Good morning, everyone. Welcome Investor Day 2025. I'm Fabiana Oliver, Investor Relations Manager. Our event is being held in a hybrid form, so thank you so much for coming here to Porto Alegre, and thank you all who are online. The event, this event, is being streamed with simultaneous interpretations being provided. It will be recorded, and both the English and Portuguese slides are available on the IR website. This morning, we have had several executives here to present to you our strategies, our ambitions for the coming five years, and how we're going to get there. This is our agenda, how we put together this agenda for today. In the end, after Daniel's session, we're going to have a Q&A session. For people who are here, of course, just raise your hand, and we're going to have, like, we'll be able to answer your questions.
And if you're online, please just click on the Q&A button. Now, I'd like to invite the President of the Board of Directors, Carlos Souto, to come to the stage.
Good morning, everyone. Oh, it's too loud. Better now? I was so emotional today. It's a great honor to have you here in Investor Day 2025, a very important moment to reinforce the essence of the culture of Lojas Renner S.A., which was built upon transparency, discipline, and trust. These are values that have always guided our relationship with the market, along with a long-term view which is shaped by decades of decisions, pioneering decisions, and a leadership that has consistently placed Renner ahead of the trends in the sector.
Our history in the capital market began in 1967 and reached a milestone in 2005 when it became the first Brazilian corporation whose 100% of its shares are negotiable in the stock exchange. In the capital is fully pulverized. This movement not only changed the company, but has also inspired the Brazilian market. The year 2025 is particularly significant. You know, we celebrate 60 years of our existence and 20 years of this milestone in the capital market, which redefined our identity. A history which has been marked by cycles, transformation, constant evolution, discipline to grow, and courage to innovate. We have always been anchored in the purpose of being a reference in fashion and lifestyle in Brazil by making clients happy and promoting responsible fashion.
Since I joined the board as President in 2024 with our Vice President, Jean Pierre Zarouk, and all the other members of the board of directors, Juliana Rozenbaum, Chris Eddington, Andréa Rolim, André Castellini, Marcilio Pousada, and Adriano Seabra, our focus has been very, very clear to strengthen the strategy, to preserve the culture, and ensure the generation of sustainable value to all stakeholders. We're always providing support to our administrators and the company itself. We are independent, rigor, we're responsible, and the perspective geared towards the future, guided by our values and aligned with the highest standards of corporate governance. The role of the board is to ensure the continuous growth, sustainable growth of the company by defining the strategic decision, anticipating structural changes, promoting innovation, and strengthening our culture of leadership.
We have seen up close the strategic initiatives of the company, ensuring that the opportunities became in results aligned with the interests of the shareholders and generation of value in the long run. Among the important stages, it's more things to get this year. We have reached a milestone which I would like to mention: the approval of our long-term incentive plan, a plan that aligns Renner with the best global practices all over the globe, reinforces our commitment to meritocracy and the alignment to the interests of our stakeholders, and also strengthens our capacity to attract and retain the talents to carry out the following cycle.
What you will see today with our executive leaders is, you know, it's a company that is getting ready, getting ready not only for the next cycle, but for the next decade, which is more, will be more digital, more integrated, more data-oriented, and more and more geared towards sustainable growth, profit. In 2025, we have redefined the strategic priorities of Renner through a clear, integrated plan, which reinforces brand reinforcement based on an incomparable understanding of Brazilian customers, strengthening our position as the major reference of fashion in Brazil, a structure of unique products, differentiated and insight-oriented structure, in which we use data, artificial intelligence, and a model of execution that improves the margin, reduces remarcations, and speeds up the time for release. An omni ecosystem which is continuous and scalable, which expands its reach through new stores, better insertion into the digital sphere, and better productivity.
You know, it's a strategic facilitator, you know, promoting more engagement and providing support to expansion into new markets. Discipline financial management, which ensures efficient capital with a solid cash flow leverage profile, which is conservative, and a flexible structure, which is efficient as well. In 2026, we're going to see the important beginning of a new cycle of growth and generation of value. On behalf of the board of administrators, I'd like to thank you all for being here. Thank you for your trust and your continuous work, and I would like to thank you all. Thank you all, our staff members, our administrators. You know, all of them, under the leadership of Fabio, have put together Investor Day, which I believe you'll love it. You know, they dedicated, they were so completely dedicated. Thank you so much.
And thank you not only for Investor Day, but for all the days in 2025. You know, with their competency and high-quality work, you dedicated yourselves tirelessly to make Renner better each day. Now, I'd like to invite Fabio to come to the stage. Thank you.
Good morning, everyone. I'd like to thank you for being here, both online and in person. So, I'd like to say that, you know, for us, both for the board and for me personally, or for all the executives, our focus is on sustainable growth and generation of value for our company. You know, we're focusing on that. That's why we're here today. This is a goal. You know, the goal is to share with all of you some of the ambitions that we have for the coming five years, which are related to growth and generation of value.
Also, we're going to share, over the course of this morning, with you guys how we plan to achieve those results, thus maximizing the potential of our assets. You know, we have to reinforce to you that, you know, this is our starting point. We are leaders in the market. We are getting market share. We can get even more and expand our leadership position, leading position. We can leverage even more our, you know, our market differentials, competitive address. We know a lot. We know consumers a lot. We have strong brands which are recognized by everyone. We are unique in terms of the omni model. You know, we have the largest capillarity in Brazil in terms of physical stores with a digital relevance, which is very strong.
Putting these two things together, it makes us very, very unique in the market. And by leveraging all that, we have a team which is highly competent and engaged. And all of that makes us ahead, ahead of our competitors. Well, but going straight to the point, you know, we started this period in from 20. We'll start the 2026-2030 period with a platform which is ready. We have invested in it, and we're going to talk about it. You know, we have invested in infrastructure, technological platforms, CV, artificial intelligence, algorithms, database. And our installed capacity is big, and we can grow with profits, with profitability. So this is the moment we've been growing. We've been getting, you know, our performance has been really good since mid-2024. But as Souto mentioned, in 2025, we stopped and looked at things. Okay, what else? What then?
We have installed capacity to accelerate, to speed up even more and continue growing and gaining more profitability and revenues, so I'd like to just want to show you this. I saw it earlier before Investor Day. we have published some of the figures that you can see here, and you'll see throughout this session today with notices, relevant data about the indicators of expectations for the coming five years, so this is on our website.
We have the expectation with these investments that we did with the initiatives that we will speak of today have an average growth in the next five years between 9% and 13%. More than that, with a gain in profitability, gain in profitability above this coming through scale, through gross margin, but reduction of expenses.
We have an expectation in this period during these five years of reducing our commitment of expenses on the net revenue to two-three percentage points coming from the growth, gaining efficiency, also reduction, specific reductions. Another important point, talking about investments we did before, we came from a cycle of investment, 9% CapEx on our net revenue, investments geared towards this platform, this infrastructure, the installed capacity in the database and this model that is ready to grow, ready to grow with efficiency and profitability, so we go to a phase now that our investment goes, it is more normalized. We have an expectation of a CapEx on net revenue around 6%-7.5% in this period annually in this period, but the investment is geared towards growth. More or less two-thirds of the investment is for new stores, refurbishing stores, and digital journey, three points of growth, direct growth.
When we align growth in sales, reduction of the commitment of expenses on revenue and a CapEx that is more normalized, it allows us also to be ambitious with a ROI around 20% and with a generation of free cash that is very important that allows us to do all of these investments, operate the company and having an expectation to continue to have a distribution of value to the shareholders in a high level. Daniel is going to explore this more, but we have an expectation to distribute a value between 50% and 80% of the profit to the shareholders doing the necessary investment and growing. Besides this, I mentioned that today, this morning, we published these indicators and a few others, but we also published a new repurchasing program and a new distribution of Interest on Equity .
You can have access to this. These are examples that our new program of repurchasing, once again, in an interesting amount, a new distribution of interest on our own capital, are examples of the trust that we have in our company and the generation of value that we have for the shareholders. Well, in our strategy, I was talking about numbers, but it was guided in our purpose. Our purpose is to delight everyone. We want to delight our customer to go above the expectation of our customer and our shareholder expectation, generating more value. We do this guided also by an obsession in the centrality of the customer. Delighting the customer is essential for us, aligned to our value proposition to be a reference ecosystem in lifestyle and fashion. In the past, we talked about our strategic pillars.
We call the three Rs, the three objectives where we want to be a reference. We want to be a reference in lifestyle and fashion, in delighting journeys of our customer and responsible btrends. These are the three references that we have worked on for a few years. The published strategy here is to accelerate and make potential, maximize what we were doing with a few other initiatives. It's not a change in the route. It's a continuity with an evolution and acceleration. Regarding the three pillars that we're going to talk about this morning, this is how to win, and the things that make it feasible are the innovation, artificial intelligence.
Also, we are working over 10 years with this, not just database algorithm, developing of an end-to-end system to use this, the operational excellence that we have and our team, our people, and our culture. But I would like to call here. I ask you to play a video to see what Renner, Lojas Renner S.A. is today.
We are. Oh, we have something.
Well, we saw the numbers now, what Renner S.A., some of our brand concepts. We're going to see this in numbers. When we bring here, we are the leader ecosystem of fashion and lifestyle in Brazil. And a few numbers of the last 12 months up to September. These are public numbers.
We have in this period over 20 million active customers purchasing the last 12 months that purchased with us, BRL 13.7 billion in sales in merchandise and retail, generated net profit of BRL 1.4 billion and generated a free cash flow of BRL 1.5 billion. Besides being the main fashion brand in Brazil, the most important brand in fashion in Brazil by far, we have a global recognition, also especially in our ESG practices. We are a reference in some of the main rankings and levels such as Dow Jones Sustainability Index, and we are AAA in the rating, in the Sustainalytics rating for ESG, ahead of our peers, domestic peers and global peers. But some of the competitive advantages of Renner are related to what we speak about, the three pillars, the three Rs.
When we talk about the three Rs, fashion and lifestyle, a big competitive differential we have, we invested a lot during these years and we continue to evolve is our execution of fashion, our capacity to create incredible, delighting products, assertive, capturing the best trends, translating this to the customer, to the taste of our consumer of the Brazilian market, Argentine and from Uruguay also. Another important point is this issue of the supply chain. We have the best suppliers domestically, an important chain. It's an asset, a competitive advantage, and we have a long-term relationship with them. This is very hard to be built. We have over 20 years of relationship with our main suppliers.
Besides this, we also have the flexibility of a global matrix of sourcing, two important assets that we have here connected to this execution of fashion, a network of suppliers that's a differential aid or supply system, 100% omni, 100% SKU based. We have the flexibility, the scale for physical and digital, working piece by piece, ringing speed, granularity, optimizing our assets and our stock also. Reference in delighting journeys, we have the issue of capillarity or physical capillarity, incredibly integrated to the digital. The omni is very important to be present 100% of our customer journey, not just in the physical journey or the digital journey. In both integrated, we have the biggest proximity with all of our customers and the best experience with the omni players also. All of this is made even stronger with a digital platform that booms with AI data.
We invested a lot in the last few years. When we talk about data and artificial intelligence, it's present in different moments of our model and the platform. For example, our database that I mentioned, the knowledge of our customers that drives the journey with our customers and products is leveraged by AI that potentializes this convenience and recognition of our customers. Not just that. We go to the end-to-end model. When we capture the trends with more assertiveness, the decision of sourcing the supply, distribution, journey in the store, journey online, recommendations, content, and productivity of the team. All of this, we use a lot of AI, content, database, and this continues to evolve. Besides this, we have also the part of responsible fashion. We are a number one brand in value in Brazil. We are a reference also ESG globally and also financial stability and financial security or safety.
When we talk about the market that we are positioned, Brazil, Argentina, Uruguay, the majority of our market is Brazil. We sell fashion, clothing, shoes, accessories, beauty. Here I detail the estimate of the Brazilian market in terms of garments, or apparel. In 2024, an estimate of BRL 132 billion in terms of consumption. And the estimate of Euro monitor is that this market will continue to grow 6% every year in the next few years because we are positioned in such a big market. This is an asset, a competitive advantage, also more than that. If we look at the formal market, the three biggest players only have 20% of the market. It's also a potential, not just in terms of growth in the market, but a gain of share in terms of the biggest players.
We must remember that we are the leaders with 10% of formal market. Now, the crunches when we do benchmarking is a lot higher. Our potential is a lot higher due to this. We must remember that we're talking about the formal market. It's hard to estimate exactly the size of the informal market. The majority of the estimates talk about the 40% in informal market. So the formalization of the market brings this to the main players without even mentioning that we are positioned as the player that has the greatest potential to capture this market and grow even more our market share. Besides this, in this market, our positioning is a big asset, a big differential.
We are positioned in accessible fashion where we have Renner, Camicado, Youcom, and we see a lot of space to be able to grow and grow more in the concepts we have, the brands we have. We see more space in the same positioning to grow with new concepts. The numbers that we mentioned today that we published that we're going to talk about are about the current assets that we have, the current concepts we have, the current brands, the BUs we have, the current geographies we have in the countries where we already at. There is potential for more. Yes, there is potential for more. We are always paying attention to this. We evaluate all opportunities with diligence, with focus to generate value to the shareholders. We're paying attention to concepts. It can be organic or inorganic.
The inorganics, the complexities of integration, possible complexities of integration that are important and overlooked sometimes, or a new country also, the geopolitical issues. The possibilities are out there. It's not about this that we're modeling today's numbers up. Additional opportunities for the future. What we guarantee is we always will evaluate with discipline and focusing to generate value to the shareholders every moment. We have in the last 10 years, let's detail the cycles a bit more. We have an important growth and this important growth up. Part of it comes to do square meters physical expansion. In the last 10 years, around 5% concentrated in the beginning of the period because in the last years we almost did not grow square meters, but we grew with gain of efficiency. The sales grew more 10%. The profit and cash flow increased also.
We did this with market share increase. We brought different indicators to compare. PMC and Euromonitor , PMC, we grew over four times that market average. Euromonitor , we grew over 100% of the indicator, gaining market, even more market in the last few years. Obviously, when we look at the main players, we have a different event in the beginning of 2020 when with the pandemic, the entrance of new business models, the indigenous growth of other players cross border that have a higher increase or growth in the market. When we look 2023 on 2024 and 2025, there's a stability of the other business model and a continuity of our growth. When we look at the plot right beside it in terms of productivity, looking at omni players, the data is public. It completes sales compared to the area.
Sometimes there are many publications of results adjusted here, adjusted there, category X or Y. What's valid in total? We agree. Total sales that's generated on top of the assets you have. So we're gaining. We were a reference when you look at before the pandemic. We increased our advantage two times. We increased the gap. So we need to see how we can continue in this trend. Well, when we look at also, it's important to bring context to see the cycles, the moments where the growth is coming from, the profitability where it's coming from, and what we see for the future. I brought from 2010 to 2019. It was a moment that we grew a lot, especially due to the geographic expansion in Brazil. That was a moment where we advanced throughout Brazil.
There was a boom of shopping centers, inaugurations, a lot of stores, a lot square meter, a lot of our growth, especially in the beginning of the period came from this. Besides this, we started to grow in new countries, new geographies. Close to the end of the year, we opened Argentina and Uruguay or Uruguay then Argentina. In the beginning of the period, we started to test and see the opportunities we understood of new concepts.
The Camicado was purchased earlier this in the cycle. Youcom was created in the beginning of this cycle too. They began growing and contributing, you know, minimally at first, you know, in some countries in this period. When we look at the 2022, 2023 cycle, we made major investments in infrastructure, you know, this platform that is ready now with the installed capacity to grow with revenues, profitability.
It was built in this cycle, 2020, 2023, you know, not many stores were open. I mean, some of them, of course, you know, we managed our portfolio. We closed some stores, we opened others, but in terms of area growth, no, we didn't have much. We grew digitally, of course, but in the moment, in the moment we were investing in efficiency of our digital platform. It was diluted, but the investments that we made, you know, allowed us to get into the following cycle, and I'm talking about 2024, 2030. You know, we're talking about the numbers, figures from 2026, 2030, but it started in the middle of 2024 and will be leveraged in 20 by 2030, but in that period, we saw that we finished our investments in infrastructure. We diluted expenses on income and improved profitability.
Daniel is going to show you a little bit more of that. And now we're ready to do even more to accelerate our expansion and other points. So the growth we had from 2024 to 2030 will be based on efficiency. And on top of that, it will be combined with the acceleration of expansion digitally, of course, with good, good profitability. When we have capacity to do so. But when we talk about strategy, we believe that, you know, there is something that says culture eats strategy for breakfast. You know, we believe, you know, if they're not aligned, yeah, it could be, but we get really, really, we're really concerned about working with culture and strategy together, you know, so they don't like overtake the other, but they can go hand in hand and both of them can succeed. So we developed our strategic plan.
We made adjustments to the essence of our culture, but we made adjustments in terms of the evolution of culture aligned with the strategy. Also, the metrics, as you say, you know, long-term and short-term incentives, they're all aligned with this strategic plan, the new organizational strategy, processes, and sustainability. They all converge, you know, they're all stated in this plan. But to talk more about this, I'd like to invite our Vice President of People and Sustainability, Regina Durante. She's going to talk a little bit more about it.
Good morning, everyone. I'm Regina. I'm going to talk to you about our people and sustainability strategy. Our strategy, you know, is grounded in four pillars. We start with the idea of cultural evolution. You know, our cultural evolution is in line with the corporate strategy. That's why strategy and culture go together.
At Renner, we have established new organizational values, you know, as we have revisited them in a short period of time. And among those values, we chose five. It's important to remember that our purpose here will not change. We want to delight customer. This is what we're here for. And because of that, we have strengthened one of the most important values that we have, clients and customers. That's what we are here for. They are at the center of our decisions to give them what they really want with technology and innovation. The second value is high performance. We know our culture at Renner. See, it's a culture of beating expectations, and high performance elevates that even more, raises the bar even more, you know, because we want to deliver results with more quality, speed, and assertiveness. The third value is people.
This is one of the values that are most important for us because we are a company of people, of people to people, and we need to take care of our staff members, giving them an environment, a diverse, inclusive environment for high performance. Fourth value is sustainability, you know, which is today a future, which builds our future. It's the value that ensures that we're going to be there longer, and the fifth value, leadership, you know, the value, which is the propelling agent of all the others and all the behaviors that are associated to it, because leadership is the role model, is a guardian of our culture. Leadership is what makes and develops our talents for today and the future and also ensures that we are always leaders at the forefront. Second pillar is performance management.
Here we have two major types of incentives that are aligned with the interests of stakeholders and corporate strategy and executives and staff members' interests. You know, these are important leverages to retain people. The first incentive deals with short-term goals. You know, we have a trigger, you know, the operating results, our EBIT, same thing as main indicators. We have the net operating revenue, free cash flow, and net income. In terms of long-term incentives, we have the following indicators: earnings per share, ROIC, and relative TSR. Our third pillar is organizational structure and processes. You know, this pillar is embraced by our corporate strategy and evolving and has been giving good, effective results. We also have the right team. You know, our team is engaged with 89% of engagement. We have a team that wants to be in the company with 95% of retention among leaders.
Our team grows and develops with us with 66% of internal performance in the leadership positions. Fourth pillar is sustainability. You know, it's got ramifications in three major areas. The first one is sustainability and climate solutions, climate circular and regenerative solutions. Our main goal is resilience, you know, and we are very proud to remember that we were the second company, number two company in the world to adopt voluntarily the IFRS S2 report. We are also very proud to say that eight out of 10 power pieces made by us are sustainable. You know, the second pillar is human relation, human and diverse relations. Our goal here is to have a real image of Brazilian society in our staff so we can offer them selections and experiences that are even more delighting and more assertive to them.
Today, we have 62% of women in our leaders, 48% of women in high leadership positions, and 34% of Black leaders. Third pillar is the pillar of connections that amplify. It deals with our long-term partnership with our supply chain at national and international level. The strategic partnership is important because it makes our suppliers, you know, have a unique methodology with us and so they can get all the support they need for them to have like social environmental practices, but also managerial practices. Like globally speaking, you know, the best that we have to offer to those suppliers and their management improves too. Today, 100% of our suppliers are certified both nationally and internationally.
With all that strategy that I have just mentioned to you and with all the indicators, people indicators, we are certain and we're sure that we have the right strategy and the right people and the right team to deliver even more value to stakeholder and carry out this strategy with certainty. Now, to talk a little bit more about the strategy and give you details about what's next with Renner, please. Let's see. My colleagues will be here with you. Fabiana Taccola, Renner VP, Renata Altenfelder, Gustavo Yuasa, Paula Mazanék, and Alexandre Aires, our supply chain director.
Thank you. Good morning, everyone. Welcome. Now we're going to drill down together at BU Renner. We call it BU, but that's our brand, you know. To talk about Renner, I would like to remind you, you know, what we're talking about.
Let's talk about this company, this brand, you know, the heart of our fashion here. In Brazil, we are the largest fashion and lifestyle brand in Brazil. Remember, we, you know, we work together with our customer. We love them. We connect with them deeply. And we are recognized as a company with a feminine soul. And to talk about feminine, so I'd like to remind you, most of our customers, over 75% of them are women or females. And they're more or less like they are ranging from 25 to 50 years old, vast majority of them. And they live and they're like upper middle class and middle class individuals mostly. But we also cater to not only feminine audiences, you know, we are a family store. We work with things for men. We work with cologne and perfumes, beauty products, accessories, shoes, kids.
We're very comprehensive. What's unique about Renner in relation to our competitors? I think, you know, people, it's important to remember that what makes us unique is the way that we translate collections. That's what we call the lifestyle methodology. This is more like, more or less like, how do you get information that is out there in several systems on the planet and translate that into assertive collections that delight our customers? You know, this methodology, the consistency of this methodology year after year is what makes us unique. You know, Fabio mentioned it, you know, sales square meter is so high. How do we get that? That's not enough. There's more to it. We, you know, there's that nice part, the Brazilian aspect of it. You know, what makes us Brazilian is the deep knowledge that we have of our clients, of our customers.
You know, you cannot make caricatures of that. You know, we work real hard to translate fashion with the Brazilian influence. Something very important too. We are recognized by our customers for the quality of our products. This is a reference. We are a reference. And of course, no less important is equally important, you know, for our customers, our value, our products have an aggregate value that is really, really high. And this gives us, you know, this makes us accessible to them. And what does that mean? You know, people, I just as a reminder, Lojas Renner is not only the largest brand of fashion and lifestyle in Brazil. It's not just the largest retail, fashion retail store. It is the most valuable brand in Brazil in terms of fashion and lifestyle. We are the most beloved store and brand.
We have the largest number of followers on social media. Our top of mind, you know, is almost twice as big, as large as the second, the runner-up. You know, our competitive NPS among the omni players, you know, we have the largest NPS clients recognize us to a certain. And our share of voice, of course, is really big. Fabio mentioned the cycle. What comes next? How are we getting ready for that? What's the cycle of growth? And to talk about it, you know, the major goal of this new cycle is to evolve from a recognized retail brand to a fashion brand. You know, there's something that we say here internally, you know, we talk about purchasing at Renner, purchasing at Renner to purchase Renner. And then there are three pillars in this scenario.
We're going to work with the products and delighting experiences, and we're going to deal with the responsible fashion brand. What do we expect to get out of it? To continue growing in terms of number of customers, to continue growing, you know, having loyalty to our customers, you know, increase the conversion and average expenses. You know, we're the largest store in Brazil in which customers spend more. You know, what else? We're going to be loyal to them. We want to bring them to us, but mostly, you know, we're talking about, of course, increase stock, the margin, and other things. But the most important thing here is to be the most relevant fashion company in our customers' wardrobes, in our closet, in their closets, to have the largest number of pieces in their closets. This is what we want.
And to talk a little bit more about it, you know, it's very important. Our first pillar. Renata is going to talk about the first pillar in our responsible fashion. Thank you.
Good morning. I'm very happy to be here with all of you. And just to start, I'd like to talk about the brand, Renner, the brand. I'd like to show you a video. And so that's it. This is where we're going to stay. We're going to stay in the middle of it all, you know, between the desire of being myself and the fear of being myself. When did our major expression tool become this? Let's imagine the fashion that we love. With, you know, let's imagine, let's sew, let's take risks, let's mix, let's try out, let's revolutionize. Oh, and breathe. You can reinvent how to do with fashion.
Renner has been around for a while, and it'll help you how to experience fashion your way, your rhythm. Please be yourself. Fashion is just the beginning. This manifesto was released in March this year as an invitation for our customers, you know, to recreate the way they see fashion with more authenticity, originality, lightness, with the freedom to be who they are. I'm very proud to say that all the images that are in the video you just saw are images of campaigns that were released after this new platform, Be Yourself. Ou seja, você. But we're here to talk about this strategy. How are we going to construct this new moment? How are we going to evolve into this fashion brand? First of all, we're going to work on delighting experiences in every single point of contact and the omni experience.
I know customers, we don't use the words on and off anymore. They are, they have merged. These experiences bring us some narratives that talk about fashion, behavior, sustainability, which is something that's been growing in importance in terms of purchasing decisions. Almost 70% of the people in Brazil today consider fashion, some fashion attribute, consider sustainability when they connect to a fashion brand, and so we gain a lot from it, so we are the favorites of these customers when we do that. Also, we're going to reinforce our fashion expertise. We know a lot about fashion. You know, our lifestyle fashion, you know, we translate fashion for our customers, for what they want, and we are going to do that by connecting with cultural moments and moments of the cycle of fashion in the country. Because, you know, fashion is culture.
Also, we're going to use several data, you know, artificial intelligence to boost the emotional connection with them and talk to these customers even more. You know, how are we going to connect with them? How are we going to give them relevant information that they need? You know, customers today, their journey is not like, it's not like steady. You know, today's things are very fluid. And also, we know who these customers are. We know these girls. How do we know them? How do we activate our retailers? You know, first, we're going to look inside, purchase information, market information, demographics, what's happening on social media, what is happening in culture. Also, we're going to, we also do research, very specialized research into fashion, NPS, what they expect, what customers expect, what they believe. What do they believe?
You know, we always say that fashion is an expression, tool of expression. When we get dressed, when we, you know, we want to communicate something, even when we believe we're not thinking about it. And so whenever we talk to these women, what are they telling us? They're telling us that their journeys are fluid, they're multifaceted. Fashion is something very important for them. Yeah, it is. And they know that Renner is the most important brand connected to quality. And you know, these figures here on the left make us very proud. When we released our platform in March this year, we did some research. And since we released Ou seja, você Be Yourself, it grew 25 points in recognition as a brand that not only sells clothes, but is authentic. We know fashion, we are original. We have a lot of quality.
Knowing who is this woman, this consumer, and what they are looking for, how do we get to them? First, we create these clusters. Don't worry, it won't be one in each box. You change the box during the day. But we create these clusters of behaviors of the consumer. We create content based on this, and we distribute the content in different points of contact, media points of sale, digital, SAC, an event like this. For every point of contact, you need to bring this information. And this has brought results. Our base of customers here, I'm talking about the brand Renner. Fabio was talking about 20 million customers because we're talking about all of our brands. 19 million customers is the brand Renner. It's a base that grew 16% in the last two years. Grew our omni base, also the consumer that buys on digital and physical.
And in very important data, we grew 33% in base of loyal and ultra loyal customers. They come more to our stores, the brick and mortar or online. They buy. The average expenditure is over four times as high. We have a very strong brand. We know a lot about our consumer, and we're doing, we're making this invitation to recreate and transform the way he uses fashion, and Renner should be his tool for expression so they can say who they are. I'm sorry, the audio is very low. Here, I want to take a step back. A step back, remember a bit our normal curve of fashion trend so I can show a bit where Renner is positioned. When we look at the normal curve of fashion, Renner is exactly here. What is Renner? Renner is a trend launcher in terms of fashion.
We are positioned before the hype, so it is not the trendsetters, so-called the fashion creator, and we approach the entire mainstream, but we position ourselves here due to three important reasons. First one, the majority of our competitors is in the mainstream, the majority of them, so being here in the launch before the hype, you have a capacity to capture value that is higher. The second important point of this is that we are always testing product all the time, and you can discover there's a lot of analytics here, many tools to find out what are the products that will go up, that will explode, that will become hype, or the potential products that will become hype, and having this before the hype, it's an avenue of opportunities and advantages, and there's a third point, more important for me and for us, is more relevant.
The mind of the consumer, he starts to perceive that Renner has products that are a trend before the competitor. The visits are more frequent. And you have that mindset of the customer, the brand, a fashion reference and lifestyle reference for this customer. Talking about a productive process, how is Renner? How is Renner? We must remember we have long term, big collections. It doesn't have to be urgent. We prepare for what we choose as a trend, forecast and plan the next season of our collections, big volumes, essential products. This is in long. And you have the in season. And on in season, basically, we have two big blocks of creation of products and collections. First is short term. Short term are smaller collections produced and delivered on that season. Why? We have collabs.
You have a space that you leave in your portfolio to be able to react. The more in season, the better to be what? More assertive regarding the consumer expectation. The consumer is being super bombarded. It has information about fashion all of the time. The companies don't have the exclusiveness of information, and some get prepared for this, and many things happen in that season itself, and this process is important. Open portfolios that we work strongly on, and we have the reactivity also, then we're talking about the fast trends. Eventually, you see concerts, a soap opera series, people that are doing something, cultural events worldwide that sometimes something explodes a certain trend, something war, somebody wore something and that exploded as a fashion reference company. That's very important to bring and make available to our consumer, then we use reactivity but not only for that.
We use reactivity also when we're testing all the time in the productive process. We're understanding in small batches what is a nice product before the hype. We also scale these products that were assertive. So reactivity for us is to scale product and it retrofits the short and eventually depending on the trend that we observe, it can become even a long term and next season in larger scale. Guys, against reactivity, I give you a few numbers. We started with 5%. Now we're in 20% of domestic. The big objective is to be between 30% and 40% here. Of course, gaining margin, stock turnaround, conversion that is stronger, bringing sales increment also. Capturing trends. We produce the productive cycle of availability of the customer, analyze very fast. This is an important tool. It's not just analyze the past. Remember, this is forecast.
It's looking to the future and scale. I want to call Alexandre Aires to tell us how supply is supporting this strategy.
Thank you, Fabi. Good morning, everyone. It's a pleasure to be here to present supply chain as competitive advantage, not just for Renner, but for Lojas Renner S.A. Our supply chain area has the ambition to connect the strategy of collection development product that Fabi just mentioned with production, distribution, and delivery for all of our stores and all of our channels. We do this divided in three big areas. An area is of sourcing, responsible for the management, development of suppliers in the domestic chain and international chain. A planning area and supply that makes the best decisions in terms of distribution of product, using technology, artificial intelligence to potentialize the use of our supply model through SKUs.
Finally, a logistics area that is able to use the distribution centers and transportation, making the product arrive at the right time in all of the points, stores, and channels also. It's important to say that this supply chain is available to all the business units of Lojas Renner S.A. With this, we can develop an area that supports the entire company with scale, synergy, becoming a competitive differential. I'm going to talk a bit about sourcing. Investor Day of 2023, we signalize what would be the areas that we would act in the following years. I would like to share the advances we had in these areas and the results that we already captured. First, we work a lot in an active triangulation of the acquisition of cloth from the raw material suppliers and finished material suppliers integrated in our collections.
With this, reducing the time that we have to develop the collections and have them in our stores. Also, we work intensively integrating the system and supply chain domestically, having visibility end to end, being able to allocate orders with the capacity according to the capacity of the supplier, more efficiently reducing issues of lack of capacity or inefficiency or making the chain anxious. We do this for over 50% of the domestic supply chain. Finally, we work also in the development in the local suppliers, investing over BRL 16 million through partners, 80%, BRL 80 million that generated the adoption of processes that are more efficient, renewal of our manufacturing domestically with 20% gain in productivity and an increase of gross margin of 1.5 percentage points in the 20 major suppliers of the company. If we add this up, we have many benefits.
I would like to highlight one, reducing 26% the time of production of a collection until it's available. It's a strategic differential for the company, as Fabi just presented, the capacity to react fast to trends and products that perform in a positive way. Another focus of action of the company during the last few years was to work their supply model. We adopted a supply model through SKUs for all the products in the company. It's a winning model adopted by the main retailers in the world in terms of fashion, and it presupposes that we stop allocating or supplying the stores using packs, which are predetermined packs that we sent all the company stores. These are inefficient to meet the different demands that we see in the consumer market according to each store.
Now we operate with an SKU model that allows us to customize specific grids for each store adequate for the standard of demand that we have in each store. The company doesn't do this now. We're doing this for many years, especially for the base and the middle of the pyramid products, basic products where we captured the gains that we mentioned. The gains generate an increase in sales because I don't have a stock break in a few sizes and I push sales in the stores and I stop having, I have bigger margin. I don't have too many sizes that are not being sold. With this, I improve the turnover in stock.
With the new distribution center in São Paulo, completely operational since 2024, sized to support the growth plan that we see today, we can increase. We already increased the business model, the SKU business model for all the products. With this, the middle of the pyramid products and the top of the pyramid products, the more fashion products are operating 100% SKU. This implementation brought gains. Increase of the availability of products in stores resulted in sales over 10%. Fashion products increase, an increase of over 10% of the pieces, these type of products. To reinforce the benefits of the supply model, we prepared a video that explains the benefits compared to the per pack model, the previous model. Let's take a look.
In this way, omnichannel distribution that uses the scale we have to supply stores, the capillarity that we have in all the states of Brazil, adding this to the e-commerce operation that has a relevant impact associated to the supply model that's precise according to SKUs, allows to support and is essential to capture the opportunities for growth that we have ahead of us. I'm going to mention a bit how this strategy, the combination of the two factors, the two strengths will leverage the strategies we have. When we talk about the increase in productivity in stores, the fact that we are able to have this sorting adequate for each store will result in square meter sale higher, avoiding excess and breaking stock. We have a better result in each store.
The same way, the same supply model that's precise allows us to have a gain in sorting in all the sizes of stores, but the smaller sizes that suffered by pack supply that generated excess and didn't allow to restock in a certain size and now is more up. These have the higher benefit. We're going to see that in strategic leverage for organic expansion of the company for non-serviced areas. These size, smaller sizes stores are fundamental. Therefore, the supply model is an important enabler for them to be efficient and to support the future plan of the company. Finally, we have a leverage, which is the increase of penetration of digital. With omnichannel supply that uses the scale that we have in terms of stores, synergy technology operating integrated both channels, we reduce expressively the cost of the operation of the distribution center and the transportation.
This is very important for a digital that does not dilute results to grow more in a relevant manner. Finally, when we enable its two components, omnichannel and precise SKU supply, not just for Renner, but for all business units, we create a competitive differential for the other units for the other concepts to grow in a relevant manner, in a meaningful manner for the company. I would like to finish here reinforcing that many results have been captured in this supply chain model, but the complete potential of the model has not been reached. We're going to reach the full potential of this model in the next two years. And with this, create competitive differentials, not just for Renner, but for all the business units and the channels that the company has. Fabi,
Aires, thank you. Guys, let's look.
People, let's look at our third pillar, the client experiences.
And I think at this point, it's important to mention that, you know, customers. Let's talk about experiences to talk about customer experience, customer behavior. It's unpredictable today. It's just unpredictable. You know, you're not in that standard journey, you know, like a process. Then you go there and then you pick your clothes and then you take inspiration. It's different. It is just different. It's chaotic. You know, it oscillates. And when we look at it, look at a company, you know, a company like ours, we want to delight our customers. We want to beat expectations. Renner has decided to be an omni-retail, an omnichannel company because we want to ensure, you know, the same standards of experiences regardless of the moment the customer enters the store and regardless of the channel they are using for each moment. You know, we can't predict.
We're going to have to work, address everything and everything. What is it? Is it about being a company that not only addresses and resolves problems? No, it's not like that anymore. But also to be a company that simply generates, it makes things convenient in the light, creates and generates, let's say, a company that creates and generates a sensation of accomplishment and pleasure in consumption and in fashion specifically. You know, this omni-retail today is very much related to that. And by being an omnichannel company, we know that we receive, realize great value in our customers. I'm going to give you some examples here. You know, we open stores in the countryside and big cities. So, you know, whenever we open stores, we get like a 10-20 acceleration of, in terms of the increase in digital sales.
When customers purchase stuff digitally, 35% of that, they prefer to pick up in store because it's convenient, and 15% of that, they carry out an additional purchase, and 70% of the people who want to exchange their products, normal, it's only natural. They try something out. They want to use a different color or the size. Out of those individuals, 70% of the exchanges, you know, when they request digitally, they want to go to the store in person, and then 20% of them buy additional items. Our omnichannel base, you know, for clients who are in several channels, we grew over 11%. This customer spends three times more than a single channel customer. If they are a Realize , you know, customer, they'll spend six times more, and so here in Brazil, this is a reality.
You know, it's really, really important. Of course, here we got a snapshot of this in our company, but for us, this is part of the process.
You know, this omnichannel retail, our digital sales reached over BRL 2.4 billion, guys, 15% of our company. We also have over seven million clients, customers who are monthly, who are active each month, and for the sixth time, we are the best e-commerce company in fashion. Something very, very important here too. We have accelerated, you know, digital sales have maximized the company. It has contributed a lot. I haven't mentioned it earlier, but in more than contributed, it has become, it has materialized into revenues. You see, see those images there, those figures, and if we look at the market, you know, we have 15%.
But when we look at Brazil as a whole, you know, the local omni players, we are way ahead of them, almost three times ahead. Go from five or seven, go to 15. But if we look at the opportunities in Brazil, in terms of fashion, we can get the digital sales can get in, you know, we have the pure digital players. We have room, there is room for us. And there's a lot more room when we look at the outside of Brazil. There are more mature countries than Brazil. This is accelerating, but has reached numbers, very high numbers. But I think the most important point here for us is our digital sales. It's not sales anymore or not about sales anymore. It's the largest, window shop, largest window for a company.
We give inspiration, you know, we have a new trend almost every day. Today, we work with digital platforms that influences what goes to the runways and also in the store, in physical stores, you know, visual merchandising. You know, this is fully connected to it and most importantly, even more important is, when we look at it, it drives technology a lot, so of course, we talk a lot about artificial intelligence and stuff, but I'm going to give you an example. We have images and pictures of babies here, baby models. Of course, we have images with of babies, of course, but most of them were like still images. Like when we can using AI to humanize this model, you know, it drove over 60% in terms of visits, walk-ins and conversion, especially in babies' products, so it maximizes a lot.
When we talk, you know, we had a recommendation engine. It's always evolving. This is a tool, an important tool. It's basic, but the most important thing here is to know how to use it and how much it is evolving into assertiveness. And we have also had, I mean, last year, we have over 135% of revenue growth driven by recommendations. And so, of course, we have like a virtual assistant, but we are getting ready for the most important point that is coming, which is agent commerce. So we're going to start to experience a reality in which we are not going to provide assistance to the end customer, but provide assistance to this customer's agent. And this is a reality now. And if you look at Renner, we are the number one in terms of ChatGPT searches.
Good.
Now I'm going to invite, let's talk about, continue talking about experience. And now we have Paula from Realize. How is Realize going to maximize all that?
Good morning, everyone. It's a great pleasure to be here with you. You know, I see some familiar faces. I've had a chance to talk to some of you. It's really nice to open our doors for you. So we saw that Realize was in very important moments of the presentation thus far. When Fabio mentioned the lighting experiences and Realize as a boost in our ecosystem, when Renata mentioned the idea, the importance of faithful and loyal customers for us to, you know, connect with them better. And as Fabiana has just said, you know, she talked about the importance of Realize in the omnichannel strategy.
But before we dive deep into it, it's important to recap on, you know, what we had in 2023 to the Realize today after three years. In 2023, we had a funding company with a hybrid strategy, you know, whose goal was to support the sales of our ecosystem, but also explore opportunities in banking and banking industries. And from then, we understood that was a moment to revisit that strategy because our vocation, of course, is to have our financial aspects totally geared toward the ecosystem. Why is that? You know, we know that we are in an environment with 20 million customers traveling around the stores. And that's precisely for this type of public audience that we want to have the best financial aspects in Brazil. And how we're going to do that?
We're going to explore this, how we're getting ready for it to support this movement, this growth for the coming five or ten years. So let's start with talking a little bit about loyalty. You know, really, Realize clients today, you know, they come to the stores physically 50% more in relation to other customers who purchase any financial product. You know, they visit us more frequently. And whenever they go to our store, they spend 150% more in terms of, you know, annual spending. So this is proof that, you know, how much the financial product is actually a powerful boost for spending for expenses in our ecosystem. It's important to remember too that 55% of our clients, of the loyal and ultra loyal customers of Renner today, they have our cards. They all have our cards.
This proves that, you know, how financial services can boost and propel sales and loyalty in our ecosystem. When we go to the omnichannel strategy that Fabiana mentioned, it will become more and more relevant in Lojas Renner, yeah, and at BU Renner, right? Today, we have the Realize app. It's embedded into the Renner app. If you use the Renner app, you'll see something like a tab card. And this leads to a high quality flow. There's over 15 million accesses, you know, in the Renner app. And every time they go there to check out the balance, see the limit, you see they have an opportunity to connect with our products and offers. And this can convert into a sale.
But also our customers, those who have the cards, they are much more engaged than the others, three times more, you know, in relation to those who pay in different ways. And today, e-commerce sales comparatively to the customers who use other payment methods is 93 times higher. This means that Realize omni is like a perfect match. And we want to boost that even more. We want to make it even stronger as a financial strategy. And when we talk about data, you know, Realize brings data, data that retail itself wouldn't be able to achieve if there is, there isn't a financial company embedded. We have over 4.8 active customers and 99% of high reachability. What does reachability mean? That means that customers, Realize customers, they really interact with the messages we sent them, either push notification, WhatsApp, email.
This is a very high reachability, way above the market. This makes us, you know, it makes it look like a Realize Ads, as we can offer our customers the offers, new collections, and they actually interact with them. Also, as you said, you know, today we have two products, two different cards, so for the cards with like Visa or Mastercard, they can also spend outside of Renner, so their expenses, they're spending outside of Renner. It's really important because we know how much they spend in fashion. These are very valuable insights for us so that we can move on with our credit model, but also to translate that into commercial insights for Renner in view of the law, of course. Another important point is the expansion of physical stores. This is a very interesting piece of information.
When you look at the participation of Renner cards, you look at the consolidated per share, but in medium-sized cities, you know, the penetration is five points, 5% higher than in larger cities. Because in those cities, the population doesn't necessarily have like bank accounts, and this increases the purchasing power. When we talk about Realize in terms of expanding stores to smaller cities, this is a relevant boost, a very strategic, especially because our credit policies, you know, they're not only, they're not single for Brazil. We have evolved in terms of our models, and today we have credit models per region in some states of Brazil too, because our behavior of clients up north, they will behave different from the clients here in the south, cost of living, per capital income, employability in the state.
This allows us to take a different action and be more assertive in terms of credit granting. Lastly, we also have a novelty here for 2026, and you're going to see it firsthand. We're going to release a new card in the second semester of next year. This new card is sustained by a complete revision of our strategy and model because it will have, it will be embedded into the Renner app, but also like in other digital cards like Apple Pay. There'll be an annual policy, annuity policy, you know, which is different from other clients. You know, it's going to be easy. You know, they'll be able to purchase using Face ID only. You know, they'll have a card, but when they get there, they'll not need the card. They'll just show their face, you know, using Face ID and exclusive rewards.
You know, they'll become completely embedded. You know, we're talking about rewards that will be in our ecosystem and how do we do that from the structural perspective? Let's talk about pipes and connection of a financial company. I know most of you are bankers and you know that very, very well. First point here is quite innovative. This new card is a unique card. It's 100% like comes with like a Visa or Mastercard, et cetera but there are two credit limits which are independent. One for them is for client customers to use in the ecosystem and another limit for them to use outside of it. It's innovative because no retail financial company does that in Brazil.
We're going to be able to calibrate things, you know, our exposure to risk to each profile client, but also we're going to be able to adapt the credit concession to the consumption profile of those customers, you know, our appetite, credit appetite and our policy. It will be oriented to expanding in the ecosystem. You know, we're going to prioritize that. You know, we're going to have like more limit, of course, but obviously if you want to improve our proposal of value for our most loyal customers and for those that, you know, make sense, we're going to be expanding credit to them because we believe it's important. As I said earlier, this brings information that feeds our credit system and brings important insights for Renner, and we have like evolved a lot in terms of governance.
And I can assure you that today we have our governance is compatible with the, with that of major banks. And this makes you guys feel really, really safe as we can support our movement of growth. Lastly, I think it's really, really important to talk about the SG&A perspective. You know, more and more we're going to look for automation and AI more and more because we understand that this is an opportunity that we have to drive operational efficiency in the company. And obviously, obviously it will reduce costs. These changes, you know, that we're doing this, these replacements, you know, it takes a while. This transition will take a little while and our costs will be duplicated in this moment. So from 2027, you'll see that this will bring us more efficiency in terms of G&A.
When we talk about the technological platforms, we're talking about preparing this company to have to be more scalable and have better performance. Lastly, our segmentation model, you know, it's innovative. You know, I come from the banking industry and we use banking information, bureau information, credit behavior, the model they offer and how do we grant credit. Here, our model is more advanced. You know, we have the traditional model that banks use. We also have begun using a different perspective, the client customer's behavior into retail. We know the parts they purchase, how frequent they purchase things. This is important for decision making. We're going to continue to be focused. We're going to continue focusing, you know, we have evolved a lot, but we're going to focus on low risk customers. It's really, really important to leave a message here with you.
The financial company is fully prepared for to support this growth for the coming five or 10 years. And speaking of growth, Gustavo Yuasa will be here with you, our strategy director.
Thank you, Paula. Well, we're going to talk about omnichannel. You know, we have excellence in digital sales. Our physical stores are and will be very, very important for Renner for the ecosystem. And we believe that, you know, the digital and the physical should go together. So we are always evolving. Every year there's something new. And since 2021, we have the Hemias model. That flows better. The use of technology, for example, to cash is a global reference. Many have approved. And the highlight to the product to fashion connecting with what Fabi said, but physically, for physical experience in our stores, the brick and mortar store is a competitive advantage.
Inside the Renner, why do we have two models? RA Plus, Essential that has all the attributes of RA MICE, ReMICE with the choice of materials that's prepared for an expansion on the choice of finishing, wood, lighting that allows us better results, to have better results. We already have to separate the municipalities between 100,000 to 200,000 inhabitants. We have 90 stores that perform above average stores that we were already able with time to have a model that brings a ROIC that's positive, higher than average from compared to other stores. The essential model does even better. 15 stores in Brazil up to now that have this journey of ReMICE that brings CapEx with better, even better results so the 15 stores, a few examples we have in Icó, Passos, Caldas Novas, cities with a high potential of purchasing and we're doing this expansion in Brazil.
Renner concept brings the essential Renner with another experience, a sophisticated store that's evolving little by little. It's going to be the store that brings not only the experience of Renner, but a building of image, positioning, brand, fashion. A few examples like there's a lounge when in the improving proof and social media stores that are more sophisticated, maybe not over Brazil, but we already have 70 of these. Every year we enhance the model since the first store until the latest. We evolve and we continue to evolve. It's very dynamic. We have Morumbi, Shopping Morumbi, Shopping Ibirapuera in Brazil and Shopping Dom Pedro. The most advanced store, more complete stores that we have in this model, this concept model. Renner Essential brings returns above average here. We're refurbishing store, the existing store where we apply this remodeling. We invest in the store.
It brings sales, brings ROIC 5%-10% incremental sales every store that we refurbish. To see this model better than these two images. I'm going to play a video for you. Invite you all to visit our stores that are online also. The Americana store and the Morumbi store are two examples of what I showed you here in the back. Americana store is essential. It's the same model that we're going to use to expand in the next five years. We want to open between 140-170 stores, only Renner stores, only in Brazil. It's a part of the acceleration of the expansion. When we do so, we're going to reach, we're going to fill 100% of the cities above 200,000 inhabitants. So we're going to be present in the biggest cities of Brazil, starting from 90-100. We're going to fill this space.
And the focus of the expansion will be between 100 and 200,000 inhabitants, considering micro regions where we are already present. As I said before, we have 90 stores in these municipalities, and we will reach 70% coverage in these municipalities, bringing a qualified demand, additional qualified demand of BRL 20 billion reais. This is the market of a profile, a social class that we understand that is addressable, that is very similar to what we have today. It gives us the trust that it is an addressable market, reachable, possible that will bring a lot of results to the company. So much so that the 15 stores that we created, the essential model are bringing the results. We monitor this in a very disciplined way because, as we saw today, these are new municipalities. We do not have a comparison to other existing stores. We potentialize the digital store, the omnichannel.
Paula talked about Realize cities where the card is even more relevant. The supply model per SKU for this property is even more important. The precision of sorting in each city that we enter is even more relevant. Everything that I explained for this model is a difference. It's a differential. The expansion is a pillar, strategic pillar. As I said, physical brick and mortar store is important for the composition of the omni strategy. We're very, it's the highest capillarity brand. It gives us steps ahead of the competition. It differentiates us from the domestic players and the native digital players. Fabi,
The floor is yours. Thank you. Yours, thank you, Gustavo. And here we finish. But before we finish, let's talk a bit about results. We said many things. It gave you some numbers, but let's do a wrap-up so we can understand a bit.
Fabio mentioned, and this is very important, that we already have collected the results since 2024, the results of the investments we made. So we can clear this looking at the nine months, taken as a base to nine months base, customer base. I'm going to use 12 here. We use the active base. Active base last 12 months. We grew over 16%. We already increased the spending, average spending of our consumer in 10%, 24% increase in the inventory turnover. And we're talking about growth, continuous strong growth of sales square meter. you might say, but you didn't grow in brick and mortar, only accelerated digital. Guys, omni retail, it's on the omni brand. It's the future of the business. This is relevant. This is our proposal for our consumer. And here it's over 20% growth.
The main thing is what's to come, what we expect of Renner going forward. Again, evolving as an objective for a fashion brand. Besides a retail, fashion retail, it's a reference fashion brand, accelerating our expansion to continue to enter in Brazil that has our target audience, ABC. It exists, and there's a lot of potential out there. Growing our total base of customer, not just conversion. Grow, grow the base, grow the base, grow the omni base, having opportunities, especially gaining productivity. Sometimes you might not see it, but we see it since 2024. We're capturing and we'll be able to scale even more going forward. And of course, supporting in a big gigantic space of digital with more profitability now, having the possibility to increase growth. Also, thank you so much. I finished now. Renner, our brand, Renner.
Now invite Gustavo and Barone to talk a bit about the other concepts and Youcom.
Let's go. As you saw, we have a detailed strategy for Renner S.A. that we saw more details, the strategy of Renner, which is one of our concepts for the strategy. Part of the strategy is how to expand the core, not just Renner. Renner is very important, yes. But for us to expand the core means also to evolve the other concepts because this way we can meet demand and opportunities that are specific of our customers, over 20 million customers that Fabio explained and even more going forward. The concepts are a strategic pillar, and we do this in a disciplined manner following three big stages. The first one, the understanding of the opportunity, how we can understand the customer.
We are the fashion brand that understands the most the customer, the trends of our base, and the potential of Brazil. From there, we can do experimentations. We have a fortress of international sourcing that we can use to test, experiment, be it in existing concepts or new potential concepts for Renner, and its capillarity can be used to do a store-in-store, a way to experiment fast using all of the capillarity that we have to scale the concepts, existing concepts, and possible future concepts. We use this investment, platforms, technologies, digitalization, and data, the entire supply model that we apply in all the concepts. It leverages the ecosystem. We have a unique position in the market to accelerate the current concepts and potential new concepts for the future.
Youcom is an example, an organic example created many years ago that is successful, that went through these three stages. Youcom is a case. It's a way to look at the process in a way that works and can be replicated. We don't have just Youcom and Renner. We have an ecosystem with different concepts, each one servicing a different public with a growth strategy that's adequate. Today we're talking about Renner and Youcom because these are the ones that we see the next five years, generation of value, growth in a more accelerated manner, but all of them contribute for the growth of the ecosystem. To talk about Youcom, I invite now Barone to explain the Youcom strategy for the next five years.
Thank you, Gustavo. Thank you, everyone. My name is Claudio Barone. I'm the director of Youcom and Ashua.
It's a joy to me to talk about our Youcom. Youcom was born from a world reading, a reading of behavior, especially a reading of opportunity, market opportunity. It's this pyramid, the starting point in the past when we started to design the brand. This was the structure that started to connect the dots and started to make sense for us. Youcom was born exactly in the middle of this pyramid, but initially we divided the pyramid in two blocks. The top part, we put the specialized brands, brands that had certain characteristics and the public that had certain characteristics, normally with a strong aspiration, with a high experience, exclusiveness, higher prices. In the lower part of the pyramid, we put the big chains, the big networks.
Here, the competition for price is higher, elasticity is harder, scale is important, and brands that have a high reach, they reach many people, many consumers. As I said, Youcom was born exactly in the middle of the pyramid, not as a middle ground between the two universes and the two worlds, but yes, as a big opportunity, a territory where we can deliver an experience and an aspirational that are so strong as a top group, quality perceived that is interesting and simple for a team and for a public. Prices that we understand are higher than the lower group, but more accessible than the higher group. With time, Youcom starts to gain a bit of the strength from the bottom group, with more scale and more reach. Youcom is getting to more people, young people.
Now, an important design for the brand, our heart, our core, everything that we do in the company, we do through this design that initially was done in 2018, 2019. In the middle of the heart, there's a word that defines Youcom, which is young. Around the heart, we have the main attributes and all the areas of Youcom. When we think about creating anything, we create from here. I'm going to talk about some attributes, and I won't list all of them, but Youcom is fashion and lifestyle. Our target audience is between 18 and 24 years old. Obviously, they interact and buy the brand 13 years old, 14 years old, 28, 38, 48 years old because they identify with the young lifestyle. I also bring that everything we do is looking at what happens in the world.
We have a lot of global inspiration, always bringing for a local translation. Why? Because the youth in Brazil has their own code, their own DNA. Youcom understands and speaks this language. Destination jeans is our key category. We are moved by it. Jeans is a young, fresh raw material that's 70 years old, but it continues to be relevant in the young people's closet. It's a great piece for the fashion for this public. What makes us very proud is responsible fashion because the public commitment from Renner S.A., our public commitments of Youcom. Moving on, I remind you that the first stores, Youcom stores started in 2013 to test a hypothesis, the same hypothesis we had in the center of the pyramid. Once we tested the hypothesis, we start to scale the brand. This plot shows the evolution from 2014 to 2025. Sales are in constant, September LTM.
In yellow, I have the evolution of the stores, plots that show a constant evolution, how much the model is strong and how the model is scalable. Now, this speed was only possible because we have worked a lot to make things happen. More than talking about the past, it's important to talk about the next cycle. We have four big pillars, four big avenues that will pave our future. First one is the opening of stores. We understand that the next cycle will arrive at 260-290 stores in operation. We have 152 currently. We understand that the digital has an importance in Youcom. It will gain more importance for the youth. It starts, he connects to the world through digital. Regarding the brand, the brand is gaining strength. It's becoming robust. The brand evolved a lot.
We have a clear plan, robust plan so that the brand continues to gain strength and reaches new territories with the years, and lastly, I would like to highlight to you the importance of productivity and the increase in sales areas. We have a large number of new stores. This year only, we opened 17 stores. When you look at all the new stores, you know there's like 30% of those stores are at the initial cycle of evolution in terms of productivity, but they will continue growing. We're going to invest in it. On the other hand, we are all stores. You know they have enormous potential with major results, major sales square meter, and with profitability. In these cases, we can negotiate. You know we have some ambition. You know something really important for the brand. I'm going to show you something here.
In 2013, we opened a store in the Anália Franco shopping mall with 110 square meter. After some time, it evolved. It grew in productivity. It became more profitable. And then after five or six years, we got to 190 square meter. We evolved a lot. We increased the area, got bigger and larger, and the store became more profitable in terms of sales. And two months ago, this store was reopened with 350 square meter. So we have done very important things to increase the size, expand the physical spaces of stores. This happens because you know the brand is more mature and also because the market mix has been evolving. Also, all that was only possible because Youcom is part of a robust ecosystem, which is very, very strong, offering us several advantages, you know very important advantages.
Some of them are here, you know like SKU, 100% fulfillment, 100% by SKU, international sourcing, technology and data and shared services. Those are some of the examples. On the other hand, Youcom plays a leading role in the ecosystem. You know we make things fresh. We have a young base and bring them to the ecosystem, and we contribute to with a number of things, but the most relevant of all those things is that Youcom has created a model which is specialized, specialized store, which could be replicated. This is important, you know an exchange between brands and ecosystem. I mean, look at the exchange and the evolution. I see the future, and the future can be brilliant and bright, and now, just to wrap up, I want to bring you some figures which make us very proud.
Our base, we have over 1.7 million customers, an active and solid base. It's been growing in terms of quantity and quality. When we look at NPS, either transactional, other competitive, you know we operate in the zone of excellence, better than the other players. We don't specialize or massive players, and NPS shows how much clients, customers recognize our efforts, our dedication, and most importantly, the consistency of the brand. In relation to social media, you know Youcom performs a lot better on social media, and I'd like to mention something here. When you look at 2025, TikTok, you know Youcom, among the specialized fashion brands, we are the brand that shows more engagement than the others. Here we got the customer base for extra information, but Youcom is much more than that. It's much more than numbers. We have building things in our everyday life.
You know we got a very large base of young customers. They interact, they purchase, they buy, they take an active role, and they identify with the brand. So that's all I had to say. I'd like to invite you guys to watch a video of our brand, of Youcom. Kids are always changing, and so is Youcom because this is what it's like to be a brand. It's to be getting updated every day, know what's happening in our lives and on social media, and obviously jump on TikTok, start trends first.
Done. Thank you. Now I want to wrap up with this session, and I would like to invite our CFO, Daniel dos Santos, to come to the stage.
Good morning, everyone. Okay, oh, let me make adjustments here. First of all, thank you for being here. It's a great pleasure to see you here in our home.
I'm going to talk a little bit about how this financial journey is going to look like, how we can monitor that to generate value. First, before I talk about this new cycle, I would like to invite you to talk about the past because you know the growth cycles that we had in the past will help us understand what we expect from this new cycle. The first cycle runs from 2010 to 2019. This cycle, the company grew 14%, mostly driven by sales areas. You know we almost, by area expansion, got almost three times as large. We opened stores in new cities, in major cities, major urban areas. You know it became really dense. When things get really dense, sales square meter in physical stores, they grew less than the inflation, you know because we had cannibalization.
The new stores ended up like taking over the old stores. The investments invested 9% focusing on the new stores. And on the next cycle, from 2020 to 2023, we grew 8%, which was mostly boosted by the digital sales. You know that was, it went from 4% to 14% digital share, almost three times as much. And another feature of this characteristic of the cycle that Fabio mentioned earlier was the investment, were the investments that we made in new capabilities. Those capabilities were intended to make the company more agile, more flexible, and more competitive. And I'm going to get into some specific details here of this new investment cycles. You know where we invest, make investments in, where we made investments in. We had a total investments of BRL 2 million in that cycle. We invested in CapEx and OpEx also.
When we look at the investment blocks here and for digital share in terms of capabilities, we invested in a new omnichannel platform. We invested in it. We invested in new features either on the website or on the app. We digitalized our fashion development in logistics. As Aires mentioned earlier, we have a new distribution center, you know, but not only the center, but the new model like the fulfillment by SKU and our distribution center of Cabreúva. It supports our expectations for this new cycle until 2030. It has been built purposefully for that. Data analytics, we use artificial intelligence applied to automation, process automation, and decision making and structures and skills. You know, we have the new data service, technology service, technology divisions to support the AI journey. CRM, you know, we have a studio.
Yeah, this very building, you know, this video makes like very several content, several videos, and we made investments in the digital structure. And I want to build on what Fabio mentioned. Well, these investments, they give us a result. But when we look at the evolution of the past two years, you know, we grew more. Our total sales as a group, the omni sales, you know, combining retail, physical retail and digital stores, it grew 19% square meter. we became more profitable with a gross margin of 2% in the same period. Expenses on sales decreased 1.1% and our EPS grew 59% in the period. When we look at the capital structure, you know, higher returns, our cash flow went from BRL 0.7 billion to BRL 1.5 billion. The financial cycle, of course, specifically inventory days, 15 fewer days.
And our ROIC aligned with our structured capital. It grew 4.6%. So that's an evolution that makes us really confident that with the new cycle, which I'm going to bring information for you now. What do we expect from this new cycle? So first of all, we expect to increase, generate, grow, generate value, have more profitability. And as I said earlier, you know, we expect to grow from nine to 13%. And this growth will basically come from BU Renner, like in terms of area expansion, store productivity. It will result from area expansion, store productivity, and increased digital sales. It will also be boosted by BU Youcom with investments of 6.7% over the course of this period. Now, I would like for you to take a look at this slide. Let's talk about these growth levers, you know, the expansion model, you know, in new cities.
Gustavo said something about it. You know, we can see opportunities from 150 to 170 cities in which we can open a new Renner store. This shows a high quality demand. You know, high quality demand is like a demand involving the social group that we were operating on, and so if we apply the average share, we can have like an incremental opportunity of over BRL 2 billion, incremental sales without cannibalization. You know, given that in these cities we're getting into, there is no Renner store. Something very important here, 90% of our stores, we have 90 stores in over 90 cities with a population of over 200 million people. This is not a new model. It's been going on for a while, very successfully. Some indicators here that I can talk about, you know, the profitability indicators.
When we talk about this group of 90 stores in those 90 cities and compare them with the others, you know, first of all, they have a gross margin, which is superior. Second, they have a cost of operation square meter, which is smaller, lower than the other stores. And combined with the fact, combined with the idea of essential store, you know, they have all those features, all the items that are necessary for us to succeed, to delight the customer. You know, with a CapEx square meter, it's super competitive. And the combination of all those factors allows us to have a ROIC, a return on investment, which could be of up to 2% above the other stores. We obviously, we have an SKU model of fulfillment, which propelled this new model of expansion.
You know, we have a capability to feed the stores with more precision, with like a personalized assortment for them. Without a shade of doubt, this can propel the performance of these new stores. Another point here is our omni channel. So let's think a little bit about the evolution of this omni channel. When we look at the past, the digital channel had like a 3% per share in it. And then one of the characteristics of that is the cost of serving above the physical store. And several investments that we made in from 2020 to 2023, and actually the last movement that we made when we internalized the digital into the Cabreúva Distribution Center, you know, it allowed us to reach the end of 2025 with a cost of serving, which is similar to the cost of serving in physical stores.
So for the company, for the journey that we have ahead of us, the company will be, you know, it doesn't matter for us, you know, customers can decide where they want to buy and purchase, either in the digital store or the physical store. Our expectations, well, in terms of growth, we want to grow with the digital channel above the average. You know, this will propel all the other items that my peers have mentioned earlier. Another growth point of growth here is the productivity gain. Well, you know, productivity, omni productivity, and Fabi said something really important about it in her talk. You know, omni productivity is a combination of our growth from the digital aspect with the increase in growth in physical stores. So why is that important?
We see, you know, all throughout this journey, you know, in the first cycle, things became really, really dense. We got new stores very close to the existing stores. In the second cycle, we converted the clients, you know, they began to share their sales journey on social media, and then lately, the management managed to boost, you know, they managed to show a productivity gain in omni productivity, of course, which is quite relevant for what we expect, and we are confident that it will continue to be this way. And on top of that, in addition to the productivity gain in mature stores and digital sales, we have the expansion into new cities, which I believe Gustavo Azevedo and I mentioned earlier, and this productivity gain is a major element of our journey, profitability journey.
You know, this productivity gain will allow us to boost our operation and allow us to continue reducing the expenses on income, on revenues. Let us not forget Realize. You know, Paula talked about it. First, the major focus of Realize is to help retail, is to boost, propel retail with an integrated journey, as Paula mentioned. You know, have the integration of Realize with the retail, bringing experiences and benefits to clients in a way that Realize could help us increase our customer base and make the existing customer base purchase more and more frequently. Another point that Paula mentioned is the execution of this strategy. How are we going to do that? First, we're going to look for low-risk customers focusing on the portfolio, you know, focusing on the purchase, on the sale at Renner, at the store.
Our expectations concerning the operating results is that it will be around 8%-12% of the total EBITDA in the coming five years. Youcom, as I said earlier, you know, sales growth higher than Renner. We expect Youcom to grow, be above the average and increase profitability, so basically, in expansion of stores, the example that Barone mentioned, you know, their older stores need to expand them, and so they have an incremental sales, incremental share in the digital channel. As for profitability, we have gross margin gains, and then operational leverage. You know, this is the fruit of our labor, you know, we can see here. We almost have like twice as many stores over these past years.
We expect from Camicado a growth above the average of the market where Camicado is located because it's home decor.
This growth will come from expansion of stores, selection of stores, and remodeling of stores, and a continuous increment of the share of digital sales inside Camicado. Regarding profitability, we expect that Camicado will follow to continue to grow in profitability. Camicado, we remember in the Investor Day, we presented the team the great success in the execution strategy through their own brands, exclusive brands. Also, today from the sales of Camicado, around 85% of sales are their own brand or exclusive brands. This allowed, besides the customer experience that is a lot more delighted with the sorting that we have that's different, allows a differential of the sorting we have versus what we have in the market, gaining profitability or sales square meter when we compare to the base of 22, increased in almost 27%, and our gross margin increased 5.2 percentage points in the period.
Adding now, looking at the indicators that we follow in this journey, first reminding you the big objective of the strategy is to scale growth and value generation with profitability, and the indicators that will guide our journey that we shared as a relevant fact earlier today was first the annual growth of retail revenue of 9%-13% during these five years. Second, continuous gain in gross margin. The representativity of retail expenses on top of the expenses in retail, we have, we expect the reduction 2.5-3.5 percentage points for 2030 compared to 2025. This journey is the objective we have until 2030. Margin, EBITDA, retail Pre-FS, close 2030 in the range of 15%-20%, above 18%-20% above the period pre-pandemic, more efficiency of capital, be it, as you observed, CapEx that we expect is lower than the growth in sales.
We have efficiency regarding the fixed capital of the company. Also, the financial cycle especially motivated with the gain of inventory days. With this, we reach a return on capital of 20% by 2030. This is when we add all the indicators, brings us to this big evolution in return of capital. Talking about capital structure now, first, let's look at the trajectory of the company. First, the company has a strong balance sheet when we observed the last four years. There was a lot of work of lowering the level of debt and keeping the level of cash flow that we believe is adequate to run the operation, be it the retail. We have a strong, consistent cash generation above BRL 1 million. We were able to do a strong distribution of profit to the shareholders.
If we look at the last four years, this shows that we returned BRL 4.6 billion through interest on our own capital, IOC, or through repurchasing plan. In the year 2025, it was BRL 1.7 billion when we add everything that we did this year with JCP that we communicated this morning earlier. We have BRL 1.7 billion, more than 100% of the profit expected for the year 2025. Moving on, when we look at this new cycle of growth that we expect, first, growth with gain in productivity, gain in profitability, CapEx around 6%-7%, 6.5%-7%. What we have as a result, this will generate profitability. We generate strong cash flow, and we believe we will do a capital distribution of profits to our shareholders above the market average. How will we do this?
A bit for us to understand the logic of how we're going to do this. First, we will continue to have a strong balance sheet that allows us to have flexibility and prudence. We want to execute first the plan that we presented to you and the eventual opportunities that we can see in the next five years. At the same time, have consciousness of the cyclical business seasonality. It's a characteristic of our business, and we must be flexible. Besides this, to deal with political environments or macro environments that are diverse that we can have in Brazil, all of this gives us the clarity that we need to have a strong balance sheet and have flexibility to operate in this environment.
The plan that we presented to you is a plan where the generation of cash that we have in the period. We can sustain it with the cash generation itself, six-7.5. The CapEx is observed with a strong cash generation that we have in the period. This way, we don't need to leverage to execute the plan that we presented to you. What would be our strategy of capital distribution? First, we will prioritize JCP, IOC. So there's a fiscal benefit that's important. We will exhaust the IOC first. We will complement the distribution of dividends and/or a repurchasing plan, always limited to the profit reserves that we have and/or our minimum cash. This is necessary. The company believes it's necessary for the retail operation and the financial institution operation. Another important point, we have seen some provocation regarding leverage for an eventual distribution or capital distribution.
Continuously, we do internal exercises to look at our capital structure to see if it's optimized or not, to see the best way to give return to the shareholders, especially leveraging and reducing capital. We evaluated, and the conclusion was it doesn't make sense. It doesn't bring benefits for the company and for the shareholders in this moment, given the high interest rates of the moment. What we expect for the next five years is that we can have a distribution of our profit from 50%-80%, and an example of the trust and commitment with this logic that we just presented to you, we communicated this morning. First, the finishing of the plan that we started in February 2025. We executed 94% of the plan, exhausting the reserves that we had to be distributed.
We exhausted BRL 1.7 billion, allowed us to distribute in this period, exhausting the reserves that we have for distribution. Relying on the profitability, profit generated in the next periods, we communicated a new plan at the same size as the previous plan that will be executed the next 18 months as we generate new reserves that can be distributed. I finished my part here. I invite Fabiana to talk to us about the next steps. Thank you, guys.
Thank you, Daniel. We will start now our Q&A session. Remember, those that are connected online can ask their questions clicking on the Q&A button, sending your questions in writing. The ones that are in person, just raise your hand. Let us organize ourselves. Let's bring everybody to the stage. We bring the mic to you.
First, tell us your name, the institution that you're part of, and the questions that we cannot answer here today. Please send it to the IR email, and we will answer them later. I invite to the stage Fabio, Daniel, Fabi, Paula, and Aires. All the executives that came up here today are very close to us, available to answer specific questions you might have.
Good morning. Congratulations for your presentation. Fabio, how do you see the evolution of the market structure and what competitors do you have? Where do you see white space as a new concept and how we should think about the addressable market, incremental price points, and lifestyle of a new brand?
Thank you for your question and for your presence. I think that the market is making a movement.
The biggest movement was in the pandemic and the post-pandemic moment, the entry of players, different model players. Digital growth was very strong. The market reorganized itself. We see growth, a higher growth of the formal players and the big players, entry of new players. As we showed, the market is huge. It's still very pulverized. It's still very informal. So there's a lot of space for the entrance of formal players and for growth, and there's space for everyone. We are positioned better than any of the other players, I believe. If we look at Brazil, 18% of the fashion sales is in digital, 82% is in brick and mortar. We are in brick and mortar and digital. We see a few players that are just digital or just brick and mortar. We have the potential to capture both.
Another important point when we look at the others that act on top of this. We invested more. We have bigger capabilities, installed capacity to grow with efficiency. It allows us to have an important potential in terms of growth for the current concepts that we have and future growth of other concepts. We brought the case of Youcom here because sometimes we hear some narratives of, "Oh, you cannot create a brand." We created the youngest fashion brand, the strongest youth fashion brand in Brazil internally. Camicado was an acquisition and was also Youcom and Ashua were born in Youcom. Machine of a youth lifestyle. We have many lifestyle segments inside Renner with the growth potential in Renner. We showed this Fabio and the guys at. But also, Youcom, that's a lifestyle. There are many others.
For example, the ones that we have worked on in Renner can be future concepts of specialized business with the same potential for growth also. Your opinion about makeup and perfumery. When we talk about fashion and lifestyle, these are correlated segments inside Renner and future opportunities. We see, especially in Renner, the potential to grow, be it fashion, be it beauty. It's our core. We have potential in what we already do and what we can do in our core, expanding our potential. Thank you.
Thank you, Bob. Good morning. Thank you for this presentation for the complete update. I'm from Citi. I have two points more financial. First, I want to explore a bit the improvement in the expense retail, 2.5 percentage points. How much of this comes from operational leverage?
We understand that up to now, the big part of the message regarding the expense improvement, the dilution would come through operational leverage unless they cut off expenses. I want to hear a bit if it changed a little bit. If you're seeking efficiency, it would be important, Fabio, Daniel, to mention this here. Fabi. Sorry. Paula. Sorry, Paula. They're similar.
There's a, yeah, they're related. Paula from Realize. It would be interesting to talk about retail also. Just one more quick thing. 70% of payout that we think you're giving soft guidance for the next years. It's important to understand looking at next year, especially the discussion we have in terms of tax, how much this can be an extraordinary dividend, how much buyback. What is buyback? I think it's very relevant. We've seen many companies talk about this. I'm sorry, Paula.
Thank you for your question, João. The first part of the question is a bit of everything you talk about. A part is dilution due to growth and leverage. A part is a reduction in specific points. A part is, Paula said, in Realize is the optimization of Realize. I'm going to ask Daniel to convey the numbers that we already mentioned before and the part distribution also. What Daniel made clear for this year, we exhausted the reserves, but we can talk about the following years also, Daniel.
Yes, yes. Let's talk a bit about the distribution issue. First point, we saw a strong movement of a few companies doing exceptional distribution now, but all distribution is done with existing reserves. That's why I was very emphatic in saying that BRL 1.7 billion exhausted all of our reserves.
There aren't new reserves that can be used this year because we distributed all of them in 2025 with the results that were published until now. Now we are forming new reserves. When February, March, when we published Q4 and you compose new reserves, as we mentioned, the priority is IOC. Even with the new taxing, JCP continues to be the first most advantage option to distribute results. After, as we communicated this morning, in a first moment, we have our repurchasing model that is activated will be a way to distribute our reserves. Regarding expenses, it's a component of both. We have a part of reduction, a part of Realize. Paula mentioned, right, Paula, that the balance sheet, you want to talk about 2026 and 2027 onwards, of course. It's important when we look at Realize.
The last three years, we observed there was, in fact, a growth of M&A.
M&A, that's important. What happens today in the fiscal year?
We are in the middle of a digital transformation where we are having our technological catch-up because there was a technological issue in our platform. When you're doing a digital transformation, you continue with the run the business expenses while you're doing the investment of change the business investment. This should finish these parallel expenses between the second semester of 2026 and the beginning of 2027. And from 2027 onwards, you will be able to observe that it will gain the capturing of efficiency from there on or level, especially the variable expenses related to processing costs, how much we can be efficient in our core business.
No doubt will bring a volumetry SG&A and total expenses of Realize to a healthier level than we see today. It's important to remember, even in the years where we are a little bit more compressed in terms of expenses, we are growing aligned to the inflation. So there's no relevant detachment that implies that we are concerned today with the financial expenses. We know we have opportunities and we're working strongly to capture them as fast as possible. Even with the platform change in case of Realize, there's nothing detaching from inflation and we see an important reduction opportunity. The others, Daniel sometimes gives us a range of how much comes from reduction and scale. It's important. It's difficult. Range and reduction. The part of scale comes from scale. We're prepared to grow. If the growth comes on the lower range, it comes from reduction.
If it comes on the upper range, it's more scale.
I have a quick question. Good. I'm Pedro Pinto from BBI. By the way, I want to say thank you for your presentation. Clear, but building upon his last question in terms of expenses, expenditures, let's look at it from a different perspective. You know, Daniel said earlier, you know, we're talking about capital distribution. You know, let's talk about the, you know, sometimes growth may not reach like 9% or 13%. There's several reasons, you know, there might be several reasons for it. And so our expenses will grow way above the revenues. How can you codify that, you know, the expenses? It's very much related to what he said. I would like to understand this a little bit better. You know, we have like downturn cycles, you know, it's so cyclical.
Would it be possible still to be efficient? And our second question is about the, you know, Aires mentioned earlier about supply chain. You know, supply chain was really big over these past year, a few years, but today the capital deployed has converged into these 20% of ROIC. Out of these 20%, I would like to understand a little bit about your stock demand. How much flow do you have there? Like, so these are the two questions that I had. So I'm going to start. Daniel, you can start.
Answering the very first part. Yes. Even if there's fluctuation in terms of demands. Yeah. That's why our metrics, we use trends as indicators, but we have the potential to reduce expenses over revenues, even if it's difficult for us.
You know, we anticipate our scenarios, but if that happens, also there will be situations and conditions to take this path. We have like more initiatives for reduction. But for your second answer, let's talk about expenses. What I think is important, Pedro, is if we do not grow as much as we expect, we know that retail, part of it is variable, you know. So basically, I always talk to Fabio about it. And this is discipline, right? If you have volumetrics, obviously it will adjust your structure to the volumes you have. Obviously, part of your expenses are fixed, but they're fixed. They're not untouchable. So depending on the expectations you have, if it's a cyclical thing or something that will take longer , given some macro economic perspectives, you'll have to make decisions to adjust it.
But I think the important point here to remember is, I think I mentioned it, the company had the intentions to increase expenses. Why? Why did we increase it? Because, you know, we were a company that operated, 97% of our sales came from physical retail, and we needed to put together a digital structure for us to succeed and be competitive in an environment which is completely different from the environment of five years ago. It's important to talk about these intentions. You know, sometimes we treat these expenses as something we're not, maybe we might think we're not careful in our management. No, we were. You know, we wanted to highlight new structures that we have created, our new capabilities that we put in the game. And obviously, yeah, they added pressure to our results. We know that.
But at the same time, they allow us, you know, these, you see these results from these past two years show that, you know, have put together a structure that allows us to continue growing and grow even more. Our distribution center, you know, addresses the need of, let's say, the coming years. It can support the demand of the next five years. Several of these structures of today have allowed us to get into the digital sphere. 15% is much higher than our competitors. And as I said earlier, we managed to reduce the cost of operation of our digital platforms. We expect that the power of the continue growing. Yeah, we are ready for it. We are ready to generate growth and address this growth without increasing expenses. But obviously, there's efficiency in the game. Paula mentioned the example of Realize, but we also have that in retail.
You know, out of all the structures and the forms of operations that we have, we know there are many things we can explore. There are internal discussions to execute and carry out these plans. At the same time, you know, we can rely on growth depending on us, but also depending on the macro perspectives. We can also have internal discussions to generate efficiency, and this is stated in this roadmap. It's within the mission, you know, from 2.5%-3.5% of leverage for the coming five years. You also mentioned like stock flow. We want to reach like four times. We want to evolve, you know, our stock. We have been very successful in that. You know, all the supply things related to supply chain that I just mentioned will allow us to operate our stock more efficiently. The idea is to profit even more.
You know, our benchmark shows that we have like a 4% per year, but we're going to try to take that path. Thank you, Pedro.
Good morning. I'm from BBI. Daniel, I got a question. You know, some people ask me, just want to make it clear. From 50%-80% of payout up to 2030, does that include buyback and JCP?
Yeah, it does. That's why I didn't call it payout. We call it profit sharing and so I got a question. If you simply replicate JCP figures that you mentioned earlier this morning, like BRL 800 million, the approximate profit for next year will be BRL 600 million. But it will be, if you look at JCP alone, we're talking about like almost 50% of your payout. You must use that to maximize the results. So the implied reading is, you know, the 2025 buyback will not be as relevant given that with the JCP alone, you get like 50% of your payout. Does that make sense? Am I right?
Your calculation, yeah. But Fabio mentioned earlier, we still have the Q4 results whose reserves will be available in February or March. I don't know. We're going to double-check it, but you also have the reserves that you'll generate at the end of the year. And so Q4 is a very important year for the generation of reserves. And as I said earlier, JCP, it consumes like a very specific base in the surpluses. You know, we can use to execute the purchase plan roadmap, except unforeseen conditions, of course. The purchase plan, we got a history, you know, in our company. We have been very successful.
But if there's like an external factor that makes us refine it or revise it or take a look at it, we are going to do it. Why not? Due to external factors. But the principles is we're going to repurchase the surpluses and you have 18 months to carry it out, including the years reserves up until those that will be available in the 2027 T1 reference to the 2026 T4. So we carried out two in their full capacity. And so we announced the second and we executed like 94% of it. And as we were almost done, you know, I had a chance to, you know, we announced the fourth that we want to carry out in 18 months. The third one, you know, basically the first one, we did it in up to 10 months, like almost 100%.
So we are the fourth period of 18 months. And as the reserves come in, the priority will be on the IOC. And then depending on the stocks and shares, we will try to repurchase. And this is very available to our stakeholders. And question from these 50%-80% by up to 2030, is it like is it a linear average, linear figures from 2026 up to 2030? Or maybe it could be bigger in 2026 and lower in 2030. Well, I would say that in these past few years, we reached over 100% in its entirety. You know, maybe every year it'll be like from 50%-80%. Obviously, it's an estimate, you know, with our current plans, current roadmap. You know, there is a plan that will generate a lot more value, some for stakeholders, shareholders, you know.
So the trend is we it should be within this range.
A second question, it's related to the guidance. Today's guidance is, you know, with the new long-term tax relief incentive plan. What are the most important metrics you've been using for this long-term incentive plan? And what about the guidance that you're using today? Do they already have an impact on the long-term plan?
I'll do the second part. Yes, they have an impact. Absolutely. I think our long-term and long-term remuneration are in line with the plan, with the roadmap. We can, you know, as we said earlier, you know, we're working on what we think is challenging, but possible, of course. We're working on a plan, roadmap that generates value to our stakeholders, and they must be in line. What about the metrics?
The metrics, you know, Regina mentioned earlier, we have three metrics. Let's talk about the long-term plan. TSR, relative, relative TSR, ROIC, and the third one is Earnings per share. If you think about in the period of three years, the strategic plan we have put together today and the metrics that are going to be used for them, they are all integrated somehow. The goals we set, obviously, it's going to be a long journey. They're going to be part of the metrics. They will be presented later to the board to be approved and analyzed. You know, so it's going to be making a decision in the beginning of the year for this three-year cycle. Every year, obviously, we have new metrics and looking at what just happened and with new estimations of what is coming next.
Sorry, one last question.
In practical terms, the three-year CLP. So there is one of the metrics that you mentioned is that you assume in place explicitly a CAGR of per share of 9% and a margin of from 18%-20%. Is that incorporated into it?
Yes, it is. It's embedded into it.
I got a question. Irma, she's online. She's from Goldman Sachs.
Here we have the examples of Youcom and the trust we have in the concept through the opening plan. We believe the time to scale of a new concept will be shorter if we believe so. What are the takeaways in this sense? I just got a second question, which is not related. I'm going to read it to you. Could you give us more details about whether we should think that productivity growth in our plan would be more driven by volume or price?
I'll answer the first. You'll answer the second. Thank you for your question, Irma. I would say that, yeah, we learned a lot. You know, if you look at the Youcom, you know, we presented to you earlier, but only gave a presentation on it. It officially came to life in 2013, both Youcom and Camicado, which we purchased in 2011. You know, I think those were the very first takeaways from the new concepts. You know, we understand the way we see it is a growth leverage, very, very important growth leverage. We were learning, we're trying things out. We tried a lot, and then we scaled. And Barone said that Youcom not only is it an example of a brand, a powerful brand. So it's Camicado, of course, but they show that our platform is ready for new concepts and new opportunities that could be scalable.
So it's in the beginning, we learned a lot. We tried things out. We did things we never had done before. Of course, from this moment on, time to be shorter. We're going to have like shorter time. We learned a lot. We are ready. We learned a lot from both to try them out, to scale them. And in the future, a new concept will be, you know, a new concept will be in place and grow even more. Price and volume, right? You know, there is a component, a real price component, which would be the inflation, and the rest would be like a combination of volume and mix. On the one hand, we know there's volume in the game, but several initiatives that we are proposing, you know, we could improve our sales mix. It's the value per part, per piece, per item.
So it's a combination of both.
Now, I'm Dani from XP. I have a follow-up on the margin dynamics. I don't think you mentioned about the gross margin and also supply, you know, the data that Fabi has shared. It showed that the model, you know, there's a reduction in the market down. But if you could give us some more about the gross margin, I know it has evolved. It grew a lot, but I would like to hear from you guys. And my additional question is about Realize. You say, I know, gave me the impression that, okay, you're focusing on the ones, but you brought something related to co-branding, like more flexibility to offer to us. Why is it? I see you brought the data to Fabi.
You showed them over the data, but if you could have the environment, it's to be better explored, and then can you connect it with the credit appetite? You know, we're obviously talking about volatility, but a lower interest rate. How do you see that? What would make you increase your appetite?
Thank you. Margin, you cannot talk about margin without talking about Realize. I think in terms of margin, we have been talking a lot about it. We see great potential for a slight growth and a higher and an elevated point, of course, with all the gains of this model that allow it. We could have more stock. We have gained a lot from it, but we see opportunities here. You know, we try to show you more data on the things that we didn't talk much about before.
I talked about profitability, which results from the reduction in expenses and commitment, but also comes from the gross margin growth. I think this is a kind of a growth that is slight, you know, but we can grow even more. About as for Realize, of course, thank you for your question. Very smart. As we said earlier, you know, we have a new product. It's important that you guys understand the dynamics in your operation. Today, we have a portfolio that is concentrated on a co-branded card. You know, customers have a limit to spend outside of the company and in the company, but from 2020 up until now, grand concession of cards is very much focused on the private label. Why is that? It's important to share it with you that private label is unique. You know, it's very important for credit modeling.
You know, it allows client customers to purchase things on the ecosystem and I can monitor their credit behavior. So today, out of 10 cards that we give in the store, this has been a while, you know, a reality for a while. So eight of them are private label. So for some other cases, you know, we have some upper middle-class customers. You know, they also have like a Visa or a Mastercard card. You know, he's got those labels, but they can operate it either only as a private label. There's going to be a limit, which is independent for on- as consumption, and they'll have the prerogative to enable it at any time and increase the limit. So that's innovative in the retail sector because it reduces friction. Today, when I give a client customer a private label, you know, we're going to it's a lot.
We're going to have new use plastic. There's an embossing cost. In terms of DNA, it's very good. For risk management, it's got the possibility, you know, gives me the possibility to give customers private label with the on us limit enabled. As I see their credit behavior, I can open and I can expand this on us limit. You know, it's very, very important both for the value proposition generation, but it also gives me the prerogative of knowing their behavior, you know, in terms of consumption, bringing those insights to my credit model and also showing important elements for fashion consumption. This will allow us to have a very adequate operation connecting retail and financial services.
As for risk appetite, we have been working on a credit policy, which is being able to support the deal with things very effectively. You know, we remain like 28% or 29% of the sales, and we see there are opportunities here to expand this credit as the macro environment allows. You know, financial institutions, we are here to have a good risk management. We are ready for it. We have capital. We have an adequate model. It will depend on how we will move on, and remember, we have more volatility next year. We are very consistent in terms of model, and with this new product, we are even ready to support the sales expansion.
Thank you, Dani. Congratulations for the event. I have three questions. Can you speak a bit louder? Joseph, J.P. Morgan, thank you for the event. Congratulations for the event. Three questions.
Looking at the last year and a half with the slide that you presented to us, future growth, the usual for guidance, we have implied a true growth of 4%-5% without distortion, seeing that the incremental area of store is smaller than we saw before due to the profile. What I wanted to explore with you, looking at the tooling of CD, we're in more or less one year with CD almost full power. Looking at the level of efficiency, where do you imagine that you are? You talk about improvement of three points, availability of product at store. To where can we bring this to understand what it brings in terms of productivity? Asking to Fabi, she talked about freshness, 23% between the collection, where we can do more when we look at the climate issue.
It wasn't an issue as it has been in the last two years. You have an algorithm evolution. What failed? Do we have the comfort that in the next five years, we have 9%-13% growth? It was a consensus. Maybe it's one point, two points below your guidance with similar expansion.
Thank you for your questions. Would like to use the presence of the executives here. I at least can answer the first question about productivity, distribution center, Fabi. You can talk about freshness, responsiveness to climate issues.
Okay. Thank you for your question. Do you hear me? Thank you for your question. It's important I mentioned the distribution center is operational since 2024. It was an important stage this year to finish the migration of e-commerce, and they're bringing it to the distribution center.
When I look at the efficiency that we have in the supply to the store, the curve is very advanced and the productivity captured. The productivity of e-commerce this year is maturing. We concluded the migration. We're going to capture gains in productivity. The next year, you will see an improvement in the logistics on top of revenue. We'll be seeing next year with the evolution, with the maturation. This also happens with the sourcing, the supply part. We have a curve. I showed the integration of systems with the suppliers is 50% in our supply base domestically. We want to increase this. This will bring important gains also in productivity in the sense of suppliers and connection with development and collections. We don't have an exact number of what is the curve, but I can tell you that e-commerce, there's still maturity to be reached in the logistics operation.
Sourcing also, we're going to involve the integration with the suppliers, gain in productivity in the domestic chain, supply chain. Thank you.
Yes. If we look in terms of capabilities, the company has it all installed. It has models, predictability, data. We have a system, functional system of building collections with methodology. It's very strong. I would take a bit care to say the error was ours in terms of the decision, not the capability or the condition. You talked about an error, and I want to go back to this. We made a decision to buy an excess in the winter. It's not always good. You don't deal with the next season always well. Looking at the short term, okay, it might have been an error in our minds, a loss in competitive advantage of Q3 with that quarter with the growth of competitors.
When you look at the full picture and I'll draw your attention, you look at the film or the movie of the evolution of stock, the construction that's engaged and the productivity that we leave open for the portfolio to really react in season. Capacity we have, we made a decision. You talked about a pain in the third quarter. You were talking about that, right? In the long term, we gained 20-25% of turnaround the last nine months. We increased 1.9 gross margin with one of the highest margins in the fashion retail, and there's still evolution that Fabio has left. We continue to project for this cycle, greater gain in turnaround, more reactivity. We depend on the productive capacity, but reducing the productive cycle is important and it we are having help.
We have cases where for 20 main ones, we have a relevant percentage of reactivity and of course, we will increment more. We gave the guidance of more or less leaving reactivity, but not only reactivity. The productive cycle we expect again in terms of speed that will bring us the flexibility. To add here, as Fabi said, well, it's a decision. When we make a decision, we evaluate risk and return. You can lose a bit of sales, but you gain in margin or gain in turnaround, as she said. Of course, maybe looking at today, we can risk more, gaining more sales.
Yes. This is an evolution for the model. We're talking about evolution. When we look at what will happen, we adjust and evolve in the processes and the evolutions. We see how we capture even more the risk-return relation.
I have a question from online, Daniela from HSBC. I think it's interesting, the feedback and increase in sales that the refurbishing of the stores has brought. The other information, if you can share how many stores we want to refurbish in the last years. And her second question about the implementation, the RFID: I want a summary of the gains that the implementation brought to the company. If you can tell us the areas and processes that count on this tool, if it's already 100% implemented. Well, I'm going to start with the last one, RFID. It's hard to say the gain. It's an end-to-end model that made feasible since 2017. We started, if I'm not mistaken, we started and finished implementation of RFID 100% in the brand in 2017. Renner brand since then 100% implemented. It's not now in 2025. It was in 2017.
The others we're still evaluating the cost-benefit and the return. What are the gains? I think it's an enabler to have stock accuracy. We have seen the importance of having inventory stock that's stock that's inventoried frequently to have accuracy of information to manage the stock. Stock is one of our biggest asset people, asset product. It's a huge initial gain that we had in 2017, 2018. After that, also it allowed us to have more speed in the cashier queues. We were able to reduce the lines, the queues of having more products at once. And the work that allowed granularity in the DC to work SKU to SKU, you need to have stock accuracy. I would say it's a big enabler of the digital journey of sorting of stock turnaround, accuracy, governance, many points, but I don't think there's one indicator. It's an old project actually for us.
The first part of the question, the refurbishing or renewals, we're going to give annual guidance of the investments per year. We validate this in the shareholder assembly. We propose this in each assembly. We're looking for a horizon in terms of expectation of what we have of CapEx on top of revenue. Probably two-thirds of it will go to store opening, digital journey, and refurbishing or remodeling, and the two-thirds, probably a good part is for remodeling or refurbishing. Maybe in the beginning of every year, we can have a new horizon, a range of new stores. This year, we're going to meet the range that we gave for opening some new stores at the end of the year. We talked about 30-37 stores, and we will meet this.
And if we look at the range for the next years that we didn't give a total per year, but we have a potential that we will let you know in the beginning of each year, maybe even be twice as big. It's not the same number every year, but it's an important potential. So refurbishing also bringing good results. We want to intensify the investment in refurbishing. We are renewals. We decrease the cost per square meter. We decrease the cost of the renewals per square meter. We can renew more stores spending less. If I can add, there's an important gain. It would be of RFID. It will bring productivity of per store operational.
RFID allows us to get into the Phase in management and the operation of the stores, all the part price, pricing of the product or repositioning of product, operational parts of the store based in people. We gain a lot of productivity and we will, it will give us a gain in productivity. It will help the dilution of expenses, for example, the phase that we are using to gain the productivity. It's still a base. It leaves the customer and enters our operation and our gain. We got to the end of the Q&A. We're a bit late. I passed the floor to Fabio for his final words.
Thank you, Fabi. Thank you, everyone.
I would like to add, we received a few questions and our intention here was to show what are our expectations and ambitions for the next years.
I can answer a few questions to see how it's possible, if it's possible. Our intention was to show the ambition showing it's possible. Three questions that we received a lot and I hope we answered here to give an example about that. One was more constant, a story of growth, of profitability or distribution of values. If you grow, you burn profitability. You give profitability, you don't grow. If you distribute, you don't grow. We're trying to show here and make it very clear. It's a story of growth with profitability that's increasing and with distribution because you generated a lot of value, generate so much cash and value that we're able to grow with profitability and distribution. This growth with profitability comes from the investments that we made in the past, the tests that we ran in the past, the things we did in the last years.
That's why we brought these cycles also, and a question that some ask, well, but it's implicit here because in the previous growth, you had a big growth in terms of area. It's implicit here. An important growth in terms of efficiency, yes. Some might ask, but you didn't do this in the past. A growth coming from sales store bigger than in the past. True. It's true, Daniel showed here. We are already doing this in the last few years despite being a big challenge, not just an intention. It is already real. Our growth in the last two years comes from this and the initiatives that we were talking from now on is to maintain this growth and now bringing new leverages like accelerating once again the digital that is very profitable now. We balanced it out the last two years. It grew from 2023 to 2024.
Now it gained profitability. Now it's ready to grow. We're ready to accelerate the expansion and to keep that good level of growth with efficiency. A final question that I receive sometimes when we talk about expansion, acceleration also, why now? Sometimes people ask, why now? It's not, it's uncertain. Isn't it worth waiting a bit? Why now? Because the projects are great. They bring a lot of value to the shareholders. We are ready. Installed capacity is there. The team asking to move and we're ready. That's why now. I want to use the opportunity to thank everyone. We finish now our online event. Any questions? We're always available. Thank you guys.