Good morning, ladies and gentlemen, and thank you for waiting. You are welcome to the webinar Grendene S.A. regarding the results of the first quarter of 2022. We have here present with us Mr. Rudimar Dall'Onder, the CEO, and Mr. Alceu Albuquerque, the IR director, along the main managers of the company. We would like to inform that the press release of the first quarter of 2022 is available on the website ri.grendene.com.br in the versions in Portuguese and English. We would like to inform that this event is being recorded, and it has got simultaneous translation into English. During the event, all participants will only be listening to the company presentation, and then after that, we're gonna have a Q&A session.
Before proceeding, I would like to clarify that any declarations done during this presentation about the perspectives and estimates, operational and financial of the business of the company are just predictions based on expectations of the administration regarding the future of the company. These expectations are highly dependent on the market conditions of economic performance of the company, sector, and international markets. I would like to give the floor to Mr. Alceu Albuquerque. Mr. Alceu, please, can you proceed?
Good morning, everyone. Thank you for being here in our video conference to release the results of the first quarter. I hope everybody is doing well and in good health. I would like to give a certain overview of the scenario of the first quarter, firstly in the internal market and then in the foreign market, the external market. In the internal market, we noticed an environment that was really challenging in the beginning of the year. A scenario of high inflation, high rates of taxes, high unemployment, and that kind of put a lot of pressure on lower classes. They didn't have enough money to spend. High classes A and B, we had the same behaviour observed in the first quarter. It's still increasing consumption.
As the quarter developed, we have a kind of resumption in consumption, and that can be seen and proved with the behaviour of the consumer in the area of the end consumer, I mean, in the retail itself. On the graph on my right, I'm showing the sellout, the accumulated sellout of our products in part of our clients, our retail clients, that we believe it will end up reflecting on the market as a whole. If we consider all our brands, except for Melissa, which has been 30% over a number around 19%. As we take the quarter, it has been 42% over. That behaviour, both on the brands of division one as in Melissa clubs, what do they show us? They show us the worst has gone.
The dynamics of this first quarter was inverted comparing to the last year. We started the first quarter last year very strong. We had the Delta variant of COVID, and in the second quarter, we entered with a more negative expectation for the second quarter, which is a contrary view of what we are perceiving now. Now we are observing a more challenging scenario. In February, we improved our scenario. We have a better, you know, significant improvement showing us that the second quarter should be strong, and we have great expectations for the rest of the year. That has been the scenario in the domestic market. In the international market, it was the opposite. We saw a favourable environment for exportation, not just for Grendene, but as shoes in general. We saw a reduction, of course, in the COVID cases, which ended up stimulating tourism.
That reflects the diversification strategy of bigger clients trying to have a wider range of suppliers, so they are not exposed to one country only, avoiding supplying problems. Another factor that contributed to exportation is the elevation of the international freight costs, which makes Asian products less competitive. Based on that, we can see a recovery, a general recovery of all of our markets, especially in North America, due to this diversification of customers. What is the reflection of that in our numbers?
In the first quarter of 2022, we had 22.6% volume inferior to the same period last year. That drop has been pulled out by the domestic market, which dropped 35.4% in that period. What are the factors and why can we perceive this drop in the internal market? Well, first of all, because of the scenario that is not favorable to consumption, as I mentioned before. The inflation is high, which compromises the consumption, especially the low-income consumer, where a number of our products they serve this population. The Melissa are more for Classes A and B, but the rest of our products, they are for a low income.
We had a high unemployment rate, we had high inflation, so that reduces the consumption capacity of this population, lower population. Another factor is the sales. At the Christmas of 2021, we had an impact which ended up impacting stocking and opening for new launches. We also had the anticipation of orders coming from our clients, our dealers. We would avoid purchasing in January because of new adjustments. We had announced a two-digit adjustment from January on, so a part of our dealers, they opted for that to be done in December, so it wouldn't impact our business in January.
Our basis of comparison against the first semester of 2021 is that in that moment, around 5 million pairs that should be shipped in December 2020, their shipment has been delayed to 2021 because of our capacity being taken over. That reflects our production in the second quarter, the whole second quarter of 2021. We received the orders in that quarter, but we couldn't produce because of interruption. The normalization of the delivery on that process and the high demand, the strong demand of the second part of 2020 overtook our capacity, and the normalization of orders would happen only in 2021. That has been a scenario in the internal market. In the external market, international market, what we could see was a high demand exactly because of the diversification.
Much because of the high cost of freights coming from Asia, which makes the Chinese product less competitive. With that, we managed to enlarge our products, increase the number of shipping pairs around 18.9%. When we look at our revenue, it's quite stable, dropping around BRL 630.8 million. Looking at the domestic market, we saw the number of 9% related to the first quarter of last year, meaning that the volume dropped in 30%, but the revenue dropped a little less because of a bigger gross revenue, which grew 31% due to price readjustments during that period and a better mix of added value.
Because Melissa had a good performance in the last three quarters, and because of the recovery of retail and the magazine channels, with historically demand a higher added value. In the international market, we had a 16.4% growth in our gross revenue. Our external foreign market, the gross revenue per pair grew in dollars 2.1%, and a drop of 2.1% in reais because of the exchange variation. We had 4.62 the dollar in reais this year here in Brazil. Looking at EBIT, the EBIT had a drop of 57% and was influenced by the continuation of the costs of raw material.
When we compare the first quarter of one year with the other, we have all the carryover, all the increase of the raw materials in 2021. Just for you to have an idea, in 2021, one of our main raw materials, PVC, represents 25% of our whole, it had an increase of over 60%. The comparison gets all that. Besides the pressure of costs coming from raw material, we also suffered a higher pressure because of labor. One of them is a higher volume of orders to serve the companies, to serve the shop floors.
We stop being so productive as we have a higher volume. The volume is one of the biggest drivers for margin at Grendene. As the volume dropped 19%, we had a smaller productivity in labor, even though we still have a management involved in the production. This productivity of labor has a factor that has contributed to intensify this loss of productivity, which is the new variant, the Omicron, that ended up bringing a labor absence, work leave, and that ends up affecting productivity of our labor. Sorry, I just forgot the term. We used to have more employees, more collaborators having to stay at home. It was a labor absence, work leave, and that ends up affecting productivity of our labor. Apart from that, we had an inflation in the period, and all the union raises kind of impacted the workforce.
The high absenteeism, work leave, high union dues, workers having the taxes on their salaries and also the inflation kind of impacted the raw materials in this quarter when compared to the end of the year. We observe an instability of the raw materials, instability in prices, and this instability is still not affecting our average inventory price. This ongoing drawback of these prices that we started observing last year, and it was stable this year, will start impacting the third quarter of 2022. Another factor that contributes to this downfall of our EBIT was our operational expenses that have increased, influenced especially by the commercial expenses. When we talk about it, we are talking about advertising and publicity. We are talking about people, employees, people related to our e-commerce team.
In our first quarter of 2021, we were still putting together the team. Now, in our first quarter of 2022, we have this team very well structured, and probably we won't have any new increases that are relevant in our team. The increase of national freights, the shipping because of the high prices in fuel also have an impact. With all of that, all our EBIT margins increased from 9% to 24%. When we talk about recurring net profit, it became relatively stable, reaching BRL 5.3 million, and our net margin was also stable, going one percentage point down. The difference between EBIT margins that were 9% and 24.2% is a result of the excellent performance of our cash flow that increased and got BRL 88 million as a result in the first quarter.
It was BRL 42 million above more than when comparing to the first quarter last year. Particularly, they were influenced by two accounts. It was our variable income portfolio that had a result next to BRL 52 million, BRL 40 million above what our result in the same quarter last year, and BRL 42 million in this quarter, BRL 20.6 million above our last year. Even if the volume applied is better, this cycle of high increase of tax rates, we had a 10.3% increase in our first quarter. When compared to last year, it was just 2%, which is kind of helping a lot with the financial results. This slide is just detailing about the numbers I showed in the previous slide.
I talked about it, and I'm going to talk a little bit about our portfolio. We call it the investment committee portfolio. BRL 682 million balance when we had a tax rate very reduced when we were looking for investments that were a little bit more profitable. BRL 850 million we used to have in March 31. They were allocated in the market. We had BRL 688 million reais allocated in the market, and the shares were divided, like, 50% was about real estate, projects of development, real estate projects with IPCA +9 and IPCA +12.
These are profits that are projected, and they will confirm themselves alongside when the projects will develop. We also have a variable income representing 42%, and we also have private credit presenting 80% of this share value. When we look at this variable portfolio, 20.1% are allocated for mining, especially Vale do Rio Doce. We have 34% in the financial institutions such as Banco do Brasil, 36% in energy, such as Eletrobras. Based on these numbers I have presented, the company is proposing a distribution of BRL 83.7 million for dividends in JCP. This is a gross value when we discount the 15% taxes, they will become BRL 31.4 million net. The dividend shares to be distributed are BRL 67.5 million.
A net value to the shareholders of BRL 71 million, like BRL 81.6 per share. These dividends will be paid to the shareholders that have Grendene's shares on the 9th of May, 2022. The shares will be negotiated ex dividends, and we will start paying JCP dividends from the 25th of May onwards. As I showed before, in other situations, I have an evolution here of our dividends and JCP that will pay out in 2004. We paid about BRL 4.3 billion. In this quarter, as I mentioned before, we have been distributing BRL 83.7 million. These are the numbers of the quarter, and I would like to get into more detail regarding our e-commerce.
I will call about GMV, which is a very good product that we have now. Our e-commerce is still growing. It kind of grew robustly in this quarter when compared to the first quarter of 2021. We increased 300% in GMV. Our e-commerce nowadays represents 3.7% of the sales in Brazil, in the internal market, domestic market. Related to the profile of our customers that purchase products with less value added, we reached a plateau of 25% like other competitors have reached. We believe that 12% is a little bit healthier for this plateau than that. Melissa represents a lot of this result, and Rider as well. Other lines with cheaper products where the freight can compromise also, maybe we'll have a smaller penetration with them.
10%-12% would be the healthy penetration of our products in the internal market. We also had an evolution in the first quarter when compared to the fourth quarter of last year. It's a quarter that has a lot of flow of people in the website because of Black Friday and Christmas. We had 16 million online sessions in our first quarter. It's an increase of 240% compared to the first quarter of 2021. From these 16 million online sessions, more than 5 million were done by different clients. We are bringing new people to our websites. More than 170,000 pairs sold in the period. We kind of increased the cities that we are reaching with our products. It's an increase of 31%.
We implemented in São Paulo the same-day delivery of Melissa, and we managed to deliver on a radius of more than 10 km products on the same day. We did integration with Mercado Livre. We started the development of Melissa APP. That's gonna happen. It will be ready until the end of the year. We are also going to integrate new marketplaces throughout the second half of the year. On the third quarter, we are going to integrate with Renner and Ri Happy, and on the fourth quarter, Shopee and Marisa. We have a lot of initiatives going on in our e-commerce. We have been learning a lot with the GGB people. We have been sharing a lot of information and experiences.
GGB, when I mentioned the results on the fourth quarter, it started the operations on the first of January, and it continues focused on the growth and the building up of the infrastructure to support a medium and long-term growth of the company. What do I mean about infrastructure? It's about people, systems, and processes. Regarding people, Gustavo and Andre have hired a team of highly capacitated people with a lot of experience in the sector, so the targets of medium and long term can be achieved. In terms of systems, they have been building information systems, IT systems, where decisions can be based on information. Turning systems into a more robust system.
For example, the online operation that they assumed from the second quarter of January, we replaced our platform for the Shopify platform and the flow of clients with this logic. We had days of peak where the flow was so high that this website ended up being slow or going down. They are investing a lot of money to turn these systems into more robust systems. When we talk about process, GGB started with global brands, very strong brands, but the company didn't exist. They are building the processes and deciding who does what. They have been hiring suppliers, third-party suppliers, payrolls, logistics operators, and all the processes that a company needs, all the processes that companies already have, we didn't have before.
Now we are focusing on building up these processes and fine-tuning all the markets we are going to act, and the brands we are going to use, and increasing local presence. The mix for United States is a specific mix. For China, is another mix. The commercial calendar for United States is one calendar, and for China is another one. For Hong Kong, for Canada. They have been creating these programs, these schedules, with these mixes of products that are specific for every single market. This is why we have to review the first result. We are going to review this first result only in 2023. As I mentioned before, the calendar of the Northern Hemisphere is a calendar that's a little bit different than us.
In May of a certain year, for example, the buyers of our clients, they receive the budget to allocate in a specific brand or product. From that onwards, these purchasers, they get together with manufacturers to get to know collections and place the orders that are going to be delivered from January to May of the following year. Now in May 2022, the commercial, the sales team of GGB are going to get together with clients, and in June and July, they are going to present the summer, spring-summer collection of 2023 . They are going to know our collection, and they are going to place orders that will be delivered from January 2023 onwards.
Commercial actions that are going to start from May and June, they are going to reflect on the shipments that are going to happen from January to June next year. This is where we are going to see the results of our new management. The e-commerce of GGB assumed the management of the e-commerce from the second quarter of January onwards. After that, we could note an increase of 100% with Melissa. It's the only brand we have selling online in the United States, and increased a lot when comparing to the last quarter of last year. This growth is a result of many different alterations and changes. For example, when we used to manage, we couldn't acquire a product without having an account at the Melissa website.
Now you can do that. You can do a purchase on the website without having an account. We used to have to tell the gender to make a purchase. Now we don't have that anymore. There is a very strong culture in the American market of devolving, of sending back products, returning products, and it's a more amicable, a more friendly experience now. Because the variety of products kind of reducing 30%, which ends up reducing the negative feeling of our consumers when they see a product and this product is not available in stock. With a smaller mix, they can have a better inventory management. Also they can have a more adequate inventory for the local consumer. Small actions like that made the e-commerce in United States to grow. They helped to grow 100% when compared to the first quarter last year.
When we talk about China, for example, the lockdown in China kind of hindered the advances of GGB in China. We had evolutions. We managed to acquire the Tmall store, our former distributor, and Tmall is one of the main channels, sales channels, online sales channels in China. We acquired this store from our distributor, and with that, we acquired the entire database of clients of them. The lockdown is something that we must pay attention to. Kind of made us postpone the entering of GGB in China. We have been working hard to advance in that market.
On the 18th of July of 2022, there is a day that will represent all the online sales of the year in China, and we are going to assume that in Tmall, and we have high expectations for the results obtained from there. I would like to, in the end, I would like to share, we did a collab with Manual do Mundo. It's the first low impact collection that we are producing soles with recycled 30% recycled content made of rice hull and coconut fiber. It's really, really cool and interesting because these people from Manual do Mundo, Manual of the World, they made a video. The link is above the picture of the product.
It's a 19-minute video with more than 50,000 visualizations that show in a very fun way and very light way all our manufacturing process. I invite you that are watching us to access this link and watch this video, which is really interesting. This product we launched with Manual do Mundo, it reflects our effort to bring our products to use bioproducts with renewable sources, replacing fossil materials. This collection joins other collections that we had before. For example, Rider R4 that uses bio-based EVA, Melissa Free that uses sugarcane materials. This is just to demonstrate a little bit of our efforts to bring renewable sources materials to our products. Always remembering that our the PVC used in our products is recyclable, 100% recyclable. We use up to 30% pre-consumption recycled material in our products also.
If we have a waste generated inside the factory, this waste is going to go back to production, go through a process, and it will end up being vegan materials, new materials. Our products are vegan. They are registered by the Vegan Society in the U.K. Our PVC can be reused many, many times. We have more than 400 points of collection since 2019 to incentivize the initiative, the circular economy. What I had to say, that was it. I would like to end saying that even though our economic scenario is still a little bit challenging, is a year where we have a lot of uncertainties, is an electoral year. We are going through a very light political crisis, going through a war between Ukraine and Russia.
Many, many elements of uncertainties are part of our scenario, but we are very optimistic. It's a positive scenario coming, arising, especially for the second quarter of this year. We have indications that we will have a very strong resumption given to the volume of sales of our products. I would like to end with this message, and I'm open for question- and- answers now.
Thank you. We will start now the question- and- answer session. The questions can be done through audio, clicking on the icon Raise the Hand, which is available on the bottom of the screen. In this moment, a request to open the microphone will appear on your screen, and you should click on Unmute. To send your text question, just click on the Q&A icon, which is available on the bottom part of the screen, and type your questions. The questions in English will be received exclusively via text. Just a moment while we collect the questions. Our first question comes from Vinicius Piccinini from Quantitas. Vinicius, please go on.
Alceu, congratulations for the disclosure. It helped a lot the results of the first quarter. My first question is if you can give an idea of the volume of the holidays in December and also the Omicron volume that happened in the second semester. If you can pass along some numbers on that would be helpful.
Thank you for the question. Just to understand what. I didn't understand.
How many of the 2021 migrated to 2022? How many pairs should be sold in December that were sold in January? The second question, how many pairs were supposed to be done in the first quarter, and because of the Omicron, you had to move to the second quarter?
This is hard to answer. Regarding the anticipation of orders, I would say around 10%-15% of orders that were supposed to be shipped in January, they were anticipated to December. Speaking of reallocation for the other semester, what I have is the orders we received in March to deliver in April. Remember, Grendene only produces. We produce just in time. What we have is a reallocation, is an improvement of sell-out at the end, and we have a certain delay from one-two months until we have the sell-in, because the retailer, the dealer, they see an improvement at the end, and they place the order in March. They place and we deliver in April.
Here we don't give any guidance, we don't give any previous results, but what we can see is the volume of orders in March to deliver in April was a very strong volume, confirming that feeling we had of a recovery on the level of consumption at the end, which is already reflecting our scenario.
If I can ask another question. Looking at the e-commerce on the internal market, can we expect that in the next 12 months you will increase the integration with the digital physical Melissa? What are the next steps?
Today, our Melissa clubs, they are already integrated on platform of omni-channel. When I show the performance of e-commerce, I don't talk about billing only. I talk about GP, because there is a difference between GMV and the turnover, the billing.
Because one is done only by Grendene that leaves the stocks of Grendene. GMV considers not only the turnover done by Grendene, where the product leaves the delivery center of Grendene, but also considers the sales that are done at Melissa's site. Who makes the sales per se is Clube Melissa, because the product leaves the club. In that case, Grendene receives the commission per sale. The sale itself, it's done by Clube Melissa. That part, I don't have the exact numbers now. The number of clubs which are already connected to this platform, I would say they are almost 100%. We have the pickup in-store mode. We also have the delivery at the house of the client mode. All these forms, they are available at this platform. Thank you.
Our next question comes from Renan Sartori from Bradesco BBI. Renan, please go on.
Good morning, Alceu. I would like to ask about the raise in prices. What was the level of acceptance? If you think there was any negative impact. My second question was the perspective of opening stores of Melissa from now on.
Regarding the readjustment of prices, we announced it in the end of last year. As I mentioned at that time, it was a readjustment that wasn't very questioned by our clients because the market as a whole felt the need for readjustment. The readjustments we did around two digits was as little as possible, so we could avoid, at the maximum, the impact on the demand. Let's say the readjustment was around 10%.
If we take a product in Ipanema, which is sold from BRL 20-30, putting 10% is 2 BRL, 3 BRL at the final price of this product. We believe that with the readjustment we did was necessary to organize the margins. Again, it doesn't have a very elevated impact on the product demand. It doesn't affect the product demand. The smallest number of pairs shipped in the first semester was a more structural issue, a more economic issue, a high inflation. In that inflation for the low-income customer can be really bad because it's more related to food and power that they can't run away of. They have less money for consumption. I don't have the feeling that readjustment we did was what impacted the demand.
What impacted demand was a structural thing, as the orders to avoid this adjustment. The dealer, the retailer, they wanted to have a better profit margin, obviously, but without the readjustment and a strong basis for comparison with the first quarter of 2021. Another point here is in a high inflation scenario of little money in the pockets, historically tends to be beneficial for us. That is because if you take our product and you take our competitor's product, both they offer very similar features, but ours has a lower classification. So, in a scenario that population doesn't have much money to consume and they have to consume a pair of flip-flops, historically, we have perceived that they prefer our product because we have very similar features but with a lower cost.
I don't know if this was your first question, but could you please repeat the second question?
The opening of Melissa stores, the perspective.
We ended the quarter with 388 stores. We closed three stores in last quarter, but we should end the year. We expect to end with 415, 416 stores. Historically, the shops, they aren't open in the first quarter. They start their opening after that. We had openings in the first quarter. We had three stores, but we had six stores closing. We expect that until the end of the year, we have 415, 416 stores.
Thank you, Alceu.
Our next question via text comes from Mr. Marcelo Garcia do Couto from the company Petrobras. Good morning. How Grendene perceive the local market in the international market, the growing expectation in sales?
Thank you for the question, Marcelo. Yes, we have growth expectations both in volume and in income, in revenue, in both markets. In the domestic market, we have a higher representativity, a higher share. We should grow, but it's a more slight growth when compared to long-term, midterm perspectives. We have an international market that in 2016 were higher than $300 million. With this partnership we had with 3G Radar, with GGB, we have very high expectations on the international market, on the foreign market for growing. The biggest Grendene growing driver on medium and long term is the international market.
We finish in this moment the question- and- answer section. I would like to give the final word for Alceu for final consideration.
One more time, thank you all for being here in our web conference. I'd like to reinforce we have a very positive view for the year. We have a revenue growth, volume growth, margin recovery, especially in the last line. Even though we are aware of the challenging environment we are going through, in election years, historically, the government injects a lot of resources in the economy, which ends up, as an incentive for consumption. We have a number of benefits being reviewed, in terms of Brazilian rights. All those are resources coming into the economy and to make that incentivize consumption, and we believe that must contribute for retail sales, including Grendene.
As I said, in moments of high inflation and unemployment, the products, mainly the low-income products, they tend to perform well because we are very competitive. We have excellent products with outstanding design and very accessible products. That's what we do. We provide fashion in accessible ways to our consumers. With this injection of resources and competitive products, Melissa as the high-income consumer with appetite for consumption facing these factors, these issues, we have a positive view on that until the end of the year.
Thank you all, and I wish you all a good day. The webinar of Grendene S.A. is closed. We would like to thank your participation, and we wish you all a good day.