the first bottleneck, and by the beginning of next month, it will be fully addressed. There are no risks of not solving it, and this has an important significant impact. The second, you well said, operating stability, browsing, and functionality of the app. You know that we launched the app in the second half of last year. This was a beta version launched. It did have many improvements to be applied. It was very difficult.
You know your clients, you navigate in our app, you know some of the problems that we had. The app is not 100% at the level that we wish it to be, but it has improved a lot. I would say that both the app as well as the stability of the platform of the e-commerce also have affected our performance in the online channel. Here in the second part, we are going very well with some things that we have implemented. The whole company is focused on solving that, not only IT, it also involves business areas that are crucial, so that we can accelerate the solution, the returns, and the adjustments that we needed in the system. We have a positive expectation thanks to the progress that we had in the past five weeks.
Therefore, I believe that as soon as we address stock-out, and we go forward in the shopping experience for our customers, and we stabilize our platforms, I believe that the conversion rate will increase a lot. We do have a great expectation there. There is a lot of work to be done, huge work to be done, but we have been able to move on, to move forward. Second, about marketing. The marketing strategy, we have our marketing strategy for B&M and for online and of course omnichannel strategy as well. In the mass media, that affects directly the brick-and-mortar sales, but also has a positive impact in the online sales. We are being more aggressive and more assertive.
We have defined an agenda for promotions that have a visibility more in the long term, so that we can buy the merchandise, supply the stores, and put together a communication plan that is more assertive than what we were doing. A media that has more to do with Pontofrio and Casas Bahia, adjusted to each one of the channels. It has been very positive. We have an important hard sell every month, and the first one we have done with a positive impact both in sales as well as in cash margin. We are changing. We are on the track to change. In the online, we have learned a lot over last year.
The team is much more structured this year so that we can have that media directing in a more assertive fashion in the different media that we have, and the search engines, and also conversion. We are learning a lot, and we are learning fast. We have no expectation to reduce marketing. We want to increase sales. We have to have the best use of our marketing budget to support that sales growth and also a better return or bringing back more our customers to stores and to the online channel.
Okay, follow up on the online, please. I would like to hear from you, Peter. Do you believe that the lack of personnel or maybe a lack of talent in the IT area is something that the company is facing today, whether developers or product developers, that type of professional, what do you think?
Well, talent is never enough, right? We always have to improve the quality of the team. We are not lacking talent. I believe that we do have a great team, but what happened, we have already talked about this, we did have a significant volume of systems integration as well as development of new software and platforms, integrating that to our legacy system. We did have several interferences in our legacy system. Because of that, we did have problems. The talent and people that know about it, they are in-house. We have concentrated, as I said, in some skilled people, technically skilled people that really have knowledge about technology and product. We brought together our business team so that we could expedite all adjustments that need to be made, and the results are there.
This is focus. Focus on the main problems that we have, on the main opportunities of development that we have. The result is very positive. The way that we are working has been effective. As I said, I expect that we will leave that war room system of working and go to the product system of working. That will not take long. It will become more productive. It will happen in the first half of the year, so that in the second half of the year, we are already in the vertical of the product, and we will have our platforms stabilized, bringing better results. Perfect, Peter. Thank you very much. Here, Tobias Stingelin from CS has a question.
Good afternoon, Felipe and Peter. This change that you have made, this accounting change of transferring these expenses regarding restructuring to the non-operating, there is an impact of BRL 400 something million for 2018. What was the impact of this line specifically? How much did you take away from this base and increase your margin in 2018 because of that difference, because of that change?
Good afternoon, Tobias. What we can see is nine months. Looking at page seven, I can see nine months of 2018, we had BRL 168 million, we do not break it down for the fourth quarter. This is already something that's recurring in the company. I can tell you that nine months, BRL 168 million.
Just to make it clear, this BRL 168 million was just regarding reclassification, something that was before under SG&A, and people that you had to lay out, and now you transferred that to another line. Is that it?
Yes.
My question is, we are looking at a guidance of 6% for 2019. If the reference is 2017, you had a margin of 6%, but you had a gross margin of 32%, and now you have a gross margin of 29%. My question is, this 6%, let's say that we had in 2017, that cannot be compared to what we have now, right? Also considering this reclassification that you had, and if we had that in 2017, probably your margin would have been much higher, right? It looks like the margin is improving. As you said, sales are improving, margin's improving as well.
Believing and checking that reference in 2017, that you have a margin that is at 300 basis points lower, then that difference will have to come from expenses. We will have to wait for or to expect a big performance on expenses. Is that right?
Well, it's partially right. Yes. You're right, Tobias. You heard me saying that we have several initiatives to bring down expenses. Yes, we do need to bring down expenses in the company. You know that we believe that expenses have always to be analyzed, to be assessed, and optimized as much as possible. As I said in my opening remarks, yes, we will be optimizing expenses, but it cannot affect sales, the level of service, and the experience of our customers in the stores and online. Other than that, yes, we will be concentrating in reducing expenses.
Do you have the reclassification impact for 2017?
Yes, we do. We can tell you right now, we don't know it right now. I can tell you later if you want. I think maybe we have that in the explanation note. Just one second. That's fine. I'll check it later. That's okay. No problem. Okay. Tobias, Felipe can send that information to you later on, okay? Thank you.
Thiago Bortoluci from Goldman Sachs has a question.
Hello, Peter and Felipe. Good afternoon, everyone. We have two questions here. The first one, as Tobias mentioned, it has to do with seasonality over 2019. You mentioned a guidance with a significant improvement in the margin throughout the year. Should we expect a gradual improvement quarter-on-quarter, or more concentrated in the second half of the year, benefiting from the content you will have ahead? Still talking about guidance, my second question is if you have a number regarding the impact of the IFRS 16. Thank you.
Thiago, this is Peter. About the results improvement, yes, it was going to be quarter-on-quarter gradual. As you know, the last quarter for retail is a quarter where we have the greatest seasonality. It's a very important quarter, we have at least one-third of the results of the year concentrated in the last quarter. That's what we usually have. The fourth quarter is extremely important in our strategy. You will also be able to see a gradual improvement quarter-on-quarter. In the explanation note, Thiago, we also have the impact of the IFRS 16. I'm looking for this note here. It's page 17 of the quarterly report. 37, 38 of the quarterly return.
Just confirming, it's not in the guidance for 2019, right?
No. Our guidance is of revenue, EBITDA, and for CapEx. That's all. EBITDA under the current criteria. We are not considering IFRS, okay? The 16. Thank you all.
Now the Q&A session. I would like to turn the floor back to the company for your final remarks.
I would like to thank you all for being with us once again. Thank you for the questions you asked, and I would like to stress that we are very optimistic about Brazil in 2019 in order also to deliver the results that we expect to deliver. I'm sure that an important part of it will be related to our execution capacity and also our capacity to look for all the opportunities that we have on our hands so that we really have these results. We also expect that Brazil in 2019 is much better than it was in 2018. We are very bullish, and we are very confident about delivering the guidance that we have just announced. Thank you very much.
Conference call for the results of Via Varejo has ended. The IR department is available to address any other questions you might have. Thank you very much for your participation, and have a nice afternoon.