Good morning and thank you for standing by. Welcome to Magazinha Luisa's First Quarter of twenty thirteen Earnings Conference Call. 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. Afterwards, there will be a Q and A session when further instructions will be given. There will be a replay facility for this call for one week.
Before proceeding, let me mention that any forward looking statements that can be made during this conference call related to Magatini Luiz's operating and financial goals are assumptions and beliefs of the company's management as well as on information currently available. Forward looking statements are no assurance of performance. They involve risks, uncertainties and assumptions since they relate to future events and therefore, they may affect the future results of Magazine Luisa and could cause results to differ materially from those expressed in such forward looking statements. Now I will turn the conference over to Mr. Marcelo Silva, CEO, to begin the conference.
You may proceed, sir. Good morning, everyone. Thank you for joining us at today's call at Magadine Luisa related to the first quarter of twenty thirteen. I have with me Roberto Bellissimo, Felipe Federico Tragenno Fabrizio Garcia and Isabel Bonfin, our Director of Administration and Control Marcelo de Almeida, Director of Lizzacready and also Ms. Elena Tragenno, our President.
We'd like to start with the highlights, addressing the highlights of the first quarter of twenty thirteen, starting with the growth in gross revenue, which was 7% growth vis a vis the first quarter of twenty twelve. Same store sales grew by 5.2%, highlighting e commerce growing 21%. And we should also consider the competitive base with a quarter of the previous year at 15.9%, therefore, very strong growth This quarter, we opened two additional stores and closed 14 branches, three from Bau, which were overlapping in terms of geography. And we forecast that we would do that as soon as we concluded year 2012.
It is very important to mention that based on the 7% growth, which is what we're working on in terms of sustainability in order to have positive results over the next quarters, we increased from zero percentage points in our gross margin vis a vis the previous year, reaching 21.8% of net revenues, certainly stemming from our focus to improve the gross margin in the Northeast. We still have a gap vis a vis other regions where we are. And we managed to preserve the margin, our gross margin in other regions where we are. We still had a 0.8 percentage point reduction in operating expenses. This stems from our cost and expense reduction program, which was started last year.
We also improved our productivity at the store. And this quarter, obviously, we had no extraordinary expenses of integration as we had last year. I think you can all recall that. Please note as well, Louis Xa Cre's quarter, which was very solid growth in our revenues 9.8%, improving six percentage points of the gross margin of Louis X ACRES and consequently, the EBITDA went up to 8.5, net margin at Louis X ACRES 4.5%. And we had a reversal of JPY 16,000,000 losses in the first quarter of twenty twelve vis a vis JPY 16,000,000 profit in the first quarter of twenty thirteen.
All these drivers and factors made us move from a loss, significant loss in the first quarter, incurring extraordinary expenses to profit. Incipient though, but it still gives us projection for a growing result over future quarters in 2013, assuring us profit very high in 2013 above what we had in 2012. To get into more details about the operating and financial indicators, I would like to invite Roberto Bellissimo for the presentation. Good morning, everyone. Starting now on Slide five, we show our growth in number of stores.
We closed last year with seven forty three stores, marked with seven thirty one stores and we closed 14 stores that were overlapping and opened two additional stores, new stores this quarter, within our plan to open from 20 to 25 stores by year end. And we closed these stores because now we are focused on improving the company's profitability as well. On the next chart, we show our investment plan. Million were invested this quarter. We optimized investment and invested less compared to the first quarter of last year, when we had invested EUR43 million.
Please note that at that time, we were investing to expand our DC in Lovada, investing heavily in logistics. So these remodeling new stores, technology and logistics as well. At the bottom to the left, we have same store sales growth. In the first quarter of last year, we grew 12.6% in physical stores, 15.9% total same stores growth and 25 total new stores. So growth this first quarter was above the market growth, 2.9% with brick and mortar, 5.2% including e commerce and 6.9% including new stores, also gaining market share.
Please know that this is the poorest quarter in retail as a whole. And from now on, future quarters tend to be more favorable in terms of seasonality and also the calendar effect. The next chart shows our average age of stores. We still have 37% of the stores with less than three years within our maturation process as we planned before. On the next slide, now on Slide six, we break down a little bit of our Luisa Credit performance, which was a great highlight in terms of results this quarter.
In terms of sales mix, third party credit cards grew from 30% to 36% stake. Direct credit to consumer grew from 14% to 18% and this has really helped the results for Luisa Credit, expanding our gross margin, EBITDA margin at Luisa Credit and also Luisa Card down from 24%, down to 16%. We continue to be very conservative in terms of credit granting. However, on the next chart, they can show the total billing at Luisa Credit, growing virtually 10% from EUR1.9 billion to EUR2.1 billion, highlighting our growth in direct credit to consumer this quarter. On the next slide, we show our growth in credit card base, virtually stable in the first quarter.
I'd like to remind you that this base is becoming increasingly more mature and more profitable as well. From the moment, we have new cards and they become more mature and more profitable. And the portfolio grew 7% vis a vis the first quarter of last year, reaching billion. And here we also highlight the growth in our direct credit to consumer portfolio growing 80% this quarter. On the next slide, we show the performance of Luisa Credit portfolio.
It was greatly improved vis a vis one year ago, improving four percentage points. Over ninety days overdue went down from 12.7% down to 8.7 So a very good performance, as you can see, a slight increase vis a vis December, stemming from seasonality, the normal seasonality of our segment. And we continue having a very robust provision level. The coverage index or the balance of provisions over past due portfolio at a very high level of 147% this quarter. Now moving to Slide 10, we will show our growth revenue on a consolidated basis.
Just to clarify, we changed our booking process for our results. We are using a new TTC in line with IFRS and now we are consolidating 100% Magazine Luisa and retail, which was already fully integrated as a controlling company. Luisa Credi and Luisa Sag, which consolidated as a proportion now are being posted as equity income affecting revenue, expenses, assets and liabilities. Anyway, in the release, we do the disclosure both of the current format and also the format that we used until last year for more comparative purposes. Gross revenue in the first quarter was BRL8.1 billion, growing 7%.
Internet sales more than BRL300 million this quarter, growing 21%. And consolidated net revenue BRL1.8 billion, growing 6%, again over a very high comparative base compared to the same quarter of last year. On the next slide, we show our gross income performance and also the gross margin. In the first quarter, our gross margin was 28.2%, growing 0.4 percentage points vis a vis last year, stemming mainly from improved margins from the Northeast stores. This margin was also above the fourth quarter of last year despite the fantastic sale that we performed in January.
And please know that in the previous format, when we would consolidate Luisa Credit as well, expansion was one percentage point vis a vis last year, considering the increased gross margin of Luisa Credit as well. On the next slide, on Page 12, we show our operating expense performance. Total operating expenses were virtually the same amount as last year, growing very little. We had a percentage reduction of 0.8 percentage points over our net revenue stemming from all the efforts already made in terms of lowering expenses. And please note, we have further opportunities for the second half of the year and also by year end to implement projects that are underway to lower expenses and also about thought maturation and synergies of our integrations as well.
In terms of selling expenses and SG and A, there was reduction and we didn't have any reduction or non recurring expenses. Therefore, other operating expenses are now used in other operating revenues. On the next slide, we show the performance of our EBITDA. Here, we include equity method as well. There was an increase in gross margin, a dilution of operating expenses and also a reversal, a substantial reversal in our equity income results.
And as a result, our EBITDA margin grew from 1.4, 23,000,000 to 3.6 in the first quarter of this year or 63,000,000. And this shows the beginning of our gradual improvement in the profitability expected for 2013. At the bottom, we show last year, 56,000,000, JPY 3,400,000.0 of recurring margin and this year JPY 3.6 Non recurring expenses. Now on Page 14, we show a drop in financial expenses also contributed to improve our final results. A reduction in financial expenses stemmed from TTI reduction and also significant improvement in the working capital this quarter compared to the first quarter of last year, both in terms of average purchase term, turnover of inventory.
So these factors altogether have really helped us to lower our need for capital, working capital and also to lower our net debt. By year end, our working capital variation is expected to be normal. In the first quarter, it is likely positive. And by year end, we expect to have it negative again. On the next slide, now on Page 15, we show our net income performance.
In the first quarter of last year, we had a loss of $40,700,000 and then 21,900,000.0 income in the second quarter, 2,400,000.0 in the third quarter, yen 9,700,000.0 in the fourth quarter and virtually 1,000,000 yen in the first quarter of this year. On the next slide, on Page 17, I give the floor back to Marcelo Silva. Before we conclude and give the floor to our President, I would like to address our expectations for future quarters. The high one digit growth for 2013 is assured, it had been growing. April was much better despite Easter last year vis a vis this year.
Mother's Day was also slightly above our expectation, really positive. We expect to open between 20 to 25 new stores and we'll keep on growing consistently, both in terms of sales and also number of stores. So 20 to 25 new stores this year. And our projections confirm that our growth, same store sales will have a high digit in addition to e commerce growth, which is projected between 20% to 30. On top of that, in addition to sales growth and high digits, we expect to maintain our gross margin.
We will be significantly decreasing our gap between Northeast stores and stores in other regions. We are in the post integration phase in the Northeast and today we have a full vision. The stores are have the same visibility of other Magazine Luisa stores. We are still in the pilot phase testing, but we expect to have the second half of the year of a pricing project in order to improve intelligence and pricing by channel, by region, by product family and give more autonomy at the sale department in our stores, which is something really important for those who are present in 16 states in the country. We also strongly continue to engage our cost and expense reduction store, improving our stores and our price policies are more stringent.
And we are having this in our zero based budget. And the most significant gains are expected to happen in the future more and more than they happened in the first quarter, including gains of synergies because now we have already integrated Maya and Bauu chains. Our commitment, like we said last year and now closing the balance sheet in 2012 is to have better productivity and profitability indicators. We are focused to improve quality of service and customer satisfaction. We still have a maturation process for one third of our stores.
As time goes by, these stores will be equivalent to the profitability of more mature stores in our chain. And now with price management, improved stores in the Northeast and in terms of profitability, Except for seasonality of the first quarter, which is only natural affecting the whole retail as a whole with zero based budget, we also have tax benefit in our payroll starting in April, reduction in electric, tariff and we are improving productivity in all our company stores, ODCs. RIZACREDI continues to have an expense rationalization program that is still very strong. We started a multi channel delivery program, so all these synergies will be much higher. And as a result, we can say that we expect to deliver results in 2013 absolutely different and above what we had in 2012.
Before we move to the Q and A session, I would like to give the floor to our President, Luisa Ena Traziano. Good morning, everyone. I'm delighted to be here with you. I really wanted to be here quite a long time. I just wanted to show that I really am very positive about the company this year.
You all know I'm really transparent. Whatever I say is already impacted. So we knew things would happen this way and whenever we have well, we bought Bawu and when it had the merger of other stores, we had two very challenging years, but we also follow very closely. And in the South, we had a drought, very strong drought and now we had another drought in the Northeast. But I'm very confident of what we did.
Any competitor with a lot of money takes many, many years to have 140 stores in the Northeast in the main capital cities. And it's really hard. It's a business of opportunities and Baou was something we really wanted to have. I particularly wanted to deliver 100 virtual stores. I believe the change from brick and mortar to five and ten years, the virtual store will be ready to have a very strategic breakthrough.
Brick and mortars will be here, but the format is something that we want to be with and virtual stores are something that and by the way, we expect to have a mixed store in Iliopolis. You will have time to get to know it. It is closer and you will see what a virtual store is all about. You have to see with your own eyes. So the 13 stores that we closed with Baou, we're not in the valuation because when we bought them, we were we took another year to see if it was really worth it.
So we closed them and we have even more to close because the valuation was less than the 130 or 113 we acquired. It was about 130 stores we would have. 35 that we have already fully converted in Parana into virtual stores and capital stores that we managed to increase and have a furniture store because it would take us too long to have it in the capital city. So we were very confident and now we have no excuse about the merger. But still we'll keep on growing and I'm really excited this weekend.
We had the right product at the right time, the right campaign. We're heavily invested in what we sold 7,500 handsets last weekend and home appliances. So we want to improve our margin. We will be improving our margin, but not by buying new change because that interferes. But I'm not saying we're not growing.
I'm not saying we're not going to increase our sales, but change sometimes impair results in the first year. It is good on the one hand, but not on the other. So now we're focused on profitability. Profitability will happen, and that's why we are focusing on stores growth, reduction of expenses and opportunities. I would also like to say, tomorrow, I'm going to Brasilia, President will have been working in a group with technicians and also with the President and several ministers.
And President Dilma will approve this week or early next week something really good, My Home, My Life program, so people can buy through Kaisha card with Magadine Luisa. We were the first with furniture test and we helped to buy refrigerators, TV sets, washing machines, computers, beds and also living room sets, 60 payments, 5% interest, we have no commitment. And we really work to increase from one door fridge. People like frost free refrigerator. So people will have up to R5,000 dollars or R5,000 dollars according to their credit to spend in our stores.
Those who are already in MVMC will also be entitled to it. So Kaisho will really facilitate loan. And we have already things in the media, but we're going to Brasilia because we hope to make this process work. And we're also very strongly engaged in tax distribution and we're sending back everything we paid more in retail as of July. So we've been really working hard to help the government to create something consistent.
My Home, My Life and another thing that probably you saw has to do with insurance. Many people sell embedded insurance. I think you heard that the first time people said if they would be dismissed or not and they promised JPY 1,000,000,000 in insurance. Some people have 2% or 3% only in insurance. I love to sell insurance, but we cannot embed it.
That will be a problem for others. So we are studying with all the bodies how we can sell insurance properly in order not to bring insurance to an end. So we are firmly engaged with the government, more than 2,000,000 products within two or three years and financing in 60 payments and we won't have problems of people because we have cash through a card. And Magadine Luisa helped to make this card with Caixa. So we have a lot of novelties, many things happening.
I'm really excited this weekend. Quite a long time, we had been expecting to do something. And we were really surprised and I was really happy this Monday. So it is great when Mother's Day is good. The market was really warmed up and it was really amazing.
Well, I'll be here for the Q and A session. Thank you very much. And we might not have bought a chain, but no, no, we have to buy the chain. Otherwise, we wouldn't be in the Northeast, which is an amazing market. We've been through serious growth, but this is really a boom and all investments will be there.
I don't regret having bought about 35 virtual stores in Parana in the interior and other states and we greatly improved our stake in Sao Paulo. So that had a price to pay and we paid that price. And now it's over. Everything is over. So it was a very well performance by Marcelo and his team in these two chains.
They were firmly engaged last year. I congratulate them. It was beautiful work and adapting a system, well, this is really challenging and they did it very smoothly without interfering with our database. So we are really working in order to have retail at a fair place in Brazil. Thank you very much.
I'll be here to take your questions. We're starting now the Q and A session for investors and analysts only. Questions from the web will be answered later through e mail messages. From BTG Pactual would like to ask a question. Good morning, everyone.
I have two questions. The first question has to do with direct credit to consumer. Roberto mentioned in the presentation that this was a project that became a heavyweight this quarter. And I'd like to know what the company imagine to be the sake of this project in sales later on. I think there are more expenses to gain, right?
So my second question has to do with gross margin. Marcelo mentioned in the presentation that evolution was very good this quarter. And if you take into account that e commerce grew beyond brick and mortar and e commerce generally has a lower margin compared to brick and mortar, this gain was even more significant. But what about the future? What are further gains?
I think Marcelo already made some comments saying that there are future opportunities. But I wonder if you could quantify what you envisage for gross margin performance down the road and also with e commerce growing more, you also expect to grow from 20 to 30 more than one digit compared to retail. So can you make comments on these dynamics? It would be excellent. Thank you very much.
Can I answer about credit cards? And maybe Marcelo can address gross margin later. So what happened? Brazil gave credit cards to everybody. Credit card started, but people knew would use, didn't use credit card properly.
So financial companies decided to have a credit crunch, which was natural In a partner with retail, the alternative by retail was to come back to payment cards because default is controlled and clients can buy more. I expect to transform this payment card into a cheaper credit card because credit card is easier for us to handle. So I've been following default at Luisa Credit on a week basis. We follow the whole operation and default and delinquency is under control. Our payment card is also under control and remaining cards, like Roberto mentioned, are those that are really profitable to the company.
So there was a strategic error by all banks and financial institutions. The premium should be on card volume, but not what we bought by card. And the cost of the company was of cards that were not used. So I say now we have been addressing very carefully with experienced people to think about the direction for CDC in the future. Based on my experience, I believe direct credit to consumer would move into a more simple and less expensive and faster card.
So that answers my first part of the question. Now I'd also like to mention our satisfaction. It is the only .com that is profitable and it has been growing profitably. So if you get into our website, it is a really cool website. People buying wedding presents, for instance, and it's really agile to buy, really friendly to buy.
And I buy myself because we all pay everything on the right spot. Even Luisa pays and buys. But Roberto is going to answer the second part of the question, and I hope I've answered your first part the question. So CDC was a way out until we could get cards back on track and put delinquency under control. Thank you, Luisa.
Good morning, Jerome. Just adding something as well. CDC state grew a lot since the beginning of last year and it has proved to be close to 20 in recent quarters and expects to be similar in future quarters. As to the gross margin, you are right. The gross margin of e commerce is slightly lower.
So when we say that we maintain gross margin in South And Southeast and it was higher in the Northeast, we managed to do that even though e commerce was growing 21%, improving the stake of online sales from 12% to 13% to 14%, almost 15% of our sales. So that was a growth or a good performance in the gross margin of other regions net of e commerce. This is Fredriko speaking. Good afternoon. Can you hear me?
Just to add something, we have already mentioned in previous call, but it's good to highlight that e commerce gross margin is lower compared to brick and mortar. However, it is more than inferior in this proportion of brick and mortar. So the impact of e commerce in EBITDA growth is very positive. Actually, although we grew more in e commerce than brick and mortar in the first quarter, the Northeast factor was very representative and significant and the consolidated gross margin went up. But e commerce did have a positive impact in EBITDA, just as it happened in previous quarter.
It's clear. Thank you. Thank you all. Irma Scott from Goldman Sachs would like to ask a question. Good morning.
I'd like to have a better understanding of your vision vis a vis sales performance in brick and mortar stores, which was a little bit more modest earlier this year. But as you said in the release, you still are confident that this is expected to come back to higher levels in future quarters. I'd like to understand about the scenario or the macroeconomic scenario. And obviously, with potential measures that might even help sales, but except for that, anything that it would highlight that you can already see in terms of Mother's Day campaign for instance or something that supports your trust and confidence for brick and mortar stores to come back to higher levels? Thank you.
Good afternoon. This is Triggerico again. Let me address sales and give you more granularity. As Marcelo said, we should always bear in mind that the first quarter of last year, we had virtually 21 well, the comparative base was very strong. It is the strongest for the whole year in the first quarter of last year.
I believe our performance was really extraordinary. So for upcoming quarters, our comparative days will be softer compared to the first quarter of twenty twelve because the economy last year was had a slowdown and the first quarter was still strong. So this is the main driver. In this reading of results for the first quarter. And another important factor, Irma, is that we have three days left this quarter.
And remember, last year, Easter was in April and this year, Easter was in March. So the three less business days have a three percentage point effect on same store sales. Just to give a comparison with retail, it's important to bear that in mind. We already see April with figures very close to our guidance. One, a high single digit for same store sales and the same for Mother's Day considering the positive weekend we had.
We are excited, also being very bullish vis a vis e commerce growth. It is still solid, robust and maintaining our profitability. Irma, this is Louisa speaking. I would like to say that we are going to have a Confederation Cup and there we will sell a lot of TVs. We are selling smartphones four or five times more than we usually do because the government gave us a lot of incentive in April.
And as of the day 20, we are booming in broadband, for instance, San Rafael and this is going to heat the mobile phone market. Smartphones, we've been working with the government for many years. And since early March, I told people to buy smartphones. Our sales in ten days in April were three or four times higher in terms of sales. And then we have the World Cup and then the Olympics.
So Brazil has six years of consumption, amazing consumption. When you have a strong game, people change the fridge because they want to entertain friends at home. And we're also working a lot with communication. On top of all the products that I said, more than 2,000,000 products that will be launched about as of next week, encouraging people who are in MCNV, who had no previous loan, 60% of households don't have credit. But that's only because they have no access to credit.
So that's why we now with Caixa can work with these projects to be launched. 60% of households have no problem of credit. However, they don't have access to credit through our financial institutions and the government will allow them to have it. So just imagine, if Brazil still need million for MCNV to have satisfactory level of cash at sustainable level, socially speaking. Perfect.
Thank you. Certainly, are important drivers. And a second question, if I may, related to e commerce. Frederico, maybe you could help me have a better understanding. As far as I understand, you're slightly changing logistics to generate 100% through the DC in Lovada.
And now you're already testing a pilot study of a center in the South, if I'm not mistaken. And now you're also working to have it expanded for all distribution centers. Could you elaborate on that? What are the expectations in that regard for EBITDA margins, more specifically for e commerce and also the impact in the company as a whole. Certainly, it's not only a pilot study, we are already working on the project.
So since early last year, just one DC center early last year would build just low beta DC would build e commerce sales for the whole country. We are only company in Brazilian retail that is fully integrated in channels. The majority of our competitors have e commerce operations fully separate with no synergy or these are different DCs or logistics is fully separate. But our operation gives us the chance to work integrated with DCs that are that can deliver both through e commerce and brick and mortar. So what we already do within our rollout, we already have Kashias Dutsu DC and another in Minas Gerais with e commerce.
And for these regions, delivery term goes down 60% and we also have a drop in delivery terms. So we have a very positive impact both in sales increase, because if I'm more competitive and I deliver faster than our competitors, we don't have that benefit in that region. And we also improve our logistics costs. The main e commerce cost is freight expenses. It is the well, in brick and mortar, it is the payroll.
So if you manage to lower freight expenses, you can greatly improve the EBITDA, commerce and EBITDA, which is already positive and above the market average, thanks to our policy of multichannel. So we already have two DCs in addition to Lovira. And until the middle of the year, we want to have another DC in the Northeast with a competitive edge, very big to the Northeast. Today, just one of our customers or competitors has a DC in the Northeast. The difference in our rollout, we are going to have eight distribution centers on the web.
And our competitors will have to heavily invest in a new CD or significant CapEx to do the same. But in our case, all we have to do is to adapt our system with very low investment investment to work on an existing DC and operate on e commerce. So we are very bullish for e commerce, both in terms of higher sales and also freight cost reduction, therefore, improving our EBITDA in this operation without massive CapEx investment, which we know is important for the capital investment. Perfect. Now just as a follow-up, What about the reduction in logistics cost?
Do you intend to transfer them or are you already transferring that to customers? Maybe that also help to drive sales. Are we going to keep on doing that? At the same time, obviously, it also brings operating leverage. So how would that happen in the earnings results?
Absolutely. But we're not transferring that to our customers yet. We only do that once our operations are more stable. But for the P and L, what we can see is a reduction in SG and A, particularly in an account that represents SG and A, which is freight account, which is one of the most important in our expense group. And it tends to go down in upcoming quarters from the moment the volume of the new markets are materialized.
Thank you. Konawa Kunitski from Santander has a question. My question has to do with the gross margin that we said before. I wonder if you could talk about the performance in the mix and the portfolio, any direct impact on gross margin? And about My Life, My Home program, will there be a direct impact on mix change?
Is it already considered in your guidance for brick and mortar stores? Thank you. It was not on our radar. We didn't know we would have my life, my home. It takes some time to happen, but it was not in our guidance.
So tomorrow, we'll have a meeting in Brasilia and we'll set the final aspect. We struggled in order to have a consistent and fair project. President Dilma is in a hurry to set that. And once Marcelo knows what happens, we will add it all to these other aspects. So maybe in the second call, we can say how much it would present to us.
So that's something really cool because there is no default. You have it right on the spot. And it's really coal because it adds customer that would not buy from us otherwise, those who currently have no credit like I said before. So it's a new consumer that will get into this project of essential or basic products. Well, we cannot measure yet what the effect will be like Louisa said it well, we have to wait until the project is launched and then see what could happen or the effect Ronaldo, okay.
Roberto has something to say. Ronaldo, in the first quarter, we didn't have major changes in product mix. The increase in margin may be explained by channels in the regions, like we said before. As to the future of the program, once we have more clarity on the mix, we can communicate the effects on margin. So that's what we already do, products, home appliances, TV.
About the mix, can I just say something? This is Luisa again. Ronaldo? This mix like gifts and toys, electric home appliances, the rates are going up dramatically because these people already have a fridge and a stove. So now they buy a multiprocessor, new pans and we launched a new multiprocessor this weekend and it was a great hit.
So we will always sell gifts, presents and toys, portable equipment and now portable equipment for women's hair for instance. These are they have a very high demand. They like to buy in the brick and mortar stores, so they can take it home right away. So we also I'm also helping our managers in the gift line because I'm very confident that color band, sets are really selling high. By the way, we showed about 8,000 sets last weekend.
So there is no delivery, no technical service and the margin is greater compared to our products. So once that grows and Magazinha Luisa is ready for that, that is a strong market trend considering nobody expected to sell this high number of pens. It was an unknown market. So this mix will really help to work on our margin. And I believe there's so much that I'm working with Fabrizio, so we can sell gifts for the team as well.
Thank you. We firmly believe it. You. Ito Pasquale from Itau BBA has a question. Good morning, everyone.
My first question has to do with margin performance of the Northeast stores. How about the gross margin and EBITDA margin this quarter? I'd like to have an understanding of profitability or different levels of profitability in these stores. My second question, based on Luisa's opening comments on virtual stores, since last year, well, I would like to understand when exactly you intend to open this store model again? Let me answer.
We grew 35 stores with 105 stores with Baou! By the way, this was the reason why I struggled to buy Baou! I thought the price was cheap. So we turned 35 stores and we have 105 virtual stores now. And regardless of e commerce, billing will be very high.
So we grew. What happened was that some 35 stores from Bau converted into virtual stores. So we grew in virtual stores and we keep on growing. Adeopolies, for instance, is a mixed store and Frederico is working with brick and mortar stores and .com. We really wanted to have a virtual store here for you to know.
And we are opening one now in Iliopoli and we also have communities like Parahizopoli. You could go and visit. It's really cool. I visit them very often, even with people from Samsung, I think these people there and we'll be opening a very good and better store. So we never stop.
We opened 38 or 39 last year and Roberto can give you the right figures and Tatiana and our team can also give you the right figures. We never stopped, quite the opposite. Bau was my goal to increase the number of virtual stores and have a need, so we never stopped. Virtual stores operating profit is even greater compared to conventional stores and shopping mall stores. The Northeast stores as of November, if you check our income statement, this is inside Magazione Luisa.
We don't have the former company name. From April to October, we fully integrated all the stores. So we no longer are communicating the former largest Maya, Vasconcelos, not even Rizacredis, not Rizacec, because these both are in the equity method. I can say there is a gap in gross margin in the Northeast because now we have more visibility and the systems are the same. We already have gains in brand improvement in the Northeast in the first quarter.
And now we have another opportunity, the operations and commercial areas are working together, so that gradually we can improve the margins in the Northeast. And it will be a time in which it will be equivalent to the Southeast, just preserving some peculiarities of the region. But our focus and by the way, this is part of the process to improve our gross margin. Our focus is to improve our gross margin in the Northeast, preserving the margin in those regions. Now for the future, whenever there is something very significant in the Northeast, be it upwards or downwards, we will be disclosing that to the market, but only when it happens, only when we have something different.
Right now, we have gradual gain in gross margins in the Northeast and also gains of synergies, considering we have the integration until October. And as of November, we also have gains of synergies for SG and A in the Northeast as a whole. Marcelo, the whole operating part in the Northeast payroll, controls, everything is already all the operations are already there in the Northeast. Savings, everything is electronic now. So the Northeast right now, well, we have already worked on the whole administrative part and the effect will also appear in the future.
So it's not easy to take it all that and convert. We are leaving a lot of things there for strategy because that's another world, another country. As to operations, everything is already with the CSE in Flenca where we have our operating part because everything is easier and cheaper for us. Great. Just to clarify about the Alberto store, I'm looking on the chart of Page three and I can see the first quarter of twenty twelve with a flat number, 106 stores.
Am I missing something here? I'm sorry, Roberto will explain that. We acquired Baou stores in mid-twenty eleven. And until the first quarter of last year, we were working on store remodeling, opening, five increase happened in 2011, right? And in 2012, we had a constant number over the year.
Well, that was at the very end. We opened stores in December because 35 stores had to be readapted. They were conventional and small stores. So we had a feasibility study and actually sales didn't happen last year. I'm sorry, I was wrong about the figures or about the date, but we are counting on it this year.
Thank you, Grace. And we'll keep on growing with virtual stores. Low cost, low investment, convenient. Graciela Paiva from Santander has a question. Good morning, everyone.
I would like to know if you are interested in Via Varejo stores to be sold, particularly in Rio. Well, this is not an acquisition. We are interested and we already have mentioned that. It's not an acquisition. This is different if they were selling the company.
It wouldn't be, but we cannot close an organic acquisition, right? So I called Via Varejo CEO and I said we would be interested. I'm not saying we will buy it, but we will be analyzing. We are in game because this is not growth in terms of buying inventory or customers, but only considering our organic growth. So we are interested in Rio and Virgo stores will greatly support Rio, particularly the one that Friderisco is testing at Ediopolis.
It will give us great support. So you can have conventional stores supported by Ediopolis stores in Rio. And if I tell you I want to know how much it's worth and where the discount is, this is different because there are many chains to be acquired. But to tell you the truth, when it comes to me, I say, Marcelo, please, you do it. Now, when we have chains to buy, but I called him personally because we are great friends and I said that I want to be in game with Via Varejo to see the point of interest because that's common organic growth and we are interested in it.
Thank you. There are no further questions. We would like to give the floor back to Mr. Marcelo Silva for the closing remarks. As you could see, all the indicators of the first quarter of twenty thirteen have been improved vis a vis the first quarter of twenty twelve in general.
And we are confident that according to our purpose and our mission about the strategy for 2013, will keep on growing. We'll be assuring our gross margins, lower operating costs. So we're extremely confident that we'll be delivering quarter on quarter gradually positive and consistent results. So that by the end of the fiscal year, we will be delivering far more satisfactory and significant results compared to what we had in 2012. Louisa, would you like to say anything?
Thank you very much. I would like to congratulate our team for the outstanding job last year. You were really engaged. The first quarter is already showing results And I'm really happy with the results like I said. And I'm confident like Marcelo said that we will deliver our promise to increase our income, but always being aggressive growing sales, doing new things and being the magazine in Luisa was always been investing in culture, people and education.
Please count on it. And I'm very happy with the path taken by us. So now our company is based on the team and I'm very happy and confident that we'll be delivering many good new things on a gradual basis this year. Thank you very much. Francazini Luisa's first quarter of twenty thirteen earnings conference call is concluded now.
You may disconnect your lines now. Have a good day.