Good afternoon, and thank you for waiting. Welcome to Magazania Luisa's Conference Call to discuss the Results of the Fourth Quarter of twenty fourteen. We would like to inform you that this event is being recorded. The replay of this event will be available soon after it ends for a week. We would like to mention that forward looking statements that might be made during this call relating to the business perspectives of Magazin Nui's operating financial projections and targets, our beliefs and assumptions on the part of the company's management as well as information currently available.
Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events, and therefore, 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 future results of Magazeni Luisa and may conduct to results that differ materially from those expressed in such forward looking statements. For the opening remarks, we would like to invite Mr. Marcelo Silva, CEO, to take the floor.
Mr. Marcelo Silva? Good afternoon, everyone. Thank you for participating in our call during which we will be referring to the results of the fourth quarter of twenty fourteen as well as the full year of 2014. I would like to start with the highlights, starting with the sales and outstanding growth of net revenue of 20.9%, And we would like to mention same store sales increasing by 17.8% and also e commerce, 33.7% growth and 15.1% in stores, brick and mortar stores, much higher than the average for the market.
And our e commerce with this BRL33.7 increase, it goes from BRL14.6 in share in our sales in 2013 to BRL 16.4 in 2014. I would like to mention also that we had a very good operating leverage. We were able to dilute our expenses by BRL 1,300,000,000.0 in 2014, coming from this increase in sales of 20.9% as well as the projects and the maturation of projects that increased productivity for the company in stores and also the management as a whole. As a consequence, our adjusted EBITDA increased by 47% year on year, reaching BRL605 million now in 2014. And with that, we were able to expand our EBITDA margin by 1.1 bps, now it is 6.2%, growing consistently in the last few years.
A big highlight also is Luisa Cregi. Luizacrechi more than doubled its equity income, 19,400,000 coming as equity income, equivalent to our 50% participation and also Itau 50%. The ROE of Lizzakre was 36.1%, therefore an outstanding performance. Considering the sales and dilution of expenses and performance of Liza Credo altogether, we were able to increase our adjusted net income by 81%. We are comparing this on a year on year basis and net of the partial sale that we did in 2013.
So we are comparing R128 million of adjusted net income from the operation of the company vis a vis BRL70 million in 2013. So our net margin went up as well, and this means return on equity of 17.9%. About 2014, 12% growth in our net revenue, same store is growing 9.4%, e commerce 20%, and this also represents a higher than the market average growth. And as we grew 20% in the top year, and we kept our participation of 16.3% of total sales. Once again, we were able to dilute our expenses because the growth in revenues was this and EBITDA growing by 33 year on year and margin growing by 1%, growing to 6.3%.
Also, Luisa Credit was not different from the year as a whole, so 28,000,000 in equity income and ROE 40%. Net income, therefore, increased to R39 million dollars in Q4. Our net margin was 1.4% and ROE was 21%. I would like to add that we were rather successful in our marketing last year. We participated very strongly in the World Cup and also in Rio de Janeiro Global.
We had an excellent performance as well in our promotions. We were able to dilute and hold back our costs. And we are celebrating, and I would like to mention that this weekend, we will have 1,300 leaders of the company celebrating our results because this is the best result of the last few years of Magazine Luisa in all its drivers, that is to say, sales and emergent operation and Luisa Credi and all the pillars that sustain our results. Now I would like to give the floor to Roberto Bellissimo, who will be giving you details about the performance that I have just referred to. He is our CFO.
Good afternoon, everyone. On Page four, we show the evolution of the number of stores. In the last quarter, we opened 20 stores, seven fifty six as a whole. And for the whole year, we opened 24 new stores, most of them in the Northeast, 14 in the Northeast where we already have over 170 stores. In the year as a whole, we invested R152 million dollars in new stores, refurbishing, remodeling, logistics, and we still have about 40% of our stores still in the maturation curve and with a more accelerated growth as well.
On Page five, we show the evolution. First, gross revenue for the quarter. Last year, billion dollars in gross revenue as a whole. In Q4, R3.2 growing by 10%. And I would also love to mention that the growth in the last quarter was based on the highest ever comparison base that we had in the last few years.
So it's difficult to grow 7.5% over 1620% over almost 40% in e commerce by the end of twenty thirteen. So you can see that there's a very significant and consistent growth coming from our plan. And for the year, e commerce grew almost 34%, much higher than the market average. On the next page, on Page six, we show the evolution of the gross profit. And I would like to mention that gross profit grew by 19% more than the gross revenues that we referred to.
If we compare gross profit over gross revenue, you can see an evolution of our margin and net revenue, a slight decrease, but it's important to see this growth in the gross profit of 19%. That is rather big. And in expenses, we have already said that we have diluted expenses in a consistent fashion during all these quarters and in Q4, the situation was the same mainly in administrative expenses. And equity income was a big highlight in our results as well, reaching BRL100 million in the year, 1% of our net revenue and representing more or less 15% of our total EBITDA. On the next page, on Page seven, we show you the evolution of our EBITDA per quarter in Q4, six point three a growth of 47% because of the growth in sales and dilution of expenses and also the performance of Luisa Crede that was very marked.
On the next page, Page eight, we give you some results of our financial we give you details of our financial results. In the quarter, our financial expenses went up from 2.7% to 3.7%, mainly due to receivables discount and the other financial expenses. Net of the receivables were 1.2% of the net revenue and the same for the year as a whole. Of the total financial expenses of R330 million $220,000,000 were in credit card and 1.8% other net financial expenses with the increase in the CDI in the year, which was the main factor. If you look at the working capital since June, we have been improving our working capital situation.
And for the year as a whole, we had a variation in working capital. And we are working this year in order to revert the situation. But in spite of that, we have a relatively low need for working capital, the balance between our suppliers, and we intend to further increase this relationship and also a better relationship with our suppliers and recovering taxes that we should achieve over the year. Because of all that, our net debt has been dropping consistently from June to December, our leverage as well. Maintaining 1.4x EBITDA and also associated to the situation of working capital that I have just mentioned.
In terms of net income, we show you here the variation, the quarterly variation. We have already mentioned the return, 21% for the year as a whole ROE. On the next page, Page 10, we show you the growth of Luizacre de Billings, also growing very much in line with Magadena Luiz, mainly in the card side of the operation. Provision for bad debt has decreased consistently as well And personal loans have been decreasing. And the cards are more important for us.
And they have been increasing both inside and outside Magazen de Luizo due to the greater activation of our card base. Even with this more conservative credit policy, our credit portfolio has been improving in quality as we expected, a reduction in the as used as almost one percentage point of the portfolio. And at the same time, we increased our coverage ratio and we reduced our provisions in our results. And therefore, this allowed Grisa Xejo also to get an increase in its earnings due to these lower provisions. Now I would like to give the floor back to Asser.
I would like to conclude our presentation before the questions. Say a few words about the 2015 outlook, I would like to tell everybody that we should continue to grow beyond the market average. Consolidation of the existing stores plus the new stores is already underway. We have been investing more in the Northeast. We will be maintaining our commercial competitiveness.
And just to give you a brief history, in 2008 with the international crisis and also the replies of that in 02/2009, we started to grow more in the February. You remember that we took off. Then we had eleven, twelve, 13 with lower end in 2014, close to zero. And in 2014, we invested in the World Cup in campaigns. Then in 2015, we are participating in the soccer championships at the global network with a strong media presence and very intensive campaigns as well.
And by doing this, we will be keeping our competitiveness that we have been keeping rationalization and cost and expense dilution better and better every year, getting to the stores and to the DCs as well. We have been focusing on the profitability of our operations. And we trust that this year, in spite of the more difficult scenario that we are living, we will continue to be focused on the profitability of our operations. Now we would like to place ourselves at your disposal. We have all the executives of the company besides myself and Beth.
We have Fabrizio, Federico, Marcelo Ferreira, everybody is here at your disposal to answer any questions that you might have. We would like to start our Q and A session for investors and analysts only. Questions coming from the Internet will be answered afterwards by e mail, and we will be available to answer any questions that you might have. Mr. Fabio Montero from BTG Pactual would like to ask a question.
Good morning, everyone. More focused on Luisa Trejo. This last year, the rate is lower with a drop of 11% and card going up, also personal loans going down. I would like to know if you see the same trend for 2015 and if you expect a reduction in the overall level of losses all on your portfolio credit portfolio. This is Marcelo Ferreira from Luisa Cregi.
In fact, what you see is a result of our strategy in terms of a more conservative credit policy. And when you look at the card and the direct consumer credit, in spite of the direct consumer credit giving higher profitability in the short run, there is more risk involved. And because of that, we became more rigorous regarding personal loans. This is the reason why you see a reduction in our personal loan portfolio. And as far as the card is concerned, we are very rigorous as well.
However, our clients are using more and more their cards as we assign credit. So 10 percentage points increase in our activation. So this is why you see this increase in cards. In personal loans, the personal loans are now linked to the cards because there is one that is linked to the card and the one that you can you link to the card, you it is under the portfolio. It grows very quickly.
This is given to clients who have a good behavior and then you offer a personal credit facility and this grows a lot in the organization. However, the separate card, we consistently decreased this kind of loan. This is part of our strategy. So you will continue to see this in the next few years. Regarding the loan loss provision and the risk, we have risks under control.
And following the same thing that we have already shown you during the last few years. A question about sales and competition. Marcelo, at the beginning of his presentation, he talked about growing this year and continuing to open new stores. And this will be a difficult year. And I would like to on the macro side, and I would like to know if you see the opportunity of acquiring any competitors that might go underwater or if you see a big impact on your suppliers of this difficult situation that exists on the macro level?
Thank you, Fabio. As I said a while ago, we will continue to be very competitive commercially speaking, And we will continue to invest very strongly in media, in our marketing actions, in our promotional actions. And we wish to continue, and this has been going on for many years already. It was not only 2014. We want and we will continue to make our best endeavors to grow more than the average of the market.
We are present in the Northeast that is growing very fast, more than the South and the Southeast because they are more mature markets for us than the Northeast. We have e commerce growing much more as well. And this is a natural process that is going on with the online operations of our company and certainly the market as a whole. Regarding M and A, acquisitions, no, we have no plans to make any acquisitions or mergers. That could happen.
This is just a matter of identifying opportunities, but this is not our focus. We are focusing on organic growth. But if there are interesting situations, more in the Northeast, I would say, and we are remodeling our stores. We are updating stores and investing quite a lot in logistics, in IT. And our company has been in existence for fifty eight years.
So we have gone through all the good times and the bad times and life goes on. Nobody knows exactly what will happen in 2015. It's a little bit too early. And mainly, we will only know what happened when we look back at the end of the year. We will continue our daily struggle with a very motivated team.
We have a very good communication channel with our whole team, with our 24,000 employees. And we have a lot of confidence in our future in the medium and the long run and in the short run as well. I'm not sure I have answered your question, but this is our driver for 2015 and on. I would like to mention that we are focusing a lot on our online operations, our platform. And afterwards, of course, we can talk in more detail about that.
But having more digital stores and IT in the stores and our DCs. So this is our program from now on. This is the path that we intend to follow. Thank you, Marcelo. Thiago Marcuz from Itau.
Good afternoon. I would like to ask a question about product mix. What kind of product will lead your growth? We have been seeing smartphones growing a lot in the last couple of years, and I would like to understand if this trend will continue from now on? And another question.
You had a very strong performance in 2014, but it was very much front loaded, that is to say, very focused on the first half of the year. And the slowdown in the second half, is there a category that had a worse performance or better performance? Thank you. This is Habrizio, Commercial Officer. Last year, we had a first half, which was not typical because of the World Cup and also a very good growth in the image area that is to say TV sets, etcetera.
As you mentioned yourself, the smartphone line grew a lot in the last couple of years, and we believe it will continue to grow at very high levels for 2015. We have a very good market share that we gained last year and this year we will be working to grow more than the market as well in the sale of smartphones and other categories that drove our growth. Well, the more representative ones are the white line and furniture that were slightly affected last year because of the sale of image products such as TV. And so we should see a growth in these two lines this year, not the ideal year, but it should be going up, that is to say white line and furniture. And the TV market this year is a challenge, and we intend to keep the same size that we had last year.
Last quarter, it was the weakest in this line. So we intend to grow in smart phones and also we will see growth in white line and furniture and the maintenance of the image market as well as TVs. Another question regarding your focus more on white line than on TVs because of the World Cup in 2014. Do you think this would further improve your profitability because TVs maybe are not the most profitable line. Well, white line is better in the sense.
It could bring a better profitability over the year and more stable over the year. Thank you very much. Alicia Damson from Credit Suisse. Good afternoon, everybody. Regarding the potential impact of the change in the tax rate, regarding the impact on your payroll from 1% to 2.5%, What could be the potential impact of that?
And how do you see the situation? Good afternoon, Alessandra. This is a very recent measure and we're still assessing it. But what we can tell you so far is that when there was that relief of payroll taxes in 2013, We estimated that the impact would be about 30 basis points in 2013. Then the company grew more and more revenues in 2014.
And also this is what we expect this year. So the higher the revenues vis a vis the growth in the payroll, and we have been trying to decrease our payroll, the more the benefit is important. It would be reasonable to estimate that the effect of last year and this year would no longer be 30 basis points. It was lower than that in 2014. And this year, it should be even lower than 2014, something between twenty and thirty.
And if we consider that it will be enforced in the second half, it could be between ten and fifteen basis points. This is just a preliminary analysis. And it would make no sense for us to go from one to 2.5. So no way. And what we should do would be to go back to the previous situation, which is slightly higher than 1% of our overall revenue.
This is what we can share with you so far about this measure. Thank you. Ms. Irma Scott from Goldman Sachs. I have a question about CapEx.
You're saying that you intend to open 50 stores in 2015. And you have already mentioned the CapEx associated to this. And it's very similar to the CapEx this year, and you only opened 24 stores. So I believe you will have more allocation of cost maybe of expenditures because of expenditures with remodelings and IT, maybe they will be lower this year. But could you talk about the size of these new stores?
And of course, the CapEx expenditure will vary a lot depending on whether you have a brick and mortar store or if it's a virtual store and how much are you growing in area, in selling area. And you had a slight worsening of your working capital. What is your expectation in this quarter year on year? And your expectation, was this just something a one off situation? Or is there something you expect for 2015 for working capital like maybe new opportunities?
We expect to see an improvement in our working capital in 2015. We are not going to give you any figures or specific guidance, but we are working to improve our working capital. Our net debt EBITDA continues to be at a very comfortable level, BRL1.4 billion, as you saw. Regarding CapEx, we are maintaining basically the same volume as last year BRL150 million, but a little bit more focused on new stores. Forty, fifty new stores, we already have 10 that came from Punto Frillo from and that we are starting to remodel already and less remodeling of already existing Magazeni Luisa stores.
And IT logistics also having big investments. So this level of 115,000,000 is what we have been doing in the last couple of years, and this is quite comfortable for us. We feel comfortable with this level of CapEx. As there are no more questions, I would like to give the floor back to Ms. Vasalo Silva for his closing remarks.
Thank you very much, everybody, for attending our conference call. I would like to reiterate that we have been in existence for fifty eight years. And we have survived all the good times and the bad times. So we are very much used to that. And we face the situation with a lot of strength, with and we trust that when difficult to come away, we just have to face them and overcome them and wait for better moments in the economy.
So we do not know exactly what will happen in terms of the economy for 2015, But we are carrying out our work as usual, working with a lot of austerity and considering very carefully all our investments, our expenses and focusing on sales in order to keep our market share. And as you see, we have been growing substantially in the last two years. So this is our position. And this weekend, we will be celebrating the best year ever for the company in all aspects. Quantitatively and qualitatively, this was the best year ever.
Satisfaction on the part of our clients, our employees and improving consistently our results such as we have been showing you every single quarter, achieving better results than the previous one. So thank you very much and see you next time. Thank you. Thank you. Mercadena Luisa's fourth quarter of twenty fourteen earnings conference call is closed.
You may disconnect your lines and have a very good