Choose your language of preference. Portuguese or English? For those listening to the call in English, you have this option – New Original Audio. We'd like to let you all know that this earnings call is being recorded and will be provided on the company's website where you have the full material for the earnings call. You can download the presentation also on the chat icon in English as well. During the company's presentation, all participants will have their microphones disabled. After, we'll provide the Q&A option. To submit questions, you can select the Q&A icon on the bottom part of your screen. As you're announced, a request to activate your mic will appear on the screen. You should activate your mic to be able to perform questions. We'd like to let you know that all questions should be submitted at once.
We want to highlight the information in this presentation and possible statements that could be made during the earnings call related to business perspectives and projections, as well as operational and financial goals of Grupo Mateus, represent beliefs and assumptions of the company's management, as well as information that is currently available. Future statements are not a guarantee of performance. They involve risks, uncertainties, and assumptions as they refer to future events, as they involve circumstances that could or not occur. They could affect the results that impact materially those listed in future statements. Today, we have the presence of our company executives, which are Mr. Ilson Mateus, the Founder and Chair of the Board – Jesu´ino Martins, the CEO – Tulio Queiroz, the VP and Investor Relations Director – and Sandro Oliveira, the Vice President for Operations, Logistics, and Commercial. Now I'll pass the floor on to Mr. Ilson Mateus.
Great day to all that are listening to us. Thank you so much for your presence. Once again, here together, I want to thank God for this opportunity to be here disclosing our results. I also want to thank our chairs, Juse´ino Martins , Sandro, and our VP, Tulio, as well as the over 64,000 employees at Grupo Mateus and another over 12,000 employees, adding up to 66,000 employees, as well as our shareholders that support us and have been with us during this process. To start off with this presentation, I would like to discuss that in the first semester, we had four stores that we expanded to in the first quarter, four stores in the second quarter we expanded to, as you all see. In the third quarter, in July, we had the store in Porto Franco. It's a small store adding on to our roots.
Of course, following with our expansion project, as well as the closing here on the next slide. Slide seven. Sorry, slide three. Our highlight here with 271 stores. In this scenario, we've also brought the closing of 10 Eletro Mateus stores, which really intend to generate more efficiency in our business, reduce our stock, and improve our working capital. We continue to analyze the other stores searching for efficiency. These are more than 5,700 commercial reps. We've really been exploring this channel a lot. Within this multi-channel approach, we also have another observation, which is we are structuring another channel here, which is the distribution of co-parts and also reinforcing this focus here and searching for innovation, which is the goal of Grupo Mateus, finding ways to innovate and provide consistency as well to our future results.
Bringing in this discussion here on expansion, we have over 16 stores under construction. We have another 16 stores that are under expansion. We have five that are for services. These are stores that bring in better results. It'll either be one store in Piauí and Teresina. We can really highlight this, which is something that really helps us with our EBITDA and our results. Now on slide six, we bring in within this merger with Novum, we have an important highlight. Within this expansion, you can see we have two stores that have already been opened. As you can see, these are stores that are very important for the root density. We have another three stores under construction that will be opened. We have another project with Novum for a group of stores that will be opened during the entire year within this expansion.
We really want to say that we are very excited with this merger. We've already been mapping out the efficiency gains, which is with Jesu´ino, Sandro, and Tulio that have really been dedicating their time to this. We see a lot of synergies and efficiencies also in logistics, HR, prevention, trade marketing, and also part of the commercial work that we start merging. We see interesting gains as well in the future.
Now we'll pass the floor on to our Chair, Mr. Jesu´ino Martins .
Hey, good morning, Tulio, Sandro, and everyone that's been listening to us today. Want to, once again, as usual, share with you some highlights that we've had throughout the second quarter of 2025 with some important achievements that really make us happy and we want to share with you all.
About our net revenue, we reach a level of BRL 8.8 billion that we're building in the second quarter of 2025. This is a level that really keeps us happy because we grow. If you notice, we have a growth of 14.9%. This is a growth that is very robust. We go from a base of 19.5% in the same period last year. We keep up with this growth at a pace that is very accelerated. When we look at the data from Nielsen, we're growing a lot more than the food retail in Brazil and in the Northeast. We've been growing at a very important pace, as we've been reporting. As you noticed, we've added another BRL 1 billion in revenue.
When you look at the bottom left side, you can see our results for the net revenue in the quarter, where we also have a historical level of BRL 17 billion built as a revenue growth of 3.9%. That was really significant. We add another BRL 2 billion. When you consider this net revenue perspective, we're very happy with the resilience and robustness of our growth during these quarters we've been sharing with you. If we take a look at this ahead, the same-store performance, I think it's worth mentioning everything that we've been able to achieve in this second quarter of 2025. We can achieve a 6.1% growth in the same store. This is a level that really makes us happy because although it is a level that is maybe a little below food inflation, we can see that we improve compared to the fourth quarter of 2024.
We improve this performance in regards to the first quarter of 2025. We reach this level of 6.1%. It's important to also highlight here that we've been trying to explore our multi-channel approach, right? We are a multi-channel company. The composition of these different channels helps us reach this level we're sharing with you today. Maybe it's also worth mentioning that when we look at the same indicator and we exclude the Eletro operation due to the closings of Eletro , and this is a very specific operation, that has transformed into 6.7% growth. When we look at this closely, we see same-store sale growth, looking at our multi-channel approach in line with the food inflation growth as well in the last few months. When we get to the bottom part, you can also see the same-store performance in the semester.
It's a level that's very similar, 5.7% growth in the same-store sales in the semester. Here it's worth mentioning also with all of you that are listening to us today, of course, we've been focusing on profitability throughout these quarters. We've been sharing with you this strategy that markets are going through a very specific moment. We chose over the last quarters to keep up with this profitability pace and really find the best balance possible to be able to deliver the best results so that the composition at the end of the day is the best possible. Most of this growth in this quarter comes from pricing, a volume that was very significant. Here it's important to mention also that the expansion we've had, which contributes to the same-store performance.
As we've mentioned on the screen here, we also shared our strategy in year one, where we focus a lot on sales. In year two, we've been keeping up with this profitability pace as well. That has really helped push the growth of the same-store sales downwards. When you look at the same indicator in legacy states, we see levels that are very different. We have legacy states that grow in the same-store sales, right? Of course, we understand that we have to find ways to find the optimal point there for the composition of our results. When we consider our company as a multi-channel company with all of these strong points together, we deliver these same-store sale levels, right? If you take a look ahead, I wanted to share our performance in the gross margins.
This has been an indicator we've been trying to focus on, Tulio, Sandro, and Mr. Ilson, because you've observed our balance sheets over the last quarters. Quarter- over- quarter, we've been keeping up this gross margin that is very resilient, very consistent. If you look at this, we've been able to reach a level of 23% once again. We've been growing in regards to the same period last year. In the bottom part, you can also see that the gross margins in the semester are left at the same level. It's a semester that's very robust. A semester that when you look at the same period last year, it's also growing 0.6 percentage points compared to the first semester of 2024. That demonstrates consistency and a growing margin. It's worth mentioning that the maturity of the new regional, and in just a bit, Sandro will also talk about this.
That really helps us to keep up with this level of gross margins. We've been maturing all of the operation we've been implementing in the last few years. The projects also on the commercial front have really been contributing with different initiatives that really helped us keep this margin level that's a historical level. If we take a next step ahead, in the fourth column, we're really happy to also share our EBITDA with a level that's a real all-time high of BRL 705 million in this quarter. We've been growing over 24% in our EBITDA. Our EBITDA margin is at 8%. It's a very robust margin. If you look at this and you've been keeping up with our balance sheet, you can see how it's been resilient and consistent over these quarters. It grows when you compare with the same period last year, 0.6 percentage points.
At the bottom part, you can also observe our EBITDA margin and the EBITDA in the first semester of 2025 compared to the same period last year with the same level of resilience. We're really happy. Tulio, Sandro, and Mr. Ilson, I think it's worth sharing that this is where our main focus is since we've been keeping up this. We've been trying to keep up this balance. I think we've been able to in a way where the gross margin can maybe go sideways. We always try to provide an EBITDA margin with consistency and resilience. I think here you also have the expense control, which is something Tulio will discuss a little more up ahead. It contributes to the gross margin that also helps us deliver this EBITDA quality. I'm really happy with these results.
Finally, I want to share our net income, which is also really making us happy, right? You have the net income of the second quarter of 2025, where we reached BRL 349 million. We've been growing, if you compare the same period last year. In the bottom part, we reached BRL 668 million. We've been growing in regards to the first quarter of 2024. Therefore, I think this is a composition of more and less that really keeps us happy because no doubt, it's another quarter of a lot of consistency with what we've been proposing to deliver and what we've been intending to share with you all during the last few years. Finally, Mr. Ilson, Tulio, and Sandro, I want to thank all of our team for their dedication that they've been having towards our performance and results.
We know about the meetings that have been made and the intensity that all of us have had. I know a lot of them are watching us as well. I want to thank them all for their dedication. I think that's it. I'll pass the floor on to Sandro, our Commercial Marketing and Operations VP. He's going to talk about the performance of the new regional and a bit more of our anniversary as well. We're celebrating this. I'll pass the floor on to him now.
Good morning, Mr. Ilson and everyone else watching and listening to our presentation. We're going to bring in once again this breakdown of how we've been moving towards our results in the Northeast region. We can observe also that we've been having consistent results when we consider this versus the previous year. We have a gain of 1% in our post-IFRS EBITDA.
This consistency is due to all of what Mr. Jesu´ino has just mentioned with the more stability in our EBITDA and our results. This expansion already contributes in this way along with the other regions in the company. Just to mention a quick analysis here, when you look at the numbers in the last quarter, we have this increase of three stores. Now we have 42 stores in this comparable basis. We were able to keep up this data, this EBITDA number in a consistent manner. If we look at the region overall as a whole, we have 52 stores already. These are 48 atacarejos, or cash and carry stores, plus the retail stores and the new challenges we have with Novum that we'll experience from now on. That already represents one-third of our sales if we consider our food retail channel.
More and more important, but more consistent also in its results. Moving ahead, we bring in a bit more detailing about our market share performance with the data analyzed by Nielsen. We have an advancing of 1% in the region we operate in with as market share. That demonstrates the strength and resilience of our team, even in a moment of so many challenges that we're going to eventually find in all of the states where we're in. We've been able to advance and really become more and more relevant in the market for suppliers and our consumers as well. Moving on to the next slide, we have a breakdown of what we're experiencing in the month of August. August is the month of our anniversary. It's a super important month for us in our annual channel calendar, sorry, when it comes to seasonality.
It's super important for us, for our revenue, and for our results. We want to talk about what we've experienced. We have this campaign, a specific campaign for the month of August, 30 days of lots of special deals and campaigns for our consumers. All of our stores are in a party climate, let's say, or party vibe. Another point we want to bring before we open this up to all of you is that we continue to respect the regionality, right? We have this artist, Joelma. This is, of course, due to all of our marketing work. She's a super famous artist in the regions where we operate. She's very strong in all of the different states and regions we operate in. She interacts directly with our public. We've been trying to really accelerate sales. She brings this in her profile.
This has been super successful for us in this first half of the month of August. All of this is really so that we can bring visibility to our suppliers. It's a delivery that also reaches the objectives of our partners. On the other hand, it also supports us with our strategic negotiations that are more assertive. In some way, we can have some traction for the sale that's been made collectively, right? We wanted to share this so that everyone can kind of keep on the same page because the month of August is part of the third quarter of the year, but it's an extremely important month for our seasonal calendar as a whole. For sure, it will help us a lot with delivering what we've been planning when it comes to result consistency. To summarize, that's basically it, Mr. Jesu´ino and Mr. Ilson.
Now I'll pass this on to Tulio.
Good morning, Sandro and everyone else for your presence and [Mateus] and Jesu´ino. We're going to talk about our results now. Jesu´ino has already given us a pretty good overview, but just to get into more details about the specific points. I think this first block on page 14, we talk about the gross profit. I think here we've been talking to you guys for a few semesters. I think the focus is really on consistency and a strategy that basically ever since the last quarter, last year, we've been focusing on profitability. Throughout the second quarter, we've been very transparent. At some moments, we had some sensitivity tests and analysis to be able to understand what would be the impact on same-store sales. We understood the best path would be to keep the profitability path.
We weren't able to keep the same-store sales at the strength we needed to keep delivering the margins. We understood the best path would be to continue to focus on this profitability agenda. Having said this, there was another quarter, as Jesu´ino mentioned, that was very consistent, balancing our gross margin and same-store sale growth. With that, we have a gross profit in the semester of almost BRL 4 billion and a growth of 18% in the quarter and 17.2% in the semester. Now on the next slide, number 15, we are bringing the overview of the operational expenses. Here you can also see we've been trying to keep consistency. We know the company has been opening a lot of stores and working on different initiatives.
Sometimes this is never actually very simple, especially in inflation moments and where other segments are maybe not in the same direction in short periods of time. We've been able to keep the consistency that's very important in this expense line. Here we've also been working on, ever since last year, some significant work with the central expenses for PIS/COFINS fees. Next year, we'll have the beginning of a tax reform. It's really important to work on the PIS/COFINS credit until the end of this year. It's an agenda we have been working towards. We continue, of course, respecting this. As we've been working on this initiative very recently, we understand what are the risks and those that are really not worth it when you consider the jurisprudence.
Another point is also something we've been working on more and more internally so that we can work with a higher level of depth. In the last few years, we were able to transform our budgets with a lingo into the different segments in the group. The expense rituals we have been working on also have been taking place. We've been thinking about productivity, right? Always thinking and understanding how our business has its peculiarities, we believe this is an important step to contribute and continue to contribute even with the EBITDA margin consistency agenda, as Jesu´ino mentioned. Having said this, it's a quarter where we have about BRL 2.5 billion of operational expenses. All of this is, of course, already considering the growth expenses of all of the new store operations and all of the processes for growth in our wholesale that we've been also disclosing to you.
Moving on to slide 16, we have the numbers of the EBITDA. Jesu´ino has already shared the main analysis points and points related to this consistency. An important point is just to remind you all that something that's contributed quarter over quarter with this consistency agenda is all of the work we've been doing for the past two years and the partnership with our suppliers, all of the different initiatives we've been working on in this sense. It's, of course, something that's been growing at levels that's a little bit higher because it's been maturing every year. We have to find more opportunities, and we get to know more about this. The interactions with Novum have also been contributing a lot to this. With this, we really help with the maintenance of profitability and consistency looking ahead.
We have growth of 26% year- over- year and an EBITDA margin of 8% for the quarter, almost 8% in the semester, 7.9%. This is a fundamental point about our profitability agenda and consistency agenda. Moving on to the next slide, number 17, we have the net income numbers – BRL 349 million in the quarter and BRL 678 million in the second semester. It's another quarter where we've been able to really have the income tax levels that were very interesting. This is something we've been dedicating a lot of time to as we redesign the tax planning. This is something that's going to continue to be alive, right? In 2026, we already start the same. We already have the application of some different changes in the tax reform in Brazil.
This is something we must look at in the short term, but also in the long term when we consider strategies for this first turnaround block. About the net income, we also have another point, which is about the lease expenses. I think here it's also maybe worth getting a bit more details. Here I'm not going to talk about lease expenses, but here we should also consider the interests. I think here there's another point that's really interesting with the new store openings. This block of new stores really added on to the lease expenses with about a bit more than BRL 16 million in this quarter, a growth of 54% year- over- year. When we consider the calculations of the square meters, it's higher because in this space. That's all part of this strategy in his safety, right?
You have about $3 million additional in expenses in regards to the anniversary here. It's a normal annual adjustment. Here you have the new measurements of some leases related to related parties where we performed an adjustment in this quarter. That adds to an increase of $10 million. You have products also, as we mentioned here, on the 24th of July. Also, the depreciation of the leasings as well when we consider this block specifically within the financial expense and depreciation line. Moving on to slide number 18, we have the cash conversion cycle slide. I want to call your attention to this slide specifically because when you look at the public numbers, we're seeing a cycle of 72 days. It's two days better than what it was last year and also two days better than the first quarter of this year.
I think here there's some interesting points we should consider. The first point is about the receivables that went from 35 days last year to 34 days. We had an anticipation of about BRL 199 million because of the transaction with Novum, right? When we created this, we brought in this mechanism for the anticipation of receivables. That was incorporated also to Novum to be able to stabilize the company's cash position and also, of course, entering into the working capital strategy as well. Here you have an important point on receivables. In practical terms, if we consider these 199 days, and I think it's really important, when we consider this, we can consider this supplier's line went to had an increase. Here you can see that throughout the questions, the recurring number of suppliers was 50 days. Why did it go up? Because there was also an increase.
When you consider the recurrence level was 50 days, basically. Also, when it went to 47 in this second quarter, now we also see there was an additional movement, right? In the first quarter, we had this supplier timeframe or deadline, but then we increased the stock level. What we did is we really controlled stock purchases a lot. Also now in the anniversary month, which is the most critical stock management process in the company, the stock levels went down. There was also a mathematical effect of this. Because of this, we were able to see this effect of suppliers kind of pushing this downwards. At that moment, we bought more and we ended up inflating this, but now we bought less. We also reduced the short term for suppliers. We keep up by saying that the recurring levels of suppliers would be 50 days.
Because of the anticipation of receivables, the recurring values would be 36. With suppliers, we understand it would be what would be recurring would be 50. When we look at the stock, we understand the 85 days are recurring because of all of the work we've been doing, not only in the second quarter, but also throughout the third quarter, which in my opinion, and as Jesu´ino can mention, it's also the most critical, right, considering all of the anniversary ramp-up. That would basically end up at the 85 days. When we perform this adjustment, we understand that it would add up to 71 days of cash conversion cycle.
What this is, is basically 36 days, which would be the receivables, discounting the effects of the receivables anticipation, 50 days also, and 85 days with a level that we consider to be recurring in the stock, adding up to 71 days. From then on, efforts continue to be quite accentuated. Mr. Ilson in his speech also talked about this from a strategic perspective. For the first time, the company really took a step into rethinking the electro operation and really levered by this working capital agenda. Of course, there's an initiative here to be worked on in this segment. Besides the stock elements we've already mentioned, we've been really working towards this in the commercial area. It also has a lot stronger impact in the short-term compensation coming from this indicator specifically. Moving on now to slide 19. Here we have the numbers.
If you look at the indirect cash flow, I think we notice that there's a working capital consumption that's very important to explain. What was this? In the first quarter, we bought a lot of stock and we gained supplier terms, right? In practical terms, those 54 days from suppliers we registered in the first quarter, I remember I mentioned it would be close to 50. These four days add up to the second quarter. How much do these represent? BRL 280 million. We understand that from a working capital perspective, there was pressure among quarters of BRL 280 million that were paid in the second quarter due to this movement that was taking place. The second quarter, as I mentioned, had pressure in the working capital because of the payment and the increase of supplier stock and also because of the payment terms we were able to achieve.
There was a displacement in the payment in the second quarter. In the next block, you can see the CapEx results and also the BRL 130 million of the Novum transaction. That is why you have this cash consumption of BRL 473 million in the quarter. Moving on to the next slide, I wanted to merge all of these different rationales on the top part of the slide. What we see is clearly the number of the net debt at the bar, how this behaved throughout the quarter of 2024. We can see that in 2024, the period of the most cash consumption was in the third quarter due to the increase in stock and the anniversary. We start buying normally in June, July, and that is where you have an important payment in the third quarter. Most of the cash consumption last year was in the third quarter.
What we see at this moment this year, we clearly shifted the pressure of cash consumption to the second quarter because of all of this context I mentioned. We mentioned that there was a clear cash generation in the company that was very different than the situation in July last year where we had important cash consumption. Since we're in the middle of the month of August, we have pretty good visibility on how the cash situation is. Why is this a lot more? Because you have an important weight on the stock management as well as this for the variable compensation process. In our understanding, the peak of leverage that we understood in the third quarter with an increase of cash consumption of about BRL 700 million, the peak this year was in the second quarter.
In the third and fourth quarters, we should generate cash because one thing that you don't give up on is that really the cash expansion needs to be done with our own cash generation. We're not going to focus on increasing our debt, right? Yeah, for sure. Today, this morning, we were having breakfast and looking at the cash flow, right? It's an important process, right? I'm very satisfied here that, as I mentioned, the last update, there is an important curve there. That should be quite relevant. Now we can move on to the next slide. Just the breakdown on the CapEx. We had about BRL 244 million in CapEx in the quarter. Of course, the biggest number is concentrated in new stores, and then another relevant level also with the land.
Generally speaking, I think we've been keeping up with a pretty good pace when it comes to the cash scenario throughout the year of 2025, considering the expansion pace Mr. Ilson has mentioned throughout his introduction speech. I think these would be the initial comments. The team will be available to get into the questions. Thank you so much.
Now we'll start with our Q&A session. To submit a question, you should select the Q&A button and write your question to enter the queue. As you do, a request to activate your mic will appear on the screen. You should activate your mic to submit questions. We ask you to please submit your questions all at once. Our first question is from Danny Hager from XP. Danny, we'll enable your audio so you can submit your question. Danny, you may proceed.
Good morning, everyone. Good morning, Mr. Ilson, Jesu´ino, Tulio, and Sandro. Thanks for taking my question of two. The first is a point that I thought was really interesting. For the first time, you guys are talking about this dynamic of capital allocation, looking at the store footprint you all have. Tulio even mentioned this when it comes to the opening. When you consider these closings, are you going to have some possible conversions? If you plan to reuse this for other formats, you can continue to be more profitable. Or if you also have other stores that are mapped out not only in Eletro Mateus, but also in other formats. Just what you consider as potential value creation in one of these metrics here to be able to look into what we should expect as gains in the future. My second point is about the Novum atacarejo.
I know you still haven't brought too much information besides the closing, but if you could give us some info on what you've been seeing as the possible or main gains that we should expect in the short term. If you would have some visibility in the next quarter on the numbers, anything you could share about how this integration is taking place would be great. Thank you.
I can start off with this about the store closing. It's important to get your question here, Danny, because we keep up analyzing Eletro . We know that it's a category that's kind of moving downwards. We've been monitoring this slowly to really unleash this capital and business that doesn't generate value. We're going to be assessing at all times. What's most important, we are a company that's always looking at innovation and technology. We've been developing other business channels.
Of course, we're going to be taking advantage of this space in one of these channels to be able to bring in business that's a lot more profitable and scale up a lot quicker. We've been keeping an eye open on this.
Now, Danny, this is a great day to you as well about Novum. The next quarter, we're already going to be reporting with Novum already consolidated. Tulio can talk about this a little bit more. We've been working on some internal discussions, and Tulio can give you some more detail.
We've already been mapping out different opportunities, and that's a super important point. We're going to be focused on finding ways to have efficiency with a new company. There's some work taking place in this sense, and I think that'll lead to great fruits, right? That was mapped out, and this work is going to start off now.
We still don't have that many fruits reaped, but of course, we want to share these efficiencies in the next quarters. Just as another initiative we've mapped out also is loss controls. We have a huge initiative there working on this topic with the food retail losses. That's been really an important point for us in the last few years. The commercial area is also mapped out, and we've seen a big opportunity for efficiencies and synergies. Sandro has been leading this as well, and that's another very robust point we've been mapping out. In the same way, the marketing and trading, we've already been mapping out a way to find synergies and efficiencies. Woodton and Edson have been working on this initiative. HR has been unified as well. Generally speaking, all of these different initiatives for efficiency and synergies we've been working on.
It's a very intense initiative with many different meetings going on in the last few days and months. Maybe you can give Danny a bit more clarity also about these results. I just wanted to reinforce this point on the shared gains and the importance we have in the regions.
Yeah, no doubt. Just to add on, Danny, first of all, thanks for the questions. As mentioned, in the next quarter, we'll already bring in the numbers for this new operation. Of course, we're looking into the best formats for this, but how we can consolidate our numbers in the balance sheet.
From the third quarter, not only the balance sheet data will be available, but we'll also be planning some communication with the market in a very robust manner to be able to share this information from a financial operational perspective and all of the main segments in the business to really help you understand this better.
Great. Thank you so much for the answers and congrats on the results.
Thank you.
Our next question is from Joao Soares at Citibank. Joao, we'll enable your audio so that you can submit your question. Joao, you may proceed.
Good morning, everyone. How's it going? Two points that I want to share. We've been seeing the sector data, and we see the Northeast as a point. It has a bit of a relative weakness when we look at other regions, like the Southeast specifically. I want to hear from you guys.
I know we always talk about this, but I think it's really important considering this deflation scenario of certain categories of food. We should understand how you look into this dynamic, if it should be beneficial to improve the purchase power of consumers. This growth organically is very important to understand. Tulio, it was really clear your explanation on the cash cycle and the adjustments required. Just to understand if we should already see this normalization, the expectation for the third and fourth quarters would be to generate cash, right? We've started having some different negotiations with suppliers to match the treasury dynamics. It's important to understand the seasonality of the business, right? Just to understand how we can imagine the cash generation dynamic in these quarters, considering the history due to these effects that change the scenario.
The differences that in some points maybe stand out in regards to the Northeast and the rest of Brazil. I think it's worth highlighting to you if we're going to some of the points about how in the last quarters we've been mentioning how the Northeast went through this readjustment in the ICMS rates that were very significant. There is an important point that weighed in on the performance of the Northeast in the last quarters. As if this was not sufficient, the food inflation has been a growing factor as well. Of course, as you mentioned, it's a little more controlled, but still on a high end. When we look at Nielsen data, we see that the food inflation in the Northeast is above the food retail inflation in the entire country and even higher than the food inflation.
We've been trying to control our internal inflation overall with a big effort to not pass along everything. The commercial area has been dedicating time to this so that in this quarter, we were able to keep a more controlled level of internal inflation. I think one point here is really important because it contributes to the same-store sales as well due to this pass-along not being everything. We should have passed along the same-store sales has maybe a negative contribution over consumers. It's a big effort we understand that needs to be made as it is important. We notice consumers, especially in the Northeast, being a little more rational, keeping their eyes open when they buy, being more selective when they perform their purchase list, and consumers with a more restricted budget, searching for ways to maybe buy in bulk to save.
In the Northeast, we've seen a big movement searching for cheaper brands, more affordable brands. I could even mention that we have examples. If you look at a cookie with filling, which is a very consumed product in Brazil, and we bought some cookies that were unknown in the Northeast, but now they're already a leader in the network. This Build Cookie brand is just growing. Milk as well, the cheapest brands we had to include in here also took on leadership in our overall chain. If you look at soap, powdered soap, you see the cheaper brands growing a lot. Liquid soaps as well. In the beginning of this year, we also bought cheaper soap. Looking at the market scenario, these guys have already taken on leadership in the network. There is this movement also in this sense, right?
Even with this entire macro scenario, what we've been doing is we've been trying to do what we can do in the most strategic possible manner. Our anniversary starts now. In the Northeast, all over, we've been going on the prime time with products and special sales and offers. That's really an important milestone, right, to have a three-minute TV film on prime time, right? Despite all of this in this scenario, we've been gaining market share, as Sandro just mentioned. I want to say that the third quarter also starts with July. That's very similar to what we've just reported. August is, of course, a very special month for us as well. It's a month where we try to be as intense as possible. When you look at this scenario, up ahead, do you think this is going to get better? It's difficult, right?
It's been even more difficult to foresee this macro scenario. What I wanted to say with all of this is whatever we can do or what's up to us, we've been able to work on, right? No doubt, with this deflation market, the volume tends to grow. We're very optimistic. The second semester historically is better. We're working to keep this same pace. I hope to have answered.
João, just moving on to your second question about the cash flow and the seasonality. As we've been working on intense initiatives for working capital, it's natural that we would have some specific impacts on the curve design and even something in the next year because the idea would be to continue to work on this topic intensely. That's where we, until we understand, we've been really able to capture all of the opportunities in our hands.
Just to make it very clear here, in this quarter, if we consider the redesigning from the first quarter to the second quarter, of course, that capital curve has been a little more concentrated this year in the second quarter. The third and fourth quarters, as I mentioned, are quarters that this year will generate cash. The third quarter last year had a major cash consumption. Now, why is it going to generate cash in the third quarter? First, because you had stability, but also because we had major stock work, right? We began with a more adjusted stock, and it was a lot more contained. We were a lot more careful with the anniversary purchases as well. We had opportunities also in this block. For sure, it'll generate cash. Of course, seasonally, from a historical perspective, I think the anniversary point is always the point of caution, right?
From the first to the second, there's, of course, some stability, right? That's where you really see gains. We have been able to build this curve throughout this year. I think that's going to provide a lot of clarity. Next year, we'll be reporting all of these elements and the intensities we've been able to bring in as in-house, right? We will bring transparency, of course, about this quarter over quarter. That's great. Just to confirm, those seven days, we had to consider it as improvements in the year, in the full year. Would that still make sense? Yes, it does. Exactly. We started the year with 77 days, and everyone's target is to be able to end with 70, right? Everyone here has been working for this purpose.
Great. Thank you so much, guys.
Our next question is from Rodrigo Garcia from Ita´u BBA.
Rodrigo, we'll enable your audio so that you can send your questions. Rodrigo, you may proceed.
Good morning, everyone. Now we already have 45 days in the quarter, and we already have some data from Nielson. Is this related to what you're seeing? Yeah. Also, this year, should you have two anniversary months or just one month? That's the first point. The second point is now, as you have about two quarters or most of the year already launched, what's the level of comfort you have about this improvement of about 10% in working capital? I also want to know how much of this improvement comes from this adjustment as well throughout the second quarter. These are the two points. Thanks, guys.
Garcia, about the third quarter, July started off very similarly with what we've reported to you. July was super resilient.
August, of course, we need to handle it in a different manner because we've been dedicating a lot of energy to this. It's kind of the scenario I can share with you. We're super optimistic, and I think we're going to be working on this a lot so that historically it can be better. We haven't seen so many changes in regards to this slowdown. We haven't noticed this contribute so much. I think that till the end of September, a lot of things can happen, right? That's kind of what I could share. About the anniversary, I think Sandro could talk more about this.
I can reinforce this. Garcia, this year, we chose to have one month of anniversary only with a lot of intensity and focused on this moment and really providing the best productivity. It's one month in September.
We'll rush to end the quarter without the anniversary advent, right? On the second point about the working capital, what would be the level of comfort we have for this improvement? I think at every quarter, we've improved our level of comfort. If we adjust these elements, it would be about 71 days. When we look up ahead, if you consider the third quarter, the fourth quarter normally already generates cash. The combination of these two elements going from this scenario that I've shared with you makes us even more comfortable and confident. We all know we understand the amount of things we've been working on and the stock issue, all of the interactions with Novum as well. Of course, the more or less we've been seeing this working capital line. We have these different elements that contribute to this.
When you consider the level of comfort, it's a lot greater, right? That's where we kind of get our guidance from.
So, then Tulio, also just to add on, I wanted to mention to Garcia and to everyone watching us that we're super conscious of how much value we unleash in this pillar and how it's so important for us and how Tulio has really been bringing this point into the company. As Sandro and myself have been dedicating our time to this, and we're being very conscious of the value in this pillar. We're going to work on this from now on until we find the optimal point for this, which is probably kind of what we're looking at. Just to connect both questions, good anniversary performance also helps with the stock. Of course, that also helps with the stock.
If you look at this from a short term, in the third quarter, we become more excited. Now I'm talking about short term, right? Very short term. We also consider the variable indicators. When we see where we're headed ever since we've started, it's really incredible to see our results. We're very happy about our journey in this pillar. We're going to try to find the most optimal scenario for this.
Excellent, Jesu´ino and Tulio. Thanks for the answers.
Our next question is from Ruben Couto, Santander. Ruben, we'll enable your audio so you can submit your question. Ruben, you may proceed, please.
Good morning, everyone. Thank you, Mr. Ilson, Tulio, and Sandro. Just a quick follow-up here on the working capital point. I think everyone's kind of headed in this direction.
If we were to look at this in the same way you tried demonstrating here, excluding a bit of the effects of the Eletro within same-store sales, and since you had a pretty significant impact, do you have an estimate of what this would be when it comes to the stock levels and suppliers, excluding the Eletro category, just a level of magnitude? My question is more about the Northeast region. You talked about this interesting level of evolution of 7%. If you're considering what we've been seeing in the stores, if you've been seeing this headed to the levels of 8%, I wanted to understand if you still have any expectations about this region keeping up at a level above the rest of the store base. I think that in the next quarter, it's going to be more difficult to view this.
I wanted to understand what your perception is towards this and the store maturity of the oldest stores in the Northeast region. Thank you.
Thanks for that. I'll start off about the Eletro . When you look at the 72 days in the cash conversion cycle, 10 days would be the Eletro operation, and it's impressive to see the significant weight in the overall cycle, right? It's not only in the stock, right? The Eletro operations have long-term time frames, and you have these two points and the working capital as well. In this quarter, you see that you're going to have some impact. As I mentioned, it's about 10% of the actual stores that closed. It's going to go from about 100 stores, and I think it would be about like one day, right? We understand that, first of all, the Eletro agenda keeps up. Mr.
Ilson and his unit are focused on this topic, and we're not stopping there. Of course, we had the first block with the stores that were at a deficit. Now we're going to have another study on value creation overall in the store, and this agenda keeps up. No doubt it can contribute to this focus on working capital. One thing that needs to be very clear is that at the end of last year, we established an internal target so we could have 70 days of the cycle throughout the end of the year. This working capital point was not being discussed, right? The topics kind of help, but the initial opportunity we had mapped out would just be in the food sector, right? I've been working in all the different segments and just to share this point with you, right?
When it comes to the stores in the Northeast, just to talk about this, as I mentioned, overall, I think we've seen the following: the knowledge of this maturity curve and profitability curve. These stores normally start with a commercial aggressiveness, and they take on the first year with a sales prescribing that's pretty good, but a gross margin that's really restrained. You have a volume strategy to attract customers into the store. In the second year, you start balancing this out a bit, and we bring in the gross margin to the stores. As Jesu´ino mentioned, even kind of pull the same sales downwards because you have a slowdown in the sales, but you have a growth in the gross profit. Then you start having a bit more room with the gross profit and a bit more space in the EBITDA.
In the third year, there is a higher level of quality. The data you mentioned in the third year already starts having more of a quality outlook. When you look at this average of seven we've been reporting, you see an interesting point. Each store, when you increase the store too much, of course, these that are arriving have a profitability that's lower. If we consider the same stores' group, we always want to show this block with more than 13 months. When you consider the feasibility studies for this new regional, if we work on the EBITDA margin, that's above 7.5%, right? That would be without considering all of the capital, the working capital gains.
Sandro, just to mention this, that's really well mentioned. What I want to add on, Ruben, here is that mainly in this region, we have cash and carry stores.
When we look at the company as a whole, naturally, in the more mature region, we also have an interesting retail store network. There's still a density curve that will help us perform or achieve our margins in the newer regions, get closer to the more mature regions. When we isolate this, as Tulio mentioned, with the older stores and we compare formats, they are pretty much on the right trend comparing with the same channels. Stores that have more than two or three years of existence already perform at levels that are very similar, right? We still have some room to grow. I just wanted to look into this.
What was very interesting is that in this expansion, we still have the distribution wholesale, and we see that whenever our suppliers start giving us the opportunity to provide distribution for them, there's an increment in sales and differentiated pricing, of course, that dilutes distribution costs from the DC. We operate with a volume of products that's more centralized as well. With this, you have this dilution of the costs, and that's really reinforcing our channels and multi-channel. We're not going to focus only on one or only on the other. There's an ongoing construction.
Our next question is from Vinicius Strano from UBS. Vinicius, we'll enable your audio so you can submit your question. Vinicius, you may proceed, please.
Good morning, Mr. Ilson and Jesu´ino and Tulio. About the mature stores, could you talk about what the performance has been for same-store sales?
If you could also talk about the competitive dynamic and also an update considering the CapEx per store. If you look at the main formats and if you've also been viewing more variable feasibility with Maranhão and Pará.
About the performance in the same stores, what I can share with you is that we've been, we have legacy states where our same-store growth is greater than the total growth we've reported in this semester, more than 6.5%. We have states with very solid growth levels, and that's a scenario. As I just mentioned recently, the Northeast, no doubt, consider that when you isolate this, it definitely is the lowest same store due to this, right? We are very comfortable in this sense because we've also considered this as our own strategy, and we've been trying to work on profitability.
We've been trying to look at our company as a multi-channel company, looking at all of the channels and searching for the best balance points. If we look at the same-store scenario and we exclude the Eletro scenario, as Mr. Ilson and Tulio mentioned, we'll reach this level that is slightly above the food inflation. That's a bit of what we've been working on with the legacy states growing above what we reported. About CapEx, as you mentioned, we have a big variation in the stores, right? When you look at our expansion model, we have stores that are cash and carry. We also have cash and carry with more services and simpler cash and carries. We have superstores that are common and other sizes as well.
The superstores that we've been discussing a lot because we're reducing the amount of these stores, the neighborhood stores we've been also advancing with, and we've been trying to tighten things up a bit. It's still very young, very early to provide this. We've been working on this with the cheaper stores, and we've been trying to buy cheaper land. As we mentioned, high sales and margins. Now we've been also working with medium-sized service stores that we've been also developing models for, and we're going to understand the cost per square meter. That's not our main concern. It's not only about the cost of the square meter, but also the profitability of these stores. We're going to be, up ahead, discussing this CapEx per brand. This is a focus we've been really discussing. We want to do more with less.
Thanks. That's great, Mr. Ilson and Jesu´ino.
Thank you, Vinicius.
Our next question is from Bob Ford at Bank of America. Bob, we'll enable your audio so that you can submit your question. Bob, you may proceed.
Okay. Thank you very much, and good day to all. Thanks for taking my question. The performance of wholesale is really impressive. How should we consider the sustainability of this growth? What should we consider as the competitive environment and expectations for the rest of the year?
Bob, I think the performance of wholesale, when our company started off, we started off as an indirect channel, and that was we were a distribution channel company. This business model is, so what happens when you see the impressive results is really we are very proud of this, right? We're super happy because we already have over 5,000 men in the Northeast working with 50,000 in small retail.
That's a big strong point for us. This is why we always share the need to look at our company as a multi-channel company. That's a reality. What happens is this channel goes through this advancing process. What we've done in the Northeast is if you look at the Maranhão state, every two days we have a truck of ours in any municipality in the state of Maranhão. What's happening now in the Northeast is just a fruit of this, right? We've been implementing this in all of the Northeast throughout the last few years with this segmentation work and areas. One of our customers, Bob, in Maranhão receives visits from at least 30 commercial reps. It's a small retailer receiving visits from 30 of our sales reps, right? The Northeast goes through this process as well.
Generally speaking, we should really look at this, and that should be the pace for this channel, which should be very consistent and resilient because there's this long journey ahead, right? That's a channel that we're really proud of. Just to reinforce this a bit as well, we see a channel that's also very important for us. If you look at the expansion to the Northeast, we have been building these business channels so they can balance out. We're really focused on these processes with innovation and channels to be able to share this and strengthen each of these channels to be able to really bring in exclusive leaders to really make this business plug into our backbone and bring in results and to bring in the margin, EBITDA, and volume to have more consistency in the states we enter.
From a competitive perspective, I think the Northeast has inflation that is slightly above the reality in Brazil and the food inflation. We've been trying to minimize these impacts, and we've been able to pass this along. Our internal inflation is below all of them. We noticed consumers have more limited budget. Consumers have been a little more careful when they buy, and they've been more rational. It's a competitive scenario, but we've been trying to keep up with this in a more strategic manner. We have our anniversary campaign. We want to make it as strong as possible. We're going to be in prime time with a three-minute video announcing this. Retail has to be always appearing as a special sale, right? If not in the Northeast, they won't sell. We've been gaining share. Sandra shared this with us. We're very proud of this in this competitive environment.
We've really kept up. July has been also very similar. August has also been a month that should be similar and special for us. We've had this expectation. The macro scenario, of course, is difficult to foresee. On our side, we should have been dedicating as much as we can on our side to deliver the results with the quality you've seen.
Thank you very much, Ilson and team. Congratulations.
Our next question comes from Tales Granello from Safra. Thales, we'll enable your audio so that you may perform your question.
I wanted to follow up on this last point. When you consider the amount of cities, especially when you consider this, the company basically doubled the amount of cities. Then we have the amount of cities and regions you're in. You don't have such a significant growth in these cities to meet to service.
Jesu´ino also talked about the amount of customers and the opportunities in different categories. I think Mr. Ilson also mentioned that. What are customers you already consider to be mature? The objective is just to understand within this potential, what would be a mature % of this growth that you presented? What are the new hard growth that was considered to project here? If you would need to open up more DCs up ahead to be able to support this growth.
First point, Tales, 30% of these customers are part of the new regional, and 70% are in legacy states. That's the format. It's important to share that if you look at the Northeast overall, it's about 1,800 municipalities. Our challenge in the next few years is to be present in all of them, right? You can see the challenge we have here.
We can really be present in all municipalities, right? More and more will be advancing throughout the Northeast with this business model. There's a very significant process, right? From a DC perspective, this is a strong point we have. We're a logistics company and a distribution logistics company. This is something that is very clear to us. We can just keep these business models up ahead with small and medium stores if we really have well-structured logistics. That's a strong point for us. Now we're talking about supplying the stores per unit, but I'm going to let Mr. Ilson speak about this.
We've been expanding this. We've had a meeting with Estevão, and we are doubling the size of the DC in Marana in Pernambuco to support us in this demand. We have a lot to advance with as well. I just have a quick observation.
You've seen we have 240 stores, and these are supplied by RDC per unit per day. You can notice they've advanced a lot in the last 12 months because of this capacity that we have logistically. That's a customer that's really been serviced by RDC. With these other customers, as I mentioned, we have different categories that we're still behind on. This is definitely a business channel that has a lot of complexity. We've been around for 39 years, and we still consider ourselves to be learners. The most important is that we're always trying to capture these opportunities.
Great. Thank you very much, Mr. Ilson and Jesu´ino.
Thank you, Tales.
Our next question is from Joseph Giordano at JP Morgan. Joseph, we'll enable your audio so that you may provide your question. Joseph, you may proceed.
Hi. Good morning, everyone. Mr.
Ilson, Jesu´ino, Sandro, I wanted to explore two points. First, looking up ahead, you talked about Novo with a lot of things mapped out. I wanted to explore when you look at this ratio in the company that's about 15. What do you think would be the issue when you consider Novo Atacarejo and if you consider that you could bring Novo to the same level of efficiency that you have in these operations? My second question is about if we consider any improvements in working capital. You also talked about Eletro that should help quite a bit during the rest of the year. When you look at working capital, we had two different focuses. First, you had a tax issue that pressured cash and other assets as well.
I want to understand if this is all impacting the EBITDA level, right, to be able to model this out better. Thank you.
Joseph, could you just be a little more clear about the first question? We didn't understand this very well on Novo .
If you could share a little more details about how the approach will be, just so we can try to look at this in a more efficient manner. We understand some initiatives will already be kind of immediate, no? How would you look at this ratio in this new operation to be able to ramp this out from now on?
Perfect. First, about these questions on Novo , we're going to get into more details about this when we bring this here. We're holding on to the third quarter a little bit just to keep the rituals and discuss this with more profoundness.
The numbers are already public, right? Novo is a company that's been around for a bit more than six years, and there's a level of maturity in the region that's a little greater. We had a level of maturity that's a little greater. Overall, what we've seen is that it's a very organized company, very well-structured. They have a working capital model that is more similar to other companies, public health companies. The store model is also a little more classic or standard for cash and carry. Their expenses on net revenue are at a level that's lower. They work with topics related to services that are different. We have this whole scope of services that you all know. In their case, it's more of a classic model.
Their profitability is very interesting, and that's one of the reasons why they've had a more mature curve and been very organized. Clearly, their results in the last 12 months have been a lot better, which is due to the overall scenario of this transaction. On our side, that's great because we're at the beginning of this maturity curve to ramp up and bring in this synergy. What we're talking about with most of the stores that have been around for two years, that's the most difficult moment with more adjustments. That's where you try to bring in all the synergies you've been trying to bring in. We're super excited with what we've seen and opportunities we found, even with the starting point here, because the company is really organized. I'm just going to highlight the quality of the numbers.
In regards to the cash, I really explained this dynamic when we look at the indirect cash flow. We understand the tax credit issues. Here there's another important point, which is generally speaking, we've been working on a very important agenda for tax planning as a whole. When we look at this, there's all the different sectors, right? You have the income tax dynamic. We had an important change from 2022 to 2024. Just to remind you all in this aspect, we are very conservative. Although we have a favorable scenario when it comes to income tax, it's a topic that São Paulo are really keeping an eye on, looking at the third and fourth quarters. These are companies that are very important in the retail sector. Of course, there's some other topics related to the new law, which would be the least topics.
In a conservative manner, we haven't done anything yet about this. When you look at this overall, we've been really taking advantage of this moment to consider any kind of opportunities in regards to fiscal fees credits and bring this in-house because we have till the end of this year to have fiscal fees credits since the tax reform will start being implemented from 2026 onward. We'll have CBS, and that's where our understanding with the lawyers we have is that we have to compose this credit because after we won't be able to anymore. When it comes to credit, we had an increase in the credit level, and that's what generates this effect. You have the issue, which is also our tax credits for ICMS. The mechanic we structured is to have better ICMS controls. When you think about ICMS, it ends up generating credits for fiscal fees.
It's super. Next year, we'll be rethinking about these structures, and that's where we will be able to use these credits better. Also, about the expenses with the fiscal fees credits, there's also this process with all of the adjustments and the complimentary obligations as well on these subvention topics. There's a real intense process. There are many elements, and eventually, we'll actually have some accumulation on this, but we're already thinking about this. At this moment, we just plan this to generate this efficiency level and where we need to think about income tax, but not only income tax. When we look at from 2026, we'll have this new scenario with at least two tracks, let's say, and we have to think about the long term and the short term. This is a moment with different initiatives, and you can be sure we're taking a look at this.
At some moment, we have this accumulation, considering this overall scenario. Just a quick addendum here about Novo Atacarejo. It's really important because they have very experienced people, and that's very important for this share gain, which is the alignment they have with Jesu´ino and Sandro because they're super well aligned. The committee is working very well, and it's been following exactly what the committee is thinking about. We're defining if we should, we had defined that we would just become one store, with Jesu´ino being very careful with this to not start any risky attempts. We're really satisfied with all of this, Joseph.
Okay. Perfect. Thank you so much, guys.
The Q&A session is officially ended. Now we're going to pass the floor to the company for their final remarks.
I just want to once again thank God for this event and this opportunity to present our results and the work we've done in the last quarter. I just want to also thank each of you guys and all of the employees that have been working with us at the stores, at the office. Everyone's really dedicated to do this carefully and with hard work as well, right? Always highlighting the importance of, above all, reaching, being with our God, that has been giving us the strength and the courage to face all the challenges. Thank you all so much.
Thanks, guys. Have a nice day. Bye-bye.
The earnings call for the second quarter of 2025 by Grupo Mateus has officially ended. The Investor Relations department will be available to clarify any other questions. Thank you so much to all participants and have a great day.