Earnings Call: Q1 2026

May 8, 2026

Good morning, everyone. Let's begin Renner S.A. video conference call. With me today are Fabio Faccio, our CEO, and Daniel Santos, CFO. Before giving them the floor, I'd like to make some announcements. This video conference call is being recorded and translated simultaneously into English. We will show the presentation in Portuguese, so for those following us in English, the English version can be downloaded from the chat and from our IR website. Questions from journalists can be directed to our press office through the number 11 3165 9586. Before proceeding, let me mention that forward-looking statements relative to the company's business perspectives, projections, and operating and financial targets are based on beliefs and assumptions and on information currently available. They are not a guarantee of performance, as they depend on circumstances which may or may not occur. During the Q&A, questions may be asked live. I now turn the floor to Fabio. Good morning. Our first quarter results are in line with our strategic plan and confirm the consistency of our execution. Even with a higher basis of comparison, we saw revenue growth of 4.3%, 5.1% growth in apparel. We had a record gross margin for a first quarter, 56.7% in the total of merchandise and 58% in apparel, representing an increase of 1.6 percentage points and 1.9 percentage points respectively, compared to the same period last year. This combination of higher sales and higher gross margin resulted in a 7.4% increase in gross profit and a 37% increase in retail EBITDA. These results demonstrated the company's ability to grow profitably across different scenarios. We believe we have potential for even more. We continue to see structural gains in our business model. Greater supply chain responsiveness, improved inventory management with a higher share of full price sales, increased freshness of the collection, and a reduction in promotional sales. Our net income grew by 16%. It was also a record mark for a first quarter, accompanied by a 24% increase in earnings per share. Another record for the quarter was cash generation. It was a robust cash position, about BRL 258 million in Q1, when we tend to have the lowest flow of the year. It shows the resilience and robustness of our model. In talking about robustness, our cash position continues to be robust, which ensures we have the flexibility to continue investing in a disciplined manner in business growth and profit distribution. We had another quarter of improved last twelve month ROIC, which reached 15.2%, up 1.9 percentage point. Over the quarter, we also held the launch event for our fall winter collection, a milestone in the quarter for strengthening the Renner brand. This event drove foot traffic to brick-and-mortar stores and traffic to digital channels, in addition to boosting online engagement. We brought together creativity, content, and influence. The result was expanded reach, increased engagement, and reinforcement of our new positioning, Dare to Be You. All this strengthens Renner's position as a leader in fashion. In the event, we featured, we had the participation of influencers, content creators, and leading fashion media outlets, not to mention the presence of our brand ambassadors, Taís Araujo and Sabrina Sato. On Mother's Day, the campaign was expanded with the Mom's Wardrobe videocast. This strengthened connection with our audience and generated a 220% increase in engagement compared to Mother's Day 2025 campaign. I would like to highlight the performance of athleisure, a category that has been growing at a double-digit rate. The market in this segment continues to grow. Even with our strong performance, we understand that we have opportunities to grow more, and we are investing in new fixtures and furniture, in visual merchandising, expanding our product assortment, and continuously improving our raw materials and products. We also continue to advance our omni-channel strategy. We implemented a store product availability check via the app and website. Customers now can enter their zip code to find the nearest store where that product they're interested in is available. This feature helps drive more traffic and conversion to physical stores and strengthens our omni-channel strategy. In this strategy, the customer chooses the channel. AI-powered video production has also enhanced our fashion positioning, customer experience, and conversion rates. In the previous quarter, we launched our Try On for select apparel items. Our customers can take a photo, and they can see themselves wearing that apparel item, and this has improved conversion this quarter. In addition to expanding this feature to include more apparel items and beauty products, now, customers can try even beauty products on, all virtually. We continue to move forward with our plan to open stores. Our expansion plan, we announced we intend to open between 50 and 60 stores along 2026. 22 to 30 Renner stores, 23 to 25 Youcom stores, and approximately five Camicado stores. We have already opened eight new stores this year. Most of these new stores should open in the second half, more towards the end of the year. We've had two stores opened in Q1 and six stores already in Q2, so we are confident that we can and will achieve our target of 50 to 60 stores in 2026. We are also continuing to renovate our key stores, as our new store model enhances customer experience, increases efficiency and conversion rate, resulting in above average performance compared to other stores. For the Renner brand, we already have 74 stores operating under the new model, and are moving forward with the renovation of 13 more stores this year. For example, Eldorado, Bourbon Shopping Pompeia, and Anália Franco shopping malls. Youcom and Camicado have also performed or outperformed the average with their new models, and part of the investment in store renovations is directed toward locations operated by these brands. We expect sales growth of between 9% and 13% for the year, with lower growth in the first half and higher growth in the second half of the year. This expectation stems from a lower comparable base in the prior year. We had about 15% growth in the first quarter and 4% in the second half of the year, that's why we have the inverse expectation. We expect to grow less in the first half, more in the second half, but achieving our range of sales growth. In addition, we have greater concentration of store openings in the second half of the year. I'd like to remind you that this year will be a record year in terms of store openings, and these stores will drive growth more in the second half of the year. As we mentioned, a higher volume of renovations in the first half. This impacts sales performance, but will potentialize sales in the second half when these renovations will be complete. We begin 2026 confident in our fashion execution, in our business model, and in our ability to achieve the guidance that we disclosed in December 2025 in our Investor Day. Our business model and our ability to execute gives us the confidence to meet the goals we set for the 2026, 2030 cycle, growing profitably and creating value. I will now hand over to Danielle. Thank you, Fabio. Good morning, everyone. Speaking a little about growth, in the first quarter, we achieved 4.3% growth in retail sales and 5.1% growth in apparel sales, a growth in line with our strategic plan. This performance was impacted by non-recurring factors, primarily the temporary unavailability of items in the digital channel. As mentioned in the Q4 2025 earnings call, between January and February, we carried out the planned transfer of inventory from the Rio de Janeiro distribution center to the São Paulo D.C., which temporarily affected the availability of older products in the online channel, with an estimated impact of 1 percentage point on total retail sales. This process was completed by the end of February, and in March, digital channel sales returned to normal. It is important to note that this final stage of inventory centralization in Cabreúva enables operating efficiency gains and a better customer experience. We saw an increase in average ticket size, driven primarily by a mix of newer products and an increase in number of transactions and conversion rate, which offset lower traffic in the period. On our digital channel, GMV grew by 7.4%, accounting for 16.6% of total sales. As Fabio mentioned, our revenue growth guidance for the year remains unchanged, with slower growth in the first half and faster growth in the second half of the year. As for gross margin, we closed Q1 with a 1.6 percentage point increase in retail gross margin, 56.7%, and 58% in apparel, up 1.9 percentage point compared to Q1 2025. Both record highs for a first quarter. This expansion was driven by a higher share of full price sales resulting from more efficient inventory management, which allowed us to reduce markdowns. It is important to note that this gross margin improvement observed this quarter and throughout 2025 is a structural result, the result of advancements in our fashion execution and supply fulfillment model, which enable more precise inventory allocation and greater supply responsiveness. Youcom reported a gross margin of 61.2%, an increase of 1.4 percentage point over the previous year, driven by an optimized product mix and adequate inventory levels. Camicado reported a gross margin of 55.6%, up 0.2 percentage point compared to the previous year, resulting from an improved product mix with a higher share of home-style private label items. During the quarter, operating expenses grew by 6.2%, exceeding revenue growth, notably due to lower volumes sold and non-recurring expenses, as we detailed in our earnings release. It is important to note that general and administrative expenses grew at a slower pace than revenue. As for our efficiency enhancement initiatives, implementation will begin in the second half of the year. These initiatives will contribute to achieving the guidance disclosed at the 2025 investor day to reduce the ratio of operating expenses ex IFRS 16 to net retail revenue by between 2.5 percentage points and 3.5 percentage points by 2030. As for Realize's earnings on a comparable basis, excluding the effects of Resolution 4966, remained stable compared to Q1 2025. Revenues for the quarter were 1.2% lower year-over-year, reflecting primarily the reduction in late payment interest-bearing income. This trend is associated with a portfolio featuring a better credit risk profile, resulting from the maintenance of a more selective credit policy. The total portfolio decreased by 0.6%, also reflecting the selective credit granting strategy by the company. We observed a higher volume of cash inflows from the maturing portfolio, which contributed to a reduction in the balance compared to 2025. The past due portfolio decreased, reflecting good credit risk quality. Stage 3 portfolio equivalent to over 90 days past due closed at 14.9%, 0.3 percentage point down compared to Q1 2025. As regards our net income, net income grew 16.4%, setting a record for a first quarter, reflecting improved operational performance and a lower effective income tax rate than in 2025. The growth in net income, combined with the execution of the share buyback plan, resulted in a 24% increase in earnings per share. Free cash flow of BRL 258 million, also a record mark for a first quarter. It benefited from higher EBITDA generation and more efficient working capital management. Our financial cycle totaled 105 days, a reduction of 8 days compared to Q1 2025. How significant is this cash flow generation? Historically, fashion retail and the fashion retail sector does not generate cash in the 1st quarter. This is the 2nd consecutive year that Renner has maintained positive cash flow in Q1, 3 times the cash generation of Q1 2025. This shows the strength of our business model. Last 12 month ROIC increased by 1.9 percentage point, reaching 15.2%. This calculation of ROIC takes into account all of the company's current and non-current assets. The continued expansion of ROIC is driven by margin gains, higher asset turnover, fueled by inventory productivity, working capital discipline, and store expansion discipline with incremental returns in new markets. These drivers reinforce the company's confidence in its trajectory toward the goal of achieving approximately 20% ROIC by 2030. Thank you. All right. Let us now begin the Q&A session. To ask a question, please click on the Raise Hand icon. Good morning, Fabio Faccio, Daniel Santos. I have 1 question related to gross margin. I think the gross margin was a positive highlight in your earnings in a challenging macroeconomic scenario and also considering competitiveness in the sector. I would like you to detail the main drivers of this improvement, elaborating on the gains that you captured in your distribution model with the new DC, assortment efficiency, sourcing, discipline in markdowns, mix, cost dynamics. If you could detail these drivers, it would be very interesting. Thank you very much. Hello, Luiz Guanais. As Daniel Santos mentioned, I think that our gross margin gains are very structural in our model. They come from some of these gains that you mentioned in your question. We improved our fashion execution, reduced time of development and production. Our team investing in capturing trends faster and more assertively, integrating systems and more systems and technology, AI, so that the team could develop their work with more assertiveness and less time and all integrated, so the production could be better and more effective. By doing that, we reduce costs along the chain and improve assertiveness of our collections. Additionally, a more precise distribution now with the new DC. We have greater granularity of the inventory, and that has allowed us to work with smaller, more streamlined inventories, reducing older items that normally have lower margins with more markdowns, and it allowed us to produce collections along a season. The more we can produce collections along a season, the greater the assertiveness, the greater full price sales and the lower the markdowns in promotional sales. That's how the margin is increasing. We are selling more at full price, and with a smaller share of promotional sales. One important piece of data, we grew 4.3% sales, reducing 1% inventory, reducing older inventories by 15%, because that's where we have more markdowns, and that explains the structural gains. This growth in gross profit comes from that. Thank you, Fabio. Thank you, Guanais. Next question from Danniela Eiger with XP. Danniela? Good morning. Thank you for taking my question. I have a follow-up to Guanais' question and another one. The follow-up question is, considering these challenging scenarios regarding purchasing power, you also mentioned lower traffic. How are you considering getting part of this margin expansion to change your positioning or some initiative in that regard to perhaps use your profitability to gain more market share? My second question is, I know you cannot give us too many details, but perhaps you could elaborate on the initial signs of acceptance of the new collection. I know you made some adjustments regarding the transition collection to make it broader. We have seen the weather volatility. Some days are too warm, some days are too cold. Perhaps you could give us a qualitative or quantitative answer regarding the evolution of the fall/winter collection. Thank you very much. Thank you, Danny. As regards margin and price, that's a question we get frequently because the margin is at a very high level with growth, a healthy margin. Like I told Guanais, the margin comes from the reduction of old inventories and not increase in price. If it had come from price increase, we would have an opportunity to calibrate margins and sales. Since it comes from reduced markdowns, our entry-level price, it is very competitive overall. It fits our positioning. We look at this daily, product by product, our price positioning, our fashion positioning, the positioning of the company, looking at the sector, looking at demand. I would say that the relationship between entry-level full price products with margin, we consider that this is very adequate, and the gain is coming from reduced markdowns. We cannot really lower the margin to sell more because our entry-level price is very adjusted. I don't know whether I was clear in my answer. As for collection acceptance, it has been very good. As I mentioned in the previous earnings call, we are working with more transition items, and we don't want this to become a future markdown, so we are exploring that opportunity. This allows us to have a good performance at several moments. In a transition collection or when the temperatures are not close to historical averages, these items are performing well. The collection itself, not just the transition collection, is performing well. In those days when we have temperatures close to historical averages, that's better, but it's also in a comparable base. I think that we are at the start of the fall season. We have a very positive expectation for our fall/winter collection in Q2, Q3. We have a lower growth expectation normally in Q1. We've seen the result. We normally expect a greater growth in the second half of the year because we are going to have a good performance of the collection and good price positioning. We're very confident about that. We intend to grow our gross margin slightly. I think that in Q1, growth was greater than the average that we would expect, but still we have an opportunity to maintain gross margin at high levels. Thank you. Congratulations on the results. Next question from Joseph Giordano with JPMorgan. Hello. Thank you, Fabi. Good morning, Fabio, Danielle. I would like to explore these incremental initiatives on the expense side. If gross margin was a good highlight, and you're talking a lot about that, looking at expenses, we start seeing the company being kind of lighter. The result came a little below what we expected. Danielle, what were the main drivers in this second wave of initiatives to drive down expenses that we should see more towards the second half of the year? How could this impact 2027? Let's understand if we have anything else to come. The second point is on digital. We see a very good evolution of the channel. You pointed out several improvements. What is your growth expectation here? Of course, we have to explore the risk of the import taxes. I'll speak about the expenses, then Fabio will speak about the other question. Well, as for the expenses, in the past call, we had spoken a little about the work we have been doing trying to pursue opportunities to gain efficiency. When we explained our strategy for 2030, we have the goal of reducing from 2.5 to 3.5 the share of expenses over revenues in a composition that comes on one hand from growth and our ability to have growth without the need to increase expenses at the same rate, as well as efficiency gains. We did work supported by an external consulting firm to explore some opportunities we had mapped out, validating them, and bringing other opportunities to the table, and we will start working on these opportunities. We cannot give you any detail on these opportunities, but as we activate this in the second half of the year, we will bring you more detail. The goal is to achieve for the full year, not just for 2026 but for the coming years, we want to, 1, be able to grow expenses at a lower pace than revenue growth, and doing this sequentially over 2027, 2028, all the way to 2030. Whenever we have any specific activity, we'll bring you more detail in our earnings call from August onward when we speak about Q2 and sequentially until the end of the year. Okay, you also asked about digital growth. We have an expectation that even with a relevant growth in physical stores, same-store sales and for new stores, when we start having more new stores during the year, still we understand that the digital channels should grow even more than brick-and-mortar store sales. We have an expectation of strong growth in physical and digital for the full year. As for the small imports tax or cheap cloth tax, there have been a lot of discussions on this. We have to remember that what the associations ask and the unions ask is for equal conditions regarding taxes. There has been a discussion on this. If they reduce again tax for cross-border, there have been some discussions, but the associations are reminding the government that they pay half the taxes that any retailer in Brazil pays. There's a discussion that can be beneficial. Perhaps they could have a tax exemption for cheap, cheaper items. If cross borders can have some benefits, why can't we? Why can't retailers of Brazil enjoy the same benefits? I don't know what's going to happen. Perhaps have a tax exemption for all that could create a benefit for the whole fashion business in Brazil. That's still an uncertain discussion. What is certain is that regardless of what happens, today we are a lot more competitive than we were two, three years ago. We have better prices, and still with good margins by the reduction of markdowns, better products with better raw materials, and we now have a much stronger and much more competitive positioning compared to two years ago. Another important point is that we are not discussing the part of state taxes, which would remain, but at a different level than 2 years ago. Thank you. Next question from Eric Huang with Santander. Eric, go ahead. Thank you. Fabi, good morning. Fabi, Fabio, Daniel, we have 2 questions. First, related to the old inventories. You had a significant reduction this quarter, I'd like to understand if you still see room for additional reductions and how you can impact the working capital dynamic, which also improved in the quarter. Second question, looking at capital allocation. You are maintaining good cash generation, a good and robust cash position. How should we think for 2026 dividend payout, share buyback? You executed part of the share buyback program. I'd like to understand the pace of this, of all of these initiatives over the year. Thank you, Eric. I'll start answering about old inventories, now can speak about capital allocation and the financial cycle. I think you put it well. We have been talking about reduction of old inventories. This has been consistent and continuous work. Just like the margin gains, our gross margin is at a very healthy and high level. We think we still have room for a slight increase. For 2 years, since we've started evolving our fashion execution model, not just fulfillment, but the whole model, we've been saying we expect to enjoy gradual gains, they will continue in the future. We have said this over and over. Reduction of old inventories, adjustment of more assertive inventory. This has led to greater inventory turnover, better gross margin, improvement in the financial cycle, yes. We expect to continue on that path because our new products are selling faster and faster. This allows us to have competitive price with a better gross margin, and a greater inventory turnover positively impacts the financial cycle. Danielle, you can talk about capital allocation and financial cycle. Eric, regarding capital allocation, our priority is to invest in opening new stores, renovation, and digital. We have BRL 1,000,000,050 of CapEx that we communicated in our Q for 2025 earnings call. This is how we'll allocate investments. As for distribution of profits and earnings, I'd like to remind you of what we said previously. We have an objective in the 2025-2030 cycle to have a distribution of 50%-80%. This is a range, okay? It doesn't mean we're limited to it. The way in which we would like to distribute our reserves would be either through share buyback program or additional dividend payout, all conditioned to a minimum cash. The fact that we can generate more cash might allow us to perhaps distribute more than this range of 50%-80%. It will, of course, depend on the ability of the company to continue to generate cash in 2026. It is our target to continue to distribute profit. We have a share buyback program, which is active. We've used BRL 100 million of our reserves, and our goal is to continue with this share buyback program during the year, throughout the year. This extra cash generation is a good sign. It might point to the possibility of executing the share buyback program faster than we had initially planned. It will depend on the next quarters and on this, on how successful we are in generating cash throughout 2026. Excellent. Thank you for the answers. Thank you, Eric Huang. Next question from Vinicius Strano with UBS. Vini, go ahead. Hi, Fabio Faccio. Good morning, Fabio Adegas Faccio, Daniel Martins dos Santos. About Realize. Q1 came slightly above our expectations via lower provision. I'd like to understand, how are you thinking about the performance of Realize looking forward? How should we think about seasonality between the quarters for Realize? What is the company thinking regarding credit granting? We see market indicators deteriorating. Renner continues to improve, Realize continues to improve. Is there any portfolio indicator of the portfolio that you see as a possible trigger to accelerate credit granting? In looking at the mid to long term, are you considering Realize a place where it makes sense to allocate more capital now that you're generating a lot of cash in your retail operation and distributing dividends and share buyback program? Capital allocation for Realize more towards the long term. Thank you, Vini. Let me start commenting on Realize's earnings. The results were positive in Q1. In a way, it results from this more selective credit management that started last year. The trend is that we will continue with a more selective credit origination and following the market. We might eventually normalize credit origination depending on household indebtedness levels and how they evolve in the market. As for seasonality, it is always important to remember that last year we had the non-recurring effect of Resolution 4966. It happened in Q1 and Q2. It is always important to replenish the base because that's the adequate comparable base, particularly for Q1, but also for Q2. As for capital allocation, we have it very clear in our mind the goals of Realize. The goal of Realize is to drive retail sales. How can it drive retail sales? Well, either through responsible origination of loans, allowing customers to access credit so that they can shop in Renner stores and digital. Also working for differentiation. In other words, how the combination of Realize credit card and Renner can bring an advantage to our customers. This advantage will translate in more frequent shopping and higher tickets. Today, for example, we have cashback available at Realize. If customers buy at Renner with a Realize card, they have a 10% cashback that they can use within the next 30 days. That's one day of encouraging shoppers to shop using Renner cards. They can shop more frequently and buy more, that is the ultimate goal. Our goal is to drive Renner retail. At this point, we are reaffirming this because our origination is happening more in our private label card, not in the co-branded card. This allows us to have an even better risk management and focus on Renner. Our goal is to continue with the execution of this strategy following this format. Perfect. Thank you very much, Daniel. Thank you, Vini. Next question from João Soares with Citi. Thank you, Fabi. Good morning, Daniel, Fabio. A follow-up on Vini's question about Realize. You have a number of initiatives. You talked about cashbacks to encourage consumers and users of a Renner card to buy at brick-and-mortar stores. When comparing year-over-year, there is a drop in the use of this card, so perhaps a more restrictive credit granting policy is more than offsetting these gains in engagement that you have at Realize. I'd like to understand that. Are there new triggers that you can implement to improve engagement? That is main, first question. My second question is about Q2. How are you preparing for it, and actually preparing for the second half of the year? Because again, we are in a complicated year in terms of temperature. There's the El Niño effect. I don't know if you have to work with lighter items of clothing. Then what is your expectation of top line growth. This effect of the DC. One last question, I'm sorry. With the closing of the D.C. in Rio de Janeiro, was there any short effect on working capital? Thank you. I'll start with Realize. Let's start talking about Realize, João, and then Fabio will speak about Q2. Undoubtedly, the small selective credit granting policy impacts credit granting, of course. I agree that when we look at the share, although we are making efforts with cashback, it does limit the potential. Of course, we believe that the current policy is adequate. We don't intend to change it. Like I said, as the market improves in terms of household debt and delinquency indicators in the market, we'll normalize credit granting. This, of course, will allow us to provide more loans. It's not just that. I have to remember, when I answered Vini's question, something I did not mention is the question of the new processor in Realize. We mentioned that we started running pilot tests, and the new processor will start being rolled out in the second half, and this will bring In addition to operational benefits, it will be more efficient operationally speaking. It will allow us to have a new differentiation for the card. It is a combination of a normalization of credit granting as we have news with the new processor, and we will be better equipped with Realize to drive retail sales, and so that we can increase our share. João, let's go over second quarter. You asked about temperatures and so on. I think that when we talk about comparable basis, a comparable base, if we think about Q1, Q2 last year, they posted significant growth, and that's why we have a more difficult comparison base. A part of that came from lower temperatures in the beginning of the fall season, March and April. Last year was an outlier. That's why we have been saying since the beginning of the year that we expect growth below the average for the year in the first half of the year. You asked whether we are maintaining our guidance. We are. We are maintaining our guidance. That's why we've been saying since the beginning of the year. We have lower growth expectation for the first half because last year temperatures were a lot lower than average in March, April, and May. This year we expected a more normalized scenario, and that's why we have a different base. I think it's all going according to plan. We have been able to work well with the collections, regardless of the temperature, we can adjust our inventories to demand. We differentiated transition items and also considering the size of the inventory. If there's higher demand, we can produce. If there's a lower demand, we can adjust. That's why we say regardless of the scenario, we can have efficiency gains. If we look at Q1, we grew sales 4.3%, margin growth with sales growth led to 7.4% gross profit increase. That's because we're able to adjust our inventories to sales volume, and that is important. You see, this leads to profitability, to cash generation, which is very important. We are convinced of the model. You also asked about the DC. I'm not sure I understood the angle of your question, the last stage of the DC closing in Rio, we planned for that. You asked about lost sales, that was planned for, we maintained the guidance for the year. We had factored that in, we had a fiscal benefit in Rio de Janeiro, theoretically, that could affect the margin. As you could see, we have been growing the margin since the initial product transfer cycle from one DC to the new one. Because the operational benefit is much greater than the fiscal benefit we enjoyed in the past in Rio. The margins continue to grow since we started reducing our operations in Rio, now that the inventory has been totally transferred to the DC in Cabreuva. Daniel mentioned, of course, there are one-off effects, non-recurring expenses, one-off expenses related to the DC closing, because we had some terminations, employee termination contracts, but this will no longer happen. Now it's the opposite. We will start enjoying our operational benefits, better inventory management, better conversion rate, better lead time for our customers, great availability of items for our shoppers, less stock out, improved margin, and greater dilution of expenses looking forward. All right. Thank you. Thank you, João. Next question from Alexandre Namioka with Morgan Stanley. Namioka, you may proceed. Good morning. Thank you for taking my question. Actually, two questions. One related to the sales guidance. You maintained the expectation of growing sales from 9%-13%. What should happen, what could happen for you to achieve the upper part of the range of 13% for this year? My second question is more focusing on the mid to long term. It's been a year since TikTok Shop launched in Brazil. I just want to explore how you're thinking about this channel for Renner. Again, more towards the medium and long term. Thank you, Alexandre, for the questions. I would say that regarding the guidance, we are reinforcing we're maintaining 9%-13%, but as a reminder, it's 9-13 this year and every year until 2030, and that's why we have a broader range. To achieve the top part of the range, I think in the past quarter we spoke about this. Most likely, in the first years we shouldn't be close to 13%. It might happen, but it's not our expectation. In the following years, as we enjoy gradual gains, as we increase the number of new stores, we tend to move towards the upper range. Could it happen this year? It could. It depends on some external factors as well. For 9% we don't rely on any external factor. We rely on our own execution, and we have full conditions to achieve it. I'd like to remind our performance last year. We had 9.2% increase in sales. First half 15, second half 4. For this year, first quarter 4.3%. We expect for the first half of the year will grow less, but with an expectation of a better second half of the year. You can do the math. We don't have to have the same inverse amount of value for the second half because the weight of the second half is greater. We expect to have higher average growth because of the base effect, because we open more stores in the second half, or because of renovations that are happening as we speak in 13 key stores. When they're undergoing renovation, sales are reduced, but when they are reopened, sales increase. You put it all together, and it gives us confidence that we can achieve our guidance. As regards social commerce, TikTok commerce, we are at the beginning of this, so we are testing it. We're testing the channel, and it is one more channel. It's not significant for us right now. The most relevant part for our business are our own websites and our own apps. Perfect, Fabio. Thank you very much. Thank you, Alexandre. Next question from Irma Sgarz with Goldman Sachs. Irma? Hello. Good morning. Most of my questions have been asked and answered. I thought, Fabio, it was interesting that you highlighted the athleisure category, which you consider a potential growth category, and perhaps linking that to capital allocation questions asked in the past. You left it open whether we could have an M&A deal or potentially acceleration of any standalone new concept. Just like you did in the past with Youcom. I'd like to see what you're thinking about the athleisure segment, and perhaps it's possible that it will become a standalone project eventually. How do you see the dynamic of this chain? Perhaps it's too far from your core business, and it wouldn't make sense. I'd just like to, you know, pick your brain on this. Thank you for the question, Irma. I'd say that when I mentioned athleisure, I did so because it is a category, a lifestyle category that is gaining more and more relevance worldwide. It's a trend that has been going on for quite a long time, and it tends to continue for quite a long time. It has posted one of our best performances for quite a while. It continues to perform to be among the top performers. Even where we are performing well, we understand that we have potential for more. I think that the market is growing. We see specialized retailers growing with that trend, and this category is our top performer, but we understand it has an even higher potential. For the new stores, we are dedicating more selling floor to that category. The category as a whole is getting a better assortment. We're improving the furniture and fixtures of that area, of that selling area because the goal here is to increase the potential. We're now internally in Renner stores. As for standalone models, I think you put it well. I think Youcom is a great case for us. It's proof that we have potential in specialized standalone businesses. We're very pleased with Youcom, and it's proof that we can have other standalone projects with athleisure and other lifestyle projects, but not right now. We're very focused. We are focusing on Renner, Youcom, Camicado, the assets we already have in-house. We are focused on those. Perhaps eventually in the future, we do have opportunities for standalone operations. Also considering our platform of operation and our model to execute, which is under our control. Very clear. Thank you very much. Thank you, Irma. Next question from Melissa Yun with Bank of America. Melissa, you can proceed. Great. Thank you so much. Most of my questions have been answered, but maybe I can ask two more. The first is if you anticipate any impact from the new debt renegotiation program from Desenrola, either directly or indirectly. I recall you did have some exposure to the last program, but obviously there have been some significant improvements in the quality of your portfolio since then. The second question is on Argentina, if you can provide an update on the operating trends there, the impact of more flexible imports from the perspective of more cross-border e-commerce competition and your ability to leverage imports for your own assortments. I can speak about Desenrola. Thank you for the questions, Melissa. As for the Desenrola program, we're waiting for more detail regarding the program. Undoubtedly, a program that helps households to pay their debts will help us. It is in our interest. We're not thinking so much about Realize because our portfolio there has good quality. We know that an indebted population in Brazil, as we have now, some numbers say 30% of their monthly income dedicated to principal and interests of their debt. Of course, that impacts consumption. The moment we have these initiatives to renegotiate debt, and if they are successful, this will help us. Families will have more disposable income, the value proposition of Renner will become even more attractive when shoppers have less payment restrictions. We welcome this initiative. We just have to wait for the details to see how fast this can be executed and how this can benefit the level of debt of the families. As for the Argentina performance, we have to remember that's a small business for us. We just have four stores in Argentina, but they're performing really well. We are pleased with the operation there. We're not investing in expanding the business there. We have to get more clarity regarding the economic landscape there and economic stability of Argentina, but it is a future potential. At this point, the operation is performing well, but it is kind of irrelevant. It's, it's too small for us. As for competition cross-border, the international players, I would say that even with higher comparison base, we have seen the major players growing, the sector growing, and we are growing above sector average. The fashion sector is growing, which shows that we have an important opportunity for all key players, especially us, in a scenario which is, in principle, more challenging. Interest rates in Brazil are still very high. Household debt is very high. Shoppers are being more selective, but they are being selective in terms of choosing the best product for them. If we bring fashion products that they're interested in with good quality, with a good value proposition, this has made a difference, and we understand that we are very well-positioned in the market. In a market that is growing, even in a more challenging landscape. Any improvement in the macroeconomic scenario will be even more positive for us looking forward. Great. Thank you. Thank you, Melissa. Last question from Renan Sartorio with Safra Bank. I'd like to have a follow-up question on Realize. By now looking at delinquency. Stage 2 could lead to an increase in NPL in the future. My question is, how do you see the quality of this credit now? Do you feel pressure from the macroeconomic scenario considering household indebtedness? Think about that, what factors would give you more comfort if this portfolio grows? Thank you, Renan. When we look at Stage 2, normally when I look at this, we have Stage 1 and 2 together, you'll see it's kind of flat vis-a-vis last year. These movements regarding Stage 2, well, they are considered normal for us, particularly when we look at the credit environment we have. We are confident that a more selective credit origination policy fits our dynamic of a good portfolio management. As for expanding the portfolio, like I said before, we have to wait and see. We have to see how the household debt is going to evolve. We had a question just now on Desenrola. This program might be a lever to address the level of debt of the families faster. The moment that we identify that the credit status, the credit situation is healthier, we'll be able to normalize credit origination. At this point, we will continue with a more cautious or selective credit origination. More focused on our private label card, as we said. Undoubtedly, this will be an opportunity for the future. We just have to wait for the right timing for us to normalize credit granting. We're monitoring this, and we'll make a decision responsibly and cautiously. All right, thank you. Thank you, Rena. We are now ending the Q&A session. Thank you very much for participating. I'll now turn the floor over to Fabio for his closing remarks. Thank you, Fabio. Well, the results for the quarter, particularly the improvement in margins, profitability, and cash generation underscore the consistency of our strategy and execution. We remain focused on realizing the company's full potential through sustained growth, increased efficiency, and primarily creation of value for our shareholders. I would also like to take this moment to thank our team for their dedication, and to thank our shareholders and our board of directors for their trust. Thank you.