Good morning and thank you for waiting. Welcome to Magazir Duizen's Conference Call to discuss the results related to the Second Quarter of twenty thirteen. I would like to inform you that this event is being recorded and all participants will be in listen only mode during the company's presentation. After the presentation, we will initiate a Q and A session when further instructions will be provided. Please talk to the operator by pressing 0.
A replay of this event will be available after it is completed for a period of one week. We would also like to stress that any statement made during this call related to the business outlook of magazine Luisa, projections, financial and operating goals are based on beliefs and assumptions from the management of the company as well as information currently available in the market. Future considerations are no guarantee of performance because they involve risks, uncertainties and assumptions and therefore, depend on circumstances that may or may not occur. Investors understand that general economic conditions, conditions of the industry and other operating factors may affect the future performance of Lagas de Nuevoiza and may therefore lead to results that differ completely from those expressed in such future considerations. To start this conference call, I would like to give the floor to Mr.
Marcelo Duva, the CEO of the company, for the presentation. Mr. Marcelo, you may proceed. Good morning, and I would like to thank you all for participating in this conference call. We will discuss the results for the second quarter of twenty thirteen.
We are just anticipating ourselves because this is from this comes from the consolidation of our stores that we initiated last year. So we will start our revenue. Total revenue increased by BRL11.2 billion when compared to the same period of the year before. We reached BRL2.2 billion. I would like to highlight growth of same store sales of 9.3% when compared to the same period of the year before.
I would also like to say that this comparison base is very strong because last year same store sales we had already managed to increase for conventional stores 9% and e commerce 45%. In addition, in this last quarter, more particularly in June, our economic environment was more challenging. The economy is slowing down gradually. And in addition to that, we had some demonstrations on the street. There were a lot of Brazilian soccer games on Saturdays.
And all of these factors affected our sales in June. But nonetheless, we do believe that we had a very satisfactory performance in the second quarter of twenty thirteen. And at the same time, we maintained the margin. And in fact, we were able to increase by 0.2 percentage points in consolidated gross sales, especially in the areas where we've been present for longer. And we were also able to increase our gross margin in the Northeast stores.
Due to the integration today, we have controls, we have ways to monitor and follow-up, and we were able to introduce the same procedures and the same comparison basis that we have with our stores in the South and Southeast. So the Northeast gross margin has been increasing gradually, and I will elaborate more further on. But I would like to make a special highlight, which is the profitability of Rizacred. Rizacred improved its gross margin. So delinquency levels are absolutely under control, thanks to our policy, which is very conservative and it was inherited from Itau Uribanco.
And also, we promoted a very important effort to reduce operating expenses. And Luzafede's EBITDA went from 3.1% in the second quarter of last year to 10.2 in the second quarter of twenty thirteen. And as a consequence, net margin went from 1.2% to 5.6%. This is an important highlight. We had already talked about several initiatives that were undertaken with Itau to improve Luisa Credit's profitability.
And all of that paid off. And in the second quarter, we are happy to say that Luisa Credit's profitability has increased. There was an exceptional fact that it was already in the pipeline because we sold our stakeholding in our distribution center in Lovada at Rim De Reintes Highway. Mangas de Nuyuliza had 76.7% of stake and remaining belongs to the holding of the company. With that sale, we were able to include 205,500,000 in cash, and that gave us $2.00 $5,000,000 in net operating gain.
And the purpose of that sale was to be aligned with what we had thought about before, which is to capitalize the main business of the company and in turn to increase returns to our shareholders, which is the main purpose of the company. And all of these actions like growth of revenue, increases in gross margin and the profitability of Lulisa Credit and additional the additional sale, in turn, our consolidated EBITDA reached BRL160.1 million, Reducing our extraordinary operating gain, our adjusted EBITDA is €94,800,000 which represents 5.1% over the net margin. And therefore, this is way above the first quarter of twenty thirteen. I think you may recall that we said before that our purpose is to present positive results throughout the period in a consistent phase. In the first quarter, we're 3.6% of EBITDA, and now that number has jumped to 5.1% in terms of adjusted EBITDA.
We were also able to reduce our SG and A sales by 0.7 percentage points even though we did not have such a significant contribution from e commerce and also increasing effort in our marketing portfolio because of all of the events that took place in June. So we will also talk about sales performance after June or after the second half of this year. Our consolidated net income was BRL 54,700,000.0, and this represents 3% net margin. And in terms of consolidated net income, that is BRL 11,500,000.0 with a net margin of 0.6%, which is way above what we reported in the first quarter of twenty thirteen, still in line with what we said in terms of achieving gradual performance increases. Now to talk a little bit about more of the financial KPIs, I would like to call Roberto, our CFO, to talk about the main economic highlights of the company.
Good morning. In the next slide, talking about the operating performance of the stores, well, we showed that we inaugurated three stores in the first half of the year. We closed one in the entire year. We inaugurated five stores. And when compared to the year before, our sales area increased 1.5%.
And once we compare that to the 11.2% growth of total revenue, it shows that we were able to achieve important sales figures in keeping with our concept of same store sales. In the chart below, we show growth of same store sales. The base was 9% on conventional stores and total growth including e commerce still in the concept of same store sales, 9.3%, considering a base of 13% in the second quarter of last year, which is a significant growth. We were able to expedite growth vis a vis the first half of the year, and we are still gaining more market share. At the top right, we show our investment plan.
We are still investing. We invested €34,000,000 in the first part of the year and then €51,000,000 distributed between new stores, refurbishing, IT and logistics, and we still have two seventy five stores. Approximately 38% of our total number of stores are still in the process of becoming more mature. And once they mature, they should contribute to a gradual improvement of our results as these stores become more mature. In the next slide, we talk about our finance sales mix.
That was very important to the overall result of Louisa Trade. As Martello already mentioned, it was another very good quarter. It was the third consecutive quarter where we experienced good and consistent growth. This also shows the strategy to change the mix of finance sales that was initiated early last year was very assertive, and it brought about the share of CDC went from 18% to 20%. Luisa Card, due to our conservative position, went from 22% to 16%, but that was offset by an increased share of third party credit cards that went from 32% to 36%, and that was the first level of the previous quarter.
Therefore, cash sales is very much stable. And Louisa Credit, even though it had a decrease in terms of total sales, revenues are increasing. It grew by 9.5% in terms of total revenue due to direct credits to consumer and also in our own stores, which really helps us to activate more clients. In the next slide, I show the base of cards. And due to our conservative position, the numbers have shrunk a little, and it's now at 3,600,000.
But I would like to say that 90% of this base refers to active cars. And the more active and mature they are, the more profitable they become in terms of our card base. Our portfolio is also increasing. It grew 5.4% when compared to the same period of the year before. It is becoming more stable at around €3,600,000 And as this is a stable portfolio and as the results are improving in terms of Luminia trade, the return on investment will be greater.
And therefore, we will be able to distribute more dividends and dividend payout will be higher. In the next slide, we show you how this portfolio has evolved. The quality of LUSA Credit portfolio is still very sound and good. Delinquency KPIs in short term are improving, are getting better. NPL ninety days is better than the year before, which is 1.6 percentage points lower than the year before, nonperforming loans.
And Luisa Credit results reinstate that this is the improvement that we expected to see in terms of allowance for loan losses. These expenses experienced a decrease from 48.4% in the second quarter of twenty twelve to 45.7% in this quarter. And expenses also, we had a decrease, which also helped Luis Acre to experience an EBITDA margin of over 10%, a two digit EBITDA. And then we had two percentage points of increase of EBITDA at Luisa Credit. Now going to the next slide, I will talk about our revenue growth on Slide 10.
In the second quarter, our total gross revenue increased 11.2%. Total net revenue grew 11.3%, so it grew more because of tax reductions of smartphones. Internet sales increased 13.3% in that quarter. And here today, it's around 17%. I would like to say once again that the base is high.
The profit margins of the channel are still maintained, and our website was awarded a prize of being the most innovative website this year. Next slide, we show the evolution of the gross profit. It grew 12.2% in the second quarter. Year to date, we experienced a margin increase of around 30 basis points. And if we continue experiencing this gross margin of around until the end of the year, I believe that we will see an evolution on an year on year basis of more than 50 basis points vis a vis the year before.
Next slide, on Page 12, we show the evolution of operating expenses. Sales expenses were in keeping with those of the year before, a little bit lower due to tax reductions in our payrolls. Both of them together accounted for 24.7% of net revenue, 0.7 percentage points lower than the first quarter of this year. I would like to remind you as well that most dilution of expenses that are expected should take place particularly at the end of the year. In terms of other operating expenses and revenues, we have some nonrecurring items.
The gains came with the sale of our stake at the Lovita distribution center, $2.00 5,000,000 and nonrecurring tax provisions and noncash, BRL 45,000,000 and also accounting write off stemming from the integration process of the former Los Jasimaya amounted to $16,000,000 So the net figure gave us gain of $55,000,000 to the total EBITDA of the company. The next slide, I show you equity income. Luisa credit was the main highlight In terms of increases in equity income, we increased the gross margin, we reduced provision expenses and operating expenses. And in turn, we increased the efficiency level of Luisa Credi. The profitability of Luisa Credi has already superseded return on net income of over 5%, and the expectations are still quite positive.
We say that Luisa Credit had the best first half of the year of its entire history. Still in keeping with its trajectory, we should have the best year of the company thus far. In the next slide, we show EBITA evolution. Total EBITA was €160,000,000 this quarter, Adjusted by nonrecurring factors, it was €95,000,000 with a margin of 5.1%, growing 15% vis a vis the year before. And I would just like to make a comment in that previous concept that we were consolidated up to last year.
Proportionally, 50% of our joint ventures EBITDA grew more than 20%, reaching a growth of 24% this quarter when compared to the year before. Next slide, we talk about financial expenses. We are able to dilute financial expenses. They came from 3.2% to 2.9% in that quarter, mainly due to CDI reductions. And in the following slide, I show you net income, which was EUR 54,700,000.0 in that quarter.
And in adjusted terms, it was EUR 11,500,000.0 with a margin of 0.6%. And that was an evolution both vis a vis the first quarter of this year and the year before and also in terms of recurring net income in that same quarter of the year before. So we may say that this improvement in the final net income figure went through almost all of our lines. Therefore, it was very consistent, going from growth in sales, increases in gross margin, dilution of expenses, improvements in the Luisa credit results, extraordinary gains, reduction of financial expenses and also reduction of net debt, as we will show you in the following slides. We have here that we were able to maintain working capital.
Discounted receivables increased due to growing increases in sales because of third party credit cards and indebtedness level decreased both in nominal terms as well as in terms of adjusted EBITDA reaching 2.1x. And with that, I would like to give the floor back to Marcelo. Thank you. Very well then. I would just now like to refer to our expectations for the next quarters.
We still maintain what we said before that we will deliver more robust results and consistent results throughout the period. And as we saw in the first quarter, lower net income but better in the second quarter and it will be even better in the following quarters. Our sales expectation is maintained, so we maintain our position in terms of the budget for the second quarter. July was the best month of the year so far and we've heard opinions from other retailers in this regard. There is one exceptional point, which is a government program called Minha Casa Melior, which was recently introduced by the government together with Caixa Economica Federal.
And this program involves the industry, retail, wholesale. And we must also say that Luisa Elena Traziano, our Chairman, had an important participation in this program. Therefore, we have a very good growth expectation throughout the following months. This program tries to include, as part of the program, a new class social class bracket that in the past did not have access to furniture and to things to refurbish their houses. That we already talked about smartphones.
This is a category that is reportedly increasing in the second half the first half of the year, the smartphone sales increased substantially because this is what everybody desires or aspires to have, and we will hope to increase sales in the second half of the year. In terms of gross margin, we will maintain and grow our gross margins in the South and Southeast. And gross margins are still improving further in our Northeast stores. I said, as I said before, we are still adopting the same incentive programs to the managers of our stores in the Northeast as well. And we were also able to extend that to the salespeople, not only we will give them commissions on commission on sales, but also they will get a participation on the total margin.
We believe that throughout next year, the Northeast will be very close to the margins, both net and growth that we experienced in the southern part of the country. We also introduced a pricing project. I talked about that in the previous quarter. And the purpose of this project is to add intelligence in the pricing structure for channel, region and family of products. So with all of that, we do believe that we will be able to keep our gross margin and yet improve it further.
In terms of costs and expenses, and we expected more significant gains in the first half of the year, we've had a reduction of 0.7, but we still have to invest more in marketing. But with the introduction of zero based budget or ZBB that we are introducing in the second half of the year, and we are, again, reviewing our entire freight structure, which is a very important part of our cost, and we are also investing in the DCs. This DC here delivers straight to the Southern stores, and we have one in the North, and this will expedite delivery of products to our consumers in that part of the country. And equally important, we have the maturity of the stores. By 2014, we said that onethree of our stores are not yet mature.
But as time goes by, we are introducing our models and systems. And I just talked about our new projects for the sales area. So the stores in the Northeast are beginning to mature. They will increase their profitability. And I believe then in about one year, they will be in keeping with the other stores of the company.
With all of those things, I must reinstate that we are totally convinced that we will deliver better results as we are already delivering good results to our investors. Now I would just like to say that we are very pleased with the results of this quarter. Here, we have all of our executive officers: Roberto Federico Isabel Saterna from Investor Relations Marcelo Sejeda is Luisa Credit Officer. So if you have any particular questions related to Luisa Credit, you can ask him. Then we have Marcelo Drigi, our I.
So everybody is here, and we are very pleased with the results for this quarter. And we are at your disposal to answer your questions or to clarify any doubts that you may have concerning the results of the second quarter. Now we will start our Q and A session only to investors and analysts. Questions that come over the web will be answered later on by e mail, and we will be available to clarify questions. Ricardo Boiachi from Bradesco has the first question.
Morning. My question is related to your expectations for the remaining of the year. If we normalize the comparison base of some of the programs that are benefiting some sectors like Minas Casa Melior and the tax reduction of smartphones if we can eliminate some particular effects. The economic environment or the demand environment needs the margin to improve or to be reduced in the second half of the year considering all of the other variables related to consumer revenue. And I would also like you to comment a little bit about the competitive environment and whether you see more aggressiveness on the part of the market.
Thank you, Hikaru, for your question. You talked about two very important points. I would like to say that We at the end of last year and early this year, we said that we will try to deliver same store sales of a very high one digit and two digits for the total of the company. That despite everything that happened to the economy, and we managed to deliver what we promised due to improvements in our processes, and we also invested a lot in our team. We motivated our people.
We have a very good communication system, which, in our view, is very important to our staff. And as we did not see changes in unemployment levels, we were able to keep our growth pace for the second half of the year. July last month, July was a motivating factor, a motivating month for the other six months to come. The first half of the year was also very important because we were able to overcome our goals in almost all the stores. We were operating above expectations.
In June, there were some setbacks. But if there is no growth in unemployment and if inflation under control because what really affects the retail market is when inflation grows and consumers begin to lose trust. And despite everything that happened, inflation was still low. Unemployment remains at the same low level. So we are not going to look at the cup half empty, but we will look at it half full.
And we will deliver according to our proposal. This is our main goal. Magazine Luisa, even though there may be difficulties, we keep on going. And we have important competitors in the market as well. They invest in media and marketing in the market, and we try to work along the same lines.
Therefore, we have to look at the glass half full and that's why we are still keeping our same sales budget to the second half of twenty thirteen. And we are very confident that we will be able to reach our goal at the end of the year. Thank you very much for the answer. Mr. Fabio Monteiro from BTG FACTORAL has the following questions.
I have a question about Minacazamemior's program. I would like to hear your views and expectations, particularly considering that market bracket that you have today, whether you believe that you should increase your share due to that program? And also in view of your sales in July, whether you could give me an overview of what happened after that program and whether what is the average ticket? Could you give me like a general overview about it? I know that it's still in its very beginning, but I just want to hear your views about Miyakazomiro program.
We see that project as something very positive. The average ticket is relatively high because it encompasses products like refrigerators, televisions, etcetera. In the North, Eats, our expectation is even greater because Brazil as a whole I mean Brazil is a large country and there are still many families that do not own LED TV or do not own a smartphone. And as people increase their income, they aspire to have better products. So there is an expectation that there will be about 1,000,000 products that will be sold due to the Miracazamelior program.
I mean July started still slow. In August, we see an increase in sales. We see that also maybe happening in other companies. I don't think that currently, I can tell you about any figures. It's still too soon.
Believe that in the third quarter, we'll be able to give you some more concrete figures about this program. We are but when I say that we maintain our budget for the second half of the year, it means that we are considering this Minas Gaza Magnor program, and we see this program with good eyes. The Northeast is a region where we believe we will be able to have a larger growth, especially comparing to the South part of the country. It's too too soon to tell because the program was introduced only a month ago. We prepared ourselves at Magazolida all of the areas of the company to be able to cope with the project.
Our Chairman or Chairperson, Mr. Luisa, was personally involved. And we are really betting on this program because it will be able to include a lot of families that had no access to credit before. Once they acquire their home to Mia Casa Mia Vida program, now they can furnish their homes. Therefore, this is a very positive thing for us and it is included in our budget for the second half of the year.
Thank you, Marcelo. One more thing about expenses. I know that you talked about it when you referred to your results, but I would like to learn something about the zero base budget and the multichannel delivery system. I would like you to just give me an idea of the impact of these two plans in the second half of the year and even next year? And whether you could give me an idea of the EBITDA margin that, in your view, will be sustainable for the next two, three years already incorporating the benefits of your plans.
We've been talking about 5% or 6% of EBITDA ever since we did the IPO. And we did that, we accomplished that in the second quarter, and we will continue to work towards increasing that. We do not disclose things for the future. We will only talk about concrete figures. But by the end of the year, we will certainly increase or grow EBITDA.
This quarter was 5.1%. And we also said that we will work between 56%. But we have to do our best to push that number upward. We will conclude the pricing project. And currently, we are doing very encompassing freight program from the South all the way to the Northeast.
And in the second well, we are deploying ZBB in the second half of the year. Last year, what we did was some work in the sales area. Now we are giving support to Luisa Craig. Luisa Craig has already initiated some work, we are doing that together with our support area. Just as we focus the integration of both networks and the entire management of the company was working on that, all of our initiatives aimed at improving results.
And what do I mean by that? Well, once we improve results, we will increase our share through sales. We will be able to keep gross margin despite the competitive environment and despite the fact that at times we have to work with setbacks in the economy, but we are succeeding and growing. And as a consequence, we will be able to deliver these numbers. We are growing gradually and consistently.
We certainly believe that results of 2013 will be much higher than those posted in 2012. And by 2014, we will be able to report on better results stemming from all of the projects and new programs that are being introduced by the company now. So we are just putting into practice all of the things that we said before. So in all of the different areas, we are putting things into practice. Also, when we talk about the profitability of the stores, we review all of the expenses.
We are looking at everything in our stores, distribution centers, freight and also the admin part of the company is being revisited. Even in a period of low economic growth, we are posting good growth. It is it's very difficult to integrate two networks, and we did that in two years. But we are, at the same time, delivering good results. Now the focus is results, and we will deliver good results in a gradual fashion.
We will not have like spectacular quarters. We will grow gradually quarter after quarter. We said that last year and this year as well when we talked about the results for the year 2012. Excellent, Marcelo. Thank you.
Just one last question about Luisa's strategy. UNIDENTIFIED I've been looking at improvements in delinquency rates And despite the growth of credit to direct credit to consumer, I would like to see whether you see any optimum level of losses in CVC or direct credit to consumer. You had a 28% it is still at 28%. I want to know whether you have any internal goals in that regard, whether you see any deterioration in terms of the quality of credit in the short and midrange because maybe consumers will have a deterioration of their income. Now this is Marcelo Bihier from LUSA Credit.
Well, first of all, I would like to refer to credit control. Well, the portfolio is under control. There is a good alignment between the two partners, and there is a very good technology coming from both sides: ICAO with the technology and Louisa Kred with account origination. Our President, every Monday, looks at all of the KPIs related to losses. So everything is under control.
We look at it with magnifying lenses. The other question related to direct credit to consumers of the card. Our strategy is to offer the best finance structure and conditions to customers. The products that we have available at LUDA CRE allows us to do that. You have direct credit to consumer, preferential credit card and gold.
And I can also tell you that we are training our sales team so that they will be able to understand the customer needs and to offer them the best possible product. To offer the credit just to finance the sale doesn't make sense, so I offer direct credit to consumers. And if further on they wish to have the card, they will already have a credit history, and therefore, it will be easier for us to approve the credit card. We don't have any fixed number, but our aim is to give customers the best possible financial conditions. It's very clear, Marcelo.
Thank you. Thank you all very much and thank you, Fabio, for your questions. You. Rachael Rodriguez from Itau BBA would like to ask the following question. My question refers to e commerce.
Could you please tell me tell us what explains the increase in multichannel sales in addition to the fixed base that you talked about last year? I want to know whether there has been changes in the e commerce strategy or whether you were choosing to have maybe less growth but more profitability and whether you could talk about the profitability of that particular channel? Thank you. Good morning, Haquelyn. Thank you for your question.
Here is Crederico Tragiano, the Operating Officer of the company. Well, talking about e commerce, the main reason of a slowdown of this area vis a vis the year before relates to the fact that last year, we grew 45% in the first quarter of last year. That was the second quarter of twenty twelve. And then we grew 40% more in the second quarter of twenty eleven. So we had top a growth, and probably that was the main reason.
We had two very good months, April and May. We were very optimistic in terms of e commerce sales in that quarter. But June was very, very bad. It was a very poor month. And I think that, that was related to all of the public demonstrations out on the street.
So we are now very comfortable with the numbers for the year. We are keeping the budget for e commerce for the year. In July, we had the best month of the year for e commerce. We grew more than all of the other months. And August is very promising even though the month just begun.
It's a promising month. So I believe that, that was just an isolated thing. And the comparison for the next quarter should be better because we grew less in the third and fourth quarters of the year before. That's why I am very confident in terms of e commerce. We have not changed our strategy vis a vis the margin.
The margin for last year was healthy. It was profitable last year and it is still profitable this year. So there is no change in terms of the margin and pricing. So we will keep on growing with a sustainable margin. Thank you very much.
Emma Gas from Goldman Sachs would like to ask the next question. Good morning. I would like to revisit Luisa Credit. I saw that you improved delinquency level year on year, but looking at the numbers, quarter on quarter or maybe since March and looking at the slowdown or the reduction level of delinquency over ninety days, there was a decrease of 25% year on year. And now here, the decrease was lower.
And now I look at your provisions and your provision level is lower when compared to the year before and also lower when compared to the first quarter. And because of that, the coverage went from 147% or over 150% at the end of the year, coming down to 126. I would just like to understand what are the drivers behind that? And what were the drivers that you chose to decrease that initial cost coverage? And if you believe that 126 or 120 is a comfortable level where you want to remain?
And later on, have another question. Thank you. Morning, Emma. This is Roberto. Let me just explain.
Well, first of all, I must say that we monitor delinquency levels, short run short term delinquency levels, and these levels are much better than they were a year ago. Talking about non NPL, it has to do with portfolios that are being negotiated. And that decreased a little bit due to our conservative position and also due to some seasonality. But this did not alter the results of Luisa credit because we have provisions for all of these credits under negotiation. So the provisioning methodology is related to expected losses, and that takes all of those elements into account.
It's a methodology that has been applied by Itau. So there was an excess of provisions from the past, and this did not affect the results for the lease credit. So with this methodology, this is what we achieved, BRL120 million. And even that result, there is another figure that we posted in the release, which is LUSA Credit's result. If delinquency were to be measured this year according to the Central Bank law, which refers to the delinquency period bracket.
And Luisa Credit's result was €29,000,000 So this is the result that will be posted to Central Bank. And in the entire half of the year, with more than IFRS, so we have more provisions than what is required by the Central Bank according to the Law 2.6. They only measure ninety day delinquency days, but the methodology considers more things like the risk per customer, the delays for bracket of delay, not just before ninety days or after ninety days. So in that sense, we are very comfortable both with origination, with the new credit levels and also the quality of the current portfolio and also the conservative position of the results. It's still conservative even excess provisions are above the level required by the Central Bank according to the Law 02/1982, and we do not see any deterioration of these KPIs.
The coverage ratio is just a consequence of all of that, is a consequence of the methodology and not a target per se. So the calculation of the provision that is then posted in the result line is based on the credit score, on customer risk, delinquency periods. And it's a more complex thing. So the coverage ratio and everything else is just a consequence of that. Okay.
And thank you for the explanation. But do you believe that in the future, as you feel comfortable with your delinquency levels in the brackets below 90 from now on, loans from loan losses should be year on year lower and then the coverage ratio will be comfortable at that level. And because I think usually your coverage ratio is like it's a little bit higher, right? Thank you. We are comfortable with our current coverage.
The trend is that the portfolio will be will improve even further. The results in terms of the results, we believe that Luisa Credit will cause consistent results and higher figures with expenses level and provisions proportionally lower. So we are we really or we are confident with that idea. We believe that in 2013, the Visa credit will post very good results as we did in the last half of the year despite all of our conservative approach that we inherited from Itau Unibanco. Therefore, we are very comfortable with Lizzo Credit's performance for this year.
And my second question, a very brief one, is about the impact of the tax deduction on smartphones. And this is probably aligned with a previous question. Can you separate that effect in the second quarter of this year and after your good performance in July and expectations from now on? Do you think that, that has a relatively high effect in the mix? Should we take that into account?
Or do you think that, that's not very relevant? Our commercial department, I mean, the performance in the first half of the year was exceptional. The projections from our commercial department, it's still very good for the second half of the year. It's even above average. And we are also increasing our market share in that category.
It is only a category among so many others. And I am I can't just say that this is a determining factor. It is contributing to the overall scenario. What contributes the most is our sales team is also MIA Cazamero Program, smartphones and also the maintenance of the other categories because they are performing at good levels before, and they are growing overall. It's just a whole set of things.
I talked about smartphones because this is what most people aspire to have. And the sales of that item is growing above average. But on average, its gross margin can be compared to the other products. The gross margin from smartphones is higher than the average of the company. REPRESENTATIVE:] So Diaz from Santander has the next question.
I have a question to Frederico because he talked about e commerce. Could you please give me some guidance? I mean nothing changed. Your projection of the year is the same because of the e commerce. Can you tell me what you want to do?
Do you want to grow in keeping with the market, above the market growth? Because what are my question is to grow in the market and to think that your margin will be pressured, we saw many companies stepping on the brakes. They are changing their strategy. They are decreasing growth to improve margins. Can you please elaborate a little bit more on that?
Okay. So let's talk about e commerce. Reinstating what I said, e commerce, I mean, we grew way above the market in the last few years. In the first half of last year, we experienced almost 50 growth and the same thing happened in 2011. So we are gaining market share in a consistent fashion.
So now things are a little bit more difficult I mean, that's difficult in the second half of this year. As I said before, in July, we experienced a significant growth. But we are talking about 20% to 30% growth for e commerce this year, considering a comparison base, which is difficult. And I say that I am totally convinced that this will happen. Already considering the fact that we grew 17% in the first half of the year, when compared to a difficult day, the trend is to have a better number than that in the second half of the year.
And this is what we said before that we will have growth of about 20% to 25%. We do not see any pressure in our margins. We have always been very rational in terms of e commerce gross margin. Expenses of Magazinha Luisa are much lower than those found in the market because we share an entire chain of supply of our conventional stores. So these are marginal expenses related to people.
So we are very comfortable vis a vis the expenses of the channel, the multichannel product. I mean the same truck that delivers to conventional stores follows I mean the e commerce product is part of it is included in all of the routes of the company. In the past, there was another transporting company that would leave low beta, the DC, to deliver to Cachios D'Osu down south. And we had and then we had a DC that was close to Cachiosu. But with the multichannel project that was reported earlier on, we are sharing the routes, and we will have improvements in the delivery timing and also we will be able to reduce freight expenses.
One of the impacting elements is freight in our e commerce strategy. What we had was a quarter that was more difficult to compare with the other previous quarters, especially due to what happened in June. But in Magazine and Louisa, I must say that July was very good. August is very promising. I have another question related to working capital.
What is the guidance from now on in terms of the vendors in supply? Afternoon, Tobias. This is Robert. We can say I mean, working capital as a whole, starting with inventory for our stock base, we are working hard to improve the turnover of our inventory. And with the integration of the Northeast stores, we are already making improvements because we are adopting the same systems and procedures that we already had in the South, Southeast and Midwest.
Therefore, we expect improvement. And we also expect a gradual improvement in the turnover of our inventory. In terms of our vendor base or supply base, The numbers are good and high compared to the market average, and it has been around the same time line, and this covers our inventory. Therefore, we do not have any need for additional working capital to cover the inventory turnover because that is covered with our suppliers. As we improve the turnover of our inventory, this negative working capital gets better.
So our working capital requirement comes from two areas: third party credit cards, part of it we discount and the other part is kept in our balance sheet and also taxes to be recovered. That's another item in our balance sheet. And this line has increased a lot in the last few years due to the process of tax replacement, and we expect to revert that in the next two, three years. We are already doing that in the State of Sao Paulo as of June, adopting a new way to collect the tax credit. So we hope to see improvements in our working capital performance and also it will be gradual as we are able to introduce special regimes in all of the other states.
So in the next two, three years, we expect to see changes and improvements in inventory turnover. But in terms of suppliers and procurement, we don't see any changes. Thank you. Thank you all very much. Fernando Fadia from Santos Piriti.
Santos has the next question. Good morning. I would like to know whether you can quantify in terms of a percentage of revenue, how much that payroll reduction helped you in terms of sales expenses? And how much more you intend to spend in marketing? And what could we expect for the next coming quarters?
Good afternoon. What we can share with you is that the decreases in our payroll, certainly, it varies. On average, that should represent 30 basis points on the net revenue, tax reductions on payroll. And in terms of the marketing part of your question, I believe that, that is just a set of expenses that if you look at SG and A and SG and A variation, you can see how much we were able to save vis a vis last year and this savings in tax reductions that we were able to promote in our payroll. Thank you.
Mr. Fritzola from GTI has the next question. Good morning. Could you please talk a little bit more about nonrecurring expenses in La Jozemaire integration? And what is in your provision for SG and A expenses?
And what is that line all about? UNIDENTIFIED Good afternoon, Pedro. Let me begin with the integration of Lojas Maya. There were not cash expenses with the integration that I mean, we concluded the integration last year, and so we no longer have integration expenses. And in fact, there is nothing else posted that relates to that integration.
What happened is that as early this year, we are now operating under the same system, and we had just to incorporate the accounting figures and the balance sheet of L'Argesmaia, and we applied the same methodology for several accounting tasks, including inventory count, and we then identified that there were some differences and then we did a write off of that. And we do not believe that we'll have any more expenses related to that merger. But that had no cash effect. I understood. Also in terms of tax provisions or fiscal provisions, we took advantage of the momentum and still on a conservative note.
We now have a very conservative balance in our liability line on the liability side. And there hasn't been changes in the risk level of the company because, as you know, we are very conservative. It's worth mentioning that we have an auditing committee. They audit risk and they have to report to the Board. And we also have a fiscal Board with members appointed by minority shareholders.
And then we also have legal consultants. Therefore, we are very comfortable with our provisions. And this has no cash effect, not in a short run or not even in the midrange because we are still being very conservative with all of our projects. What about the gains from e commerce operations? Now you have multiple DCs.
I mean, some of the risks have been eliminated. It has nothing to do with our e commerce operation. It has to do with taxes, particularly ICMS. We already explained that before that the company is now participating in a special program that was made available by the State of Sao Paulo. And because of that, we decided to be more conservative vis a vis other processes.
But it has nothing to do with e commerce. Just one last question. What is the company feeling vis a vis the purchase of stock? We do not have anything to say yet about that, Pedro. If there is anything to that end, we will certainly communicate it to the market.
But currently, we don't have anything to say about it. Fernando from Credit has the next question. Good morning. In terms of the result of the quarter on the half year, what was the stake of that I mean, what was the impact of the sale of your stake at the Lovada DC? And if you hadn't sold, what would be the result?
Okay. Good afternoon. The sale of our stake at the DC, the distribution center, represented million in cash. In terms of result, million. And the net from other nonrecurring expenses that we mentioned from the incorporation of Lodge Asmayo in tax provision, we had a growth effect of income tax of BRL65 million, net about BRL48 million.
So growth of BRL55 million, net BRL48 million. So our result looking at the recurring line was between BRL11 million to BRL12 million when compared to BRL54 million to BRL55 million, which was the total. So BRL11 million, BRL11.5 million. That was the profit from the operation of the company. Mr.
Vicor Pascoe from Itau BBA has the next question. It's a very specific question. Still talking about Luisa credit and what Beto said in a previous answer, when we can I remember that Beto said that there was a lower level of negotiations? Now why did you decide to reduce the number of renegotiations? And what should we expect for the future?
Victor, thank you for your question. In fact, there was a reduction which was proportional to that portfolio. In terms of renegotiation, we do not report the result of the lease up quarter to the Central Bank every quarter. In June, I mean, we have to report the figures for this first half of the year. So you will see the costing that has an evolution of Luisa credit portfolio by level of risk of each customer and also the balance of the portfolio that is being renegotiated and the balance.
In fact, that reduction in the balance has a little to do with seasonality and also something to do with the fact that we are renegotiating with customers that have a greater likelihood of paying that bill. But it's nothing that is extremely relevant. And once again, we are very confident with the quality of the credit. We had more than enough provisions to cover that, and we are still posting provisions than the minimum required and in keeping with the methodology of the bank. If there are no further questions, I would like to give the floor to Mr.
Marcelo Silva for his final remarks. I would like to thank you all very much for participating in this conference call. And together with my colleagues, I would like to reinstate our position that we will deliver gradual and consistent results, positive results. At the end of this year, we will post figures that are much better than those presented at the end of last year. And certainly, we will fulfill the promises in terms of results by 2014 according to what we said before.
We are confident in what customer is number one comes first and then next comes the results of the company, which is what we are demonstrating to you now. So I would like to thank you all very much, and I hope to see you next time we have another conference call. Thank you. This conference call related to the second quarter of twenty thirteen of Vanda de Invoiza is now concluded. Thank you very much for participating, and have a good day.
You can disconnect now.