Good afternoon, everybody. Welcome to Los Jacena video conference about the results of the Q1 of 2021. Before we start, I would like to give you some information and make a brief disclaimer. This video conference is being recorded and simultaneously translated. All questions must be asked by chat by means of the webcast platform.
Questions from journalists should be sent to our press office and the number is 11-316-59586. And before we continue, I would like to clarify that forward looking statements that might be made during this video conference in relation to the company's business perspective, projections, operating targets and financial as well, our beliefs and assumptions of start our management based on information currently available. Forward looking statements are no guarantee of performance. They involve risks the uncertainties as they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect the performance of the company and lead to results that differ materially from those expressed in such forward looking statements.
Start. Having said that, I would like to give the floor to Alvaro de Vedo, our CFO, to start the presentation. Alvaro? Start. Good afternoon, everybody.
This is Alvaro. Start. And first, I would like to thank you for participating and for your interest in participating today. Fabio Fato is with us, CEO, Carlos Fair, our Investor Relations Manager, who will be organizing the questions that you will be forwarded via chat. As we said in the release, the Q3 was characterized by an increase in number of COVID cases, leading to an intensification of the social distancing protocol.
Start. As a consequence, once again, we adapted very quickly to the needs of the situation, prioritizing the well-being of our clients, employees, suppliers and our community. Regarding our business, we adjusted product and operations so that we could have the best possible use of our businesses during and after the temporary closing of the stores. Thus, I understand that we should stress 4 operating points of our Q3. Let's start by Slide number 3, where we see the sales performance.
See the new restrictions regarding our operations put in force, mainly regarding temporary closures that happened in a more relevant fashion in March, included areas of operation very important for us such as the South and the Southeast. And this led us to operate with 69% of the total start business hours of the quarter vis a vis 86% in 2020. I would like to remind you that until March, it was 100% saw and with an important pace of sales thus. Net revenue from merchandise sales was 12% lower, same store sales going down 12.7 percent at the end of the quarter. We only had 38% of the stores in operation.
And in some locations where there was more mobility such as the North and the Midwest, if we consider only the days in which the stores were open, the physical unit performance was positive in the quarter and this led to inadequate execution of the operation than the good acceptance of the fallwinter collection. Now look at the Q2 of 2021, this behavior became even stronger in the following weeks, mainly as of April 2019 when we started to see more flexibility in the restrictions with the resumption of activities in old stores. Ever since then, we have been seeing a very important recovery of sales, a growth of, on average, 2 digits over 2019. Currently our stores are open and we had a great week for Mother's Day, the best in our whole history. We have a diversified assortment with quality of the product in the transition and in winter, which generated a lot of attraction to the stores.
Traffic is still lower than usual, but conversion is much higher, more items were bagged. And even with a faster place in the physical stores that we saw in the last few weeks, e commerce continued to accelerate in this period because of all the initiatives underway in the quarter, digital sales went up by 173% and in April continued to be high. Start. Regarding Slide 4, another important point regarding our operations was our gross margin. Once again, we saw sequential evolution in our margin visavis the last quarter.
Our inventories are well balanced with good quality, but we had the challenge of the exchange rate on imported products and inflationary pressures on raw materials besides international freight and the biggest restrictions in terms of the operation generated more promotional environment for this period. Start thinking about the Q2 of 2021, even having the exchange rate and inflation of raw materials as challenges we see a more promotion which is more normalized. And the third point that I would like to mention is on Slide 5 and it's about started expenses. The operating deleveraging in the quarter came mainly from lower sales because of the restrictions to our operations and mainly the temporary closing of stores in March. And as we have already said in many interactions with the market, we have additional expenses related to the acceleration of digital sales and the initiative related to the digital transformation and development of our ecosystem and Fabio will be talking about that.
For the Q2 of 2021. According to the trend of improvement in sales that we have seen so far, we believe there will be a lower effect of deleveraging, which will help us to bring the EBITDA margin to a positive level. Important to mention that over 2021, we will see higher OpEx expenses related to the initiatives that we have already mentioned. Start. And lastly, on Slide number 6, I would like to talk about the credit part.
We have maintained a gradual improvement visavis the last quarter of 2020 with a good quality of the portfolios and delinquency under control. Additionally, the revenues had a gradual recomposition, trend, but still impacted by the lower origination of portfolios as a consequence of the restrictions to our operations and lower financing requests for the part of clients. We also had an increase in expense and mainly due to the Realize digitalization initiatives together with the development of our ecosystem. Forward to Q 2021, we continue to work to guarantee credit quality and delinquency under control. Start on revenues.
We will have a one off challenge of the lower generation of portfolios because of slower sales, but we will continue to evolve in measures to liberate credit limit that had been limited and for the composition of past due and financial rates as well as the offering of open seas of milk carteau. Also, we are accelerating the sales and organizing campaigns and incentives for the use of operation of cards, which will allow us to rebalance the operations as a result. Now I would like to turn the floor to Fabio Fazio to talk about digital transformation and the development of our fashion and lifestyle ecosystem. Thank you, Alvaro. Good afternoon, everybody.
And before talking about our main initiatives in digital transformation over the quarter, start, I would like to talk about the construction of our fashion and lifestyle ecosystem and how this business model has been evolving in the company. September 2019, the Board of Directors and the management met to define the strategic priorities for the next few years for the future. As changes have been very fast in the habits of consumers in a more digital environment. We understood it would be necessary to have a more complete offering in all stages of the consumer's journey, and we decided to adapt our business model to meet these demands. Start this.
At that moment, we define the design of our ecosystem, as you can see on Slide number 7. Started. And also, we renewed our value proposition to meet this model. Ever since then, we have been working in the necessary adaptations, the adjustments in our culture, bringing new expertise and structuring our teams. Start on March 31, we presented the plan in our Investor Day.
And now we believe that we are ready to invest in the execution of these initiatives, powering up our current platform so that we may be the leading specialized ecosystem in fashion and lifestyle and reference in Latin America. For this construction, the main front of our investments are related to the extension of product assortment, categories, services to our clients decide the offering of services to partners and sellers. Besides, we are working in the generation of proprietary content and media for more engagement, frequency and stickiness, increasing our life brand value and reducing the cost of acquisition. Start. Likewise, the ongoing investments in the omni journey with a bigger array of channels and platforms storms all integrated brings more digitalization, flexibility in the journey, convenience, enchantment and the consequence, an increase in sales spend a better productivity and profitability.
Additionally, we are increasing our client base in Real Easy CFI and increasing stood the offer of financial solutions that might meet the needs of everybody in our ecosystem, start being a very important driver of synergies and results. And we are also structuring a loyalty program that will bring benefits, not only quantitative benefits, but also differentiated experiences begin the link between the different formats of retail and banking and further improving our ecosystem. End so that everything may happen, we need to accelerate platforms and important enablers as well that can be seen on the lower part of the slide, start driving logistics, technology, data that will allow us to bridge some of our current gaps and go ahead in our business model. And in order to face these plans that last week, we finalized an offering of 102,000,000,000 in shares, totaling funding of almost BRL 4,000,000,000. And these proceeds will bring us agility, flexibility end preparedness, which are necessary to capture all the opportunities associated to the continuity of development of our ecosystem by means of an organic construction as well as partnerships and acquisitions.
Likewise, start. They will allow us to invest in the acceleration of digital transformation and they will guarantee the continuity start off our work in the Omni DC in Sao Paulo and the expansion of stores regardless is of the economic scenario and COVID-nineteen consolidating the omnivision associated to our strategy. This follow on was priced on April 29 started at BRL 39 per share with a discount of 2.4 percent visavis the closing price of the day, below see average of the recent offerings in the market. And besides, we had a demand of 4 times fold higher than the book. Start.
And we are very confident in the trust of our investors about our strategy, our capacity to execute it. And I would like to take start this moment to thank our shareholders for their trust that they deposited our company. We are sure start that these investments will allow us to have more enchantment for our clients, guaranteeing more competitiveness in our business and generate more value to our stakeholders. Having said that, I would like now to go to Slide number 8 start and say a few words about the progress that we had this quarter in many fronts of digital transformation, which is so relevant for our ecosystem. Talk about digital sales.
As Alvaro has said already, we continue to deliver an accelerated performance with an increase in traffic and relevance in the app. Start. And still about that, the Ritter app was the most downloaded among the fashion retailers and absolute leader in MAU. Start. Certainly, the initiatives implemented over 2020 for an increase in the available sales channels, which are 10 options today, contributed to accelerate online sales as well as the higher productivity of the stores mainly when they were temporarily closed.
These initiatives are sale by WhatsApp and sale by affiliate and fashion delivery among others, which are gaining relevance and maturity consistently still about the sales channel besides marketplace already established at Canicado. Last week, we started lab arena with 3P products being sold in e commerce arena being an important step in the extension of the assortment available to our slide. And also, it was very relevant for the online sales performance, the use of the stores' inventory that represent 32% of the total sold digitally. Having all the stores adapted for ship from store guaranteed the flexibility of increasing the availability started with the service and while our stores were temporarily closed then give more traction to online besides a better service to our clients. Additionally, 80% of the potential assortment is already available at e commerce and that half of the online requests were products inclusive of the store and the sale would not have happened if it were not for the implementation of the Infinite scale.
In the stores, we continue to make the checkout more flexible with more relevance in the mobile start moving the finalization of sales besides traditional cash. The clients may pay anywhere in the store by means of the employees or the smartphone of any client. And the mobile modalities represent 31% of the sales of the physical stores in the quarter with a ticket 19% higher start. And faster deliveries, more omni clients and this powerful combination is fundamental for a new level of sales online. Start.
We had a growth of 102% in the active base of client omni with a frequency and annual expenditure times higher than the current offline client. And to supplement this formula, we continue with our expansion plan in the physical stores, which have an even more relevant role and is on the start. We have already inaugurated 20 stores, 11 branded, 5 Kamikado, 3 Ucom and 1 Ultra that also increase the number of corners of the brand within the brand new stores to 9, generating more synergies among the businesses and driving our brands. Start. I would like to highlight the inauguration of our 1st guide shop in a pilot mode, which proposes a new concept for the consumer to have a relationship with the brand.
The idea is to offer a totally omnichannel experience, putting together the best in the physical retail with the facilities of digital. This is a very recent format, but the first impressions are very positive. Start. Regarding the unique vision on Slide number 9, we continue to increase our active flight base with 84% of our sales identified. And this allows us to increase our client base for our campaigns and making more organized and optimized communication with a higher engagement of the clients that are reached about content and branding.
We accelerated the initiatives this beginning of the year started with a weekly program of live shops, implementation of mini stores on Instagram and content co created with influencers. Start. Considering this and other actions, the volume of sessions increased by 71% and transactions via social networks went up 103% in the quarter. Regarding the use of data in the product life cycle, we continue to advance in the distribution of items without human intervention. Besides this, 57% of the basic items of Renault be allocated by means of AI.
These items represented 6.7% of the UCOM sales and 2% of Kamikado. Will also advance in the use of this model in the purchasing process and the shopping process for the same items that are allocated by artificial intelligence, such as the pilot for the price markdown engine at Real Easy, also digital account that was in an operational phase with family and friends since March. Now in May, it was made available 2, 70,000 clients. And this digital account already has a fixed solution integrated authorization or participation joined by the Central Bank, which occurred in April. And in terms of the increase in the client base, we are offering the Mercartone start.
In a direct way, we've kind of render clients with the option of digital autonomous upgrade by the app and the site and start about new products, we started the offering of well-being and health insurance. Besides extended warranty and subscription services. We are developing products to offer to Kamikado sellers as well as adjustments in the digital solution for UConn clients. These and other initiatives are already underway and all that in line with the construction of a durable and sustainable ecosystem. Now let's go to Slide number 10 and talk about ESG.
Start. We launched a collection with less impacting product that uses sustainable cotton produced by women in the north of Minas Gerais, and we launched a collection that you call in partnership with youngsters in the community, which is next door to the company and the sales have part of that that goes to the community. And by means of the Instituto Los Usainen, we had more actions to combat COVID-nineteen. We donated EUR 1,200,000 for the construction of a new vaccine plan to reach to the Bhutan. And we made donations for the generation of oxygen in the Amazon and respirators and Rio Grande to the zoo.
Over EUR 8,000,000 that we offered to fight the pandemic regarding governance. In April, we held our first exclusive with Digital Shareholders Meeting with 64.3% of our see capital participating. And as of 2021, the compensation of the management start with the results of the Q1 of 2021, before we start with the target of ESG in what has to do with public commitments for 2021 in regarding climate, social environmental compliance of suppliers and products. And as a result, we are again members of the start. S and P Global Sustainability Yearbook launched in February in the 2021 edition.
And thus, we go toward the Q2 saw future. We know that we might see some oscillation in the short run, but as Alberto said, start. We believe that we have we are already beyond the turning point and we are ready to go ahead looking after now, but mainly investing in the competitiveness of our business by means of the development of pioneer platform of brands, partners and sellers are specialized in fashion and lifestyle. These were my remarks. And now, I would like to open for questions.
Start, you may send your questions by means of the platform and Karna will be receiving the questions and reading them to us. Thank you very much. Start. Thank you, Fabio, Alvaro. I have some questions here.
Start from Citi. But this is a theme that is recurrent in many other questions. So start. I'm going to put all of them together. They have to do with the gross margin inventory, markdowns and the commercial environment.
And start, I would like to ask Fabio to answer about the competitive environment, the level of markdowns started in April May and also talking about inventories. And Joseph from JPMorgan said asked if we have held some inventories winter inventories to use this year. Start and also Guilherme from Safra and Vinitsu from Cerro Invest. Start. Afterwards, I would like to ask Alvaro to say a few words about the exchange see hedges that we have and our expectation about gross margin for the Q2 and for the year as a whole.
So, Fabio? Start. Thank you, Carla. Thank you, everybody, for questions. Start.
As we have been repeating, this moment of pandemic has been bringing a lot of volatility. Saw at many moments, we saw a scenario, especially during the whole year. Started last year, we saw a consistent drop and a bigger challenge. And around August September, things started to improve a little, then October, then we stember, things started to improve a little. Then October, then we had some other restrictions put in place, especially in March 2021.
Start. But this volatility continues. However, the scenario is different now because it's a positive volatility. Restrictions in April May are lower than what we expected. As Alvaro mentioned, we had an excellent Mother's Day.
I believe that since mid April, we have been delivering a superior performance vis a vis our expectations. Started, and we already had a very assertive inventory with very good quality. Started. We were able to exchange our collections on a timely basis at a very good timing. Start.
And as I said before, due to the lower number of restrictions, for instance, today, we have 100% of our stores already open start, and this is resulting into a much higher level of sales than we expected. Start. Because of that, we have a very positive inventory volume, very adequate, I would say, for this moment. And this leads us to believe that well, we still have half of the quarter to go, but it leads us to believe that once again, we will have a very good change of collection. Start.
And we do not expect to hold on to any inventory this year, and we expect start to have a very good and adequate consumption of our inventories and projecting less markdowns than in the past. Start. In a way, and this is still an estimate, okay? So we are still in half of the quarter, so we have have a few days to go. But it leads us to believe that in spite saw pressure coming from the exchange rate and international freight.
As Alvaro said, in spite of all that. With all the positive sales and the positive scenario and the start our inventories, the probability of having not having to hold on to inventories and with lower markdowns, we might see margins more similar to the best moments, let's say, getting close to see the levels of 2019 more healthy margins in spite of a relative pressure on the part of the exchange. So far, the expectation is positive. It's too early for us to say anything, but what we can say is that the scenario is better than we expected. Start.
Well, let me now take the answer with 2 points that were the level of hedge. Start. Joao and the others who are interested in this enter, it's important to mention that we have a second quarter and the third quarter totally hedged in terms of our imports. So this gives us this makes us very comfortable regarding the next quarters. And regarding margin, that was another question.
Said the gross margin expected for the 2nd and the 3rd quarters. I believe we could give you a retrospective here. The Q1, as was said by Fabio. Still with some pressure from the exchange rate and inflation as well, squeezing the margin a little bit in the Q3. Start, but we expect to see a gradual improvement, an ongoing improvement with lower markdowns.
Start, as Fabio said, the inventory has a very good composition, good product with a good acceptance, see margin becoming more robust gradually and having less markdowns expected because of the good inventory quality. And I think what is important is to say that gradually, we might see some improvement in our margins. We will still have some investments in OpEx because of the different developments that we are carrying out and that we have already mentioned before and that are already underway. Start. But due to the better sales, the better quality in our inventories and potential lower need for markdowns and all the developments starting to bear fruit.
In terms of delivery of the initiatives, we will see gradually saw margin going up as of mainly as of 2022, getting to levels close to the see pandemic levels. Thank you. Start. There is another question from Jerome from Citi about the supply chain. And it has start to do with what we have just said.
If the chain is back to normal, do you believe there will be an additional cost in the future because of the pandemic effect still. So Fabio, could you please answer? Start. Thank you very much. Thank you, Joao.
In fact, I believe that now we start to reap some fruit started from the partnership of over 30 years or 35, 20, 15 partnerships with some of our partners in the supply chain. Started. And mainly, we showed them and we worked with them hand in hand during the pandemic. So the relationship that we have always had in our history became even stronger during the pandemic. It became even stronger and the team people and the style people are working very aligned with our partners, with our chain, repositioning productions and working beforehand, so that production may remain active and see the windows for demand for items are performing better than expected.
And see what is being most demanded. So we have not felt see any pressure or any of the pressures that we see in other segments or also in other players, very much because of the work done by the team historically and mainly over this last year with our suppliers. Show this pressure is not a problem or does not tend to be a problem as far as we are concerned. Are changing focus. Elena Villardes from Itau BBA asks about start our lifestyle platform and more specifically about marketplace, what is our competitive advantage.
Start. And the work of curatorship and product and we are already a benchmark in the market, could it be rolled switch out to the whole platform and drive our ecosystem. Fabio? Start. Thank you very much.
In Kamikado and also the first test with Brenna, we see that consumers, they look for specialized platforms. Many consumers look for specialized platforms. We see some of our sellers. These are initial tests, start, but some of them have a much superior behavior or performance in our platform than in other platforms. And also, the storms and also the traffic that is brought by some sellers add to the sale of our own.
So we bring our client base that maybe would not be there because they would be looking for products in other categories. So this increases our client base. It increases the conversion of the 1P product besides bringing sale for us and for the seller see in that category. So the experience has been very positive at Kamikado. It's already growing and render.
This is very recent. We only have a handful of days, but very encouraging, such as the case in Kamikado. It's a very big competitive difference for clients and for sellers themselves. Start. Thank you.
Danielle Iger from XP. Start. Also regarding the ecosystem and a little bit on the supply side, she has been hearing start. About the offering that was made and bringing a higher liquidity. Start.
I know that you have already talked about the long run, 15, 18 months for the use of the proceeds of the offering. Start. But what about our view? Do you have any diligence in this regard in what category, priorities and fronts? Fabio, maybe you could answer.
Start. Thank you, Carla. Thank you, Daniela. As we said at the offering start. We're talking about 12 to 18 months.
So start. There are many initiatives and many of them are organic, the development of our project and that really drive situation going through some inorganic ones. And about the inorganic ones, we do not have any diligence started and start. We are talking about a whole range of initiatives that should be occurring during this period. But certainly, we are already working to accelerate saw all the initiatives, be it organic or through partnerships or totally inorganic.
As of last week, we the plans are already being are still being executed. Start. Still along the same lines of the ecosystem, Joseph from JP, he asks in the brand strategy and a more digital approach. What about adding new brands to the platform, Fabio? Start.
Thank you, Carla and Josef. We still have a lot of room start to grow with our own brands. So I would say that the biggest opportunity for growth that we have start. And all the investments that we are making are in our current businesses and increasing the synergy among our current start brand real easy with ASHA, Kamikaze and Reiner. But certainly, when you talk about fashion, start.
It is going to require at some point in time the presence of 1 or 2 additional brands start. That could happen, yes, we could have another brand or a few other brands in order to further consolidate the market that we have in fashion and lifestyle. Now change a shift to your call. Felipe Casimiro from HSBC asks 2 questions. Start, I would like to understand the potential of the brand online.
Do you see a potential of online penetration in Yukon or higher than Rainer? Did have a specific project for e commerce and the Yukon app in order to improve the shopping experience of the client and social commerce, for instance, for that brand specifically. Fabio? Thank you very much. Start.
I would say that Ducommun has a very big growth potential. It's a brand that is less mature than Reiner. So in omni as a whole online and not and physical stores as well, such as Hainer. But the penetration that we see start. In the digitalization of retail, the youngsters adhered start more quickly.
But this is no longer true because all the age brackets participate in digital and it's a matter of convenience and experience and the profile. Because of the public profile, you started some initiatives, first at Newcom, but many started at Rainer. And all the initiatives that we start, start. We look at the whole ecosystem. We look at all the companies in the group and we test more than 1.
Start. And when we decide to roll out the initiatives, then it has to do with all of them, as we said about the use of algorithms and artificial intelligence. It started with Reina. It's being rolled out for Yukon and Kamikado as well. Start.
So the trend of the increase in digitization of Yukon is very real because there are many initiatives now start to grow a new comp and also bringing a very big synergy with HENNET. Saw this is a very strong trend regarding increasingly high penetration such as Kamikado. Start. And maybe because of the maturity of our initiatives, we should see a bigger acceleration in the next few days. Start, some questions related to expenses and behavior for the Q2.
Alvaro, start. Could you answer this question, please? And I would like to enter into some details because this we have a combination of questions here from Daniel Lager from XP, Guilherme Ercir from Safra and Rodrigo Diaz from VCI Asset Management. Rodrigo is bringing take question about the increase in freight expenses. And could you please talk about the future in freight expenses and the other themes in expenses have to do start with how much we will have in additional expenses given all the projects underway for the development of our ecosystem and also how much dilution could we have with increasing number of stores.
So you can see that all of the questions are related to expenses. So to expenses. So, Alvaro? Start. Thank you very much, Daniela and Rodrigo, for the questions start.
And growth in the freight line comes for two reasons: the omni freight, which is associated to our e commerce, which was one of the sales drivers for the Q1, such as it also happened over 2020. So some growth is associated to e commerce and more specifically in the moment in which the stores were closed. And so there was no store pickup. So this generated an additional freight cost. Start.
So we have the omni freight and the ship from store, which is rather associated to our initiative of decreasing the time, the lead time when the client buy the product online and being able to use the inventory that is there at the stores. And this improves client satisfaction because of the shorter lead time, but it generates an additional cost because of the ship from store method. Start? And regarding the second question, I jotted it down here. How much could we see in expenses associated to the ecosystem.
Start. How many technological developments for the ecosystem could impact our start with OpEx. Yes, we do expect this to generate some additional impact. We have new structures that are being built. We had many structures that have already been implemented over 2020 and that are maturing now over 2021 totally and this generates more expenses.
Start. Our expectation is that might this might generate growth start in the expense line from 3% to 5% of the total expenses that we currently have. Start. Thank you. Joseph from JPMorgan asked a question about the new format of deck shop.
Start. How do you increase the potential for Granite? And could this model be used for EUCOM and Kamikado, Fabio? Start. Thank you, Carla, Joseph.
In fact, we started the test start now. So it's impossible to make any estimates regarding figures yet. Start. But I would say that without this format, while we have 520 stores start in Rainier. And this format should increase this number because started.
It allows us to reach smaller cities less with a lower demographic than we have today, started driving the online sales and the omni model as a whole. And yes, this format is possible for all our business models. Start. But due to the initial stage, it's impossible to give you any predictability in how much this will impact the expansion of all the businesses. But we do believe in this model.
And I believe that very soon, we will be able to do the calculation and know how much this increases our potential for expansion in all the businesses. Start from Bank of America. Start with accessories and beauty. What is the opportunity as we become more and more digital? Start.
What about the spaces in the stores and the searches about from the start. Client, how do we deal with these two interfaces? Start. Fabio? Thank you, Carla.
Thank you, Bob. Start. This is an extremely important category as far as we are concerned. We could have a much bigger penetration. Start.
It's already leader in the physical retail, fashion and beauty, but you're asking specifically about beauty. And on online, we already have a considerable share of mine, much higher than our competitors. Start. And we could further extend this and we could make revenues more concrete, start. Our assortment in beauty is small yet started because we had an assortment that was very similar between online physical.
And in the last few years, we have been increasing our assortment online, start, but it could be further extended very extensively in the assortment of the products that we already have and in other categories that are related to beauty and in which we do not have anything yet. And this has to do with the longer tail. It has to do with our 1P inventories and also this has to do with partners that might offer products that we do not have in our 1P. So offering this through 3P and beauty start is one of the categories such as home and interior design that have a whole range of products started services both in 1P and then 3P. And we see a huge potential in these categories such as in fashion, accessories.
Start. But beauty, the assortment is still very small visavis the others. Saw the growth potential is even bigger. Start. Irma from Goldman Sachs.
Started having to do with marketplace and logistics services for sellers. When do you believe you will be offering these services see the sellers? And how much is this related to the DC? Will it only be when the DC is up and ready to go that this will be offered to your sellers. Thank you, Carla and Irma.
Start. In fact, there was an initial plan regarding the need to have the see ready by 2022. But we are working with other start initiatives in order to bring forward this roadmap. In principle, it would be for the second half of twenty twenty two. Start.
But I believe that with the current situation, we will make our best endeavors to bring forward these initiatives to our sellers and bringing also new revenue for our group. Start. Alvaro, could you please answer this question about provisions in Realizzi? Jump from Citi. With the operation of stores and more origination of folios, do you see an increase in provisions from now on?
Alvaro? Start. Thank you, Jean, for your question. Start. Today, we could consider that we are very well provisioned start in relation to Realizzi.
Ever since 2020, we already had this situation of adequate provisioning and we got into 2021 also with a very adequate coverage level. And now over the second or as of the second quarter and over the second half, we believe that even with the growth in our portfolio, we will have an adequate level of coverage started with the quality of portfolio much better than we had in 2020. And start with the gradual and expected increase in the Realize portfolio because of the improvement in sales, we believe that the coverage level will be very adequate at least over the next few quarters of 2021. Start. Thank you, Alvaro.
And now along the same lines, Alice from intrinsic. Start the short term results of Realizzi start and target in the medium term for the business and talking about the strategy and the launch of new product and integration of apps in the see ecosystem, the digital account? And with the higher penetration of e commerce and sales, could we expect a higher participation of YALI in our EBITDA. So start the results of Financial Products visavis the total EBITDA for the year and on. Start.
Thank you very much for your question. It's only natural for us to start looking at Realizzi start having a bigger share of the group. Realize is one of our arms, it's one of our businesses. And there is a very big opportunity to develop it in the ecosystem. As Fabio said during his opening remarks.
Start. And now we started with the whole diversification of products and increasing the offerings of services and insurance and start a deeper implementation of the digital account with PIKS associated with it. Start. With all that, it should increase its share. And we will have as our objective also start to use Realizzi as a driver of interest start on the part of our sellers, our partners in our market basis, lab hand and as it matures.
So I would say that in terms of expectations start. And in the Realiz ecosystem, we should be seeing an increase in the weight of Realizzi and the EBITDA in the total EBITDA of the group. Start. Of course, during 2021, this will be gradual. We are rebuilding the portfolio and sales since April are becoming more vigorous.
And automatically, this will also impact start. It will also impact the growth in the number of opportunities and the number of portfolios via Realizzi. Probably over time with we will see an increase in the participation of Financial Services in the overall EBITDA in the shortened the medium runs. And you also asked if it would be participating more and more start in the process of financing in e commerce. Yes, this is one of the objectives start for the this business line.
Start for Rainer, Kamikado, EUCOM. So this is another path for start revenues for the business and making its presence in the company more and more important. Start. Andrew from Morgan Stanley. Start.
He asked quite a few questions, but some of them have already been answered about inventories and raw materials and see promotions. And one of them I would like to ask Fabio to answer. In our inventory planning for the year, how do we think about start product mix in this scenario. Do we expect to have a return to more model products with a bigger circulation? Start or will our focus continue to be on more basic products?
Andrew, thank you for the question. Start. And I think this is a very important question. Of course, in a normal management, as I said before, if we had a more start. Let's say, if the pandemic was not so bad, but right now, with the current situation, well, we expect start to see.
We do not expect to hold on to anything and also start. We have a good consumption saw inventories and at an adequate speed with no markdowns. Maybe one mark down maybe, and this is very positive. Regarding trends, consumer trends, start. It had more to do with comfort, I would say.
Restrictions were in place. And what we see now with less restrictions, we see consumption of kids products and with schools being reopened, for instance. So we see a change in the consumer behavior buy new items, items that were not required when all the restrictions were in place and now with softer restrictions, not only for children, but also women's fashion and men's fashion with people going out of their homes a little bit or gradually and some going back to their offices. Comfort started, continue to be important, but we see a higher demand for other items that were not demanded during the peak of the pandemic. Start.
We see a very important movement in the last few weeks and Mother's Day, for instance, it comes from the mother's event. It comes from the cold weather started because we already had this change, weather is cooler now and the reduction in the number of restrictions. Start. And this brings more traffic to the physical stores and also it continues online start with evidence of our omni proposal in spite of the growth in physical stores and also with more categories because people go out now a little bit more and they consume more products in other categories as well. Start.
So comfort, we believe, will continue, but items related to work, workplace, school, start. I have one question and another one, and we are going towards the end. And I think we have been able to enter all your doubts. Felipe Casimiro from HSBC. Start.
Are you opening new stores in 2021? We have been talking about 2025. Fabio? Start. Thank you very much, Carla Rodrigo.
2025, talking about Renner. So if you talk about the Renner brand, it's very difficult to accelerate more than that because we are talking about bigger stores and they are more time consuming projects. But we should be within this range for the Rimmel brand. Start, but 5% to 10% Newcom, 5% to 10% Kamikado, for instance. Start.
So in principle, for 2021, the range should be kept like that. But 2022, 2023, 2024 and 20 25, this should be gradually increasing from 25 to 30 for rand and maybe a little bit more than that. And the expectation that we have is to maintain this range for 2021 and accelerating this as of 2022. Start. Thank you, Fabio.
Just one correction. I'm going to ask 2 more questions because we do not want to exceed the time. Vinicius from SauerInvest with the follow on and having all these proceeds and our capital structure being used in up to 18 months. Start, Alvaro, could you please talk about the capital structure and also the cost of capital from now on start when you use the proceeds after you use the proceeds. Very well.
Thank you very much. Start. We expect to use this capital, as Kavyo said. Let's say between the next 12 to 18 months, we have a very low leverage. Start.
As you can see, with all the figures of last year and also the figures of the Q1 start. And as a consequence of this follow on and the inflow of these funds and over the utilization of the same, we should be maintaining the slow leverage start and that recently went through some other funding operations already at low cost, the market cost. But compared to the cost that we had in the past, the cost was much more adequate to the current economic situation or the current economic reality. So in the next few months, as this capital is used start fully. Then we will revisit another future move start with the results regarding the leverage of the company.
But for the time being, we have a positive expectation regarding the next few months. Start. Thank you, Alvaro. Now the last question, Fabio. Start.
What changes in the level of service for the clients with the new DC in Sao Paulo? What are the main benefits coming from this new DC. Thank you, Carla. This is an important operation for us. Start.
We already have a very advanced automation in the Rio de Janeiro and Cerda Catarina DCs, but automation will be much more advanced in the Sao Paulo DC. The operation had already been thought and designed to supply the stores and last mile as well. And the previous DCs, started. They do they performed the 2 functions, but they were not originally designed for the 2 functions. Start.
This DC has a production capacity that is much better. It is faster, more assertive start from the viewpoint of automation and design to supply the stores and last mile as well. Start. So it brings a much bigger area. In this DC, we will have a bigger capacity than we have in our whole structure today.
And it will also allow us to have all the companies in the group start performing services to the sellers in one place with which reduces the freight cost, which is a major cost and bringing more synergy among go the businesses and services to our sellers and gaining efficiency and as a consequence, more frequency. Start and the shorter lead time for physical stores and for clients directly at a lower cost. And I would like to remind you that being in the state of Sao Paulo, we are very close to most of consumers. Start. So we impact in a short time most of our consumers, both in physical stores and online.
Start. With that, we finish our Q and A session, and the Investor Relations team will remain available to you should you have any additional questions. And I would like to give the floor back to Fabio and Alvaro forward the closing remarks. Start, I would like to thank you all for participating. And we are available here at all times.
Should you need any further clarifications, our occasions our Investor Relations team will continue to be available to you as usual. And we see that the biggest challenges were in 2020 and the beginning of 2021. But the scenario seemed to be rather different from now on. Not only we are very confident in our future plans, but also we have been seeing saw a very encouraging short term, very different from the scenario that we saw until then and ending in the Q1 of this year. So I would like to thank you all very much and we hope to see you again in our next events.
Start, I would like to take the opportunity to reinforce my fabulous remarks. Start. We are optimistic regarding the next few months. Given all the investments and all the programming that we have regarding the possibilities of development for saw ecosystem and based on the results that we have obtained recently. And we are optimistic, but prudent in the light of the pandemic that continues to evolve, but people becoming more and more vaccinated.
Start. So I would like to take the opportunity to thank you all very much for your presence and for the opportunity to talk about our company.