Good morning, and thank you for standing by. Welcome to Magazine Luiza's first quarter of 2013 earnings conference call. We'd 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&A session, when further instructions will be given. Should any of you need assistance during this call, please press star zero to reach the operator. 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 Magazine Luiza'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, not occur.
They may affect the future results of Magazine Luiza and could cause results to differ materially from those expressed in such forward-looking statements. 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 Magazine Luiza related to the first quarter of 2013. I have with me Roberto Bellissimo, Frederico Trajano, Fabrício Garcia, and Isabel Bonfim, our Director of Administration and Control, Marcelo de Almeida, Director of Luizacred, and also Luiza Helena Trajano, our President. We'd like to start with the highlights, addressing the highlights of the first quarter of 2013, starting with the growth in gross revenue, which was 7% growth vis-à-vis the first quarter of 2012. Same-store sales grew by 5.2%, highlighting e-commerce growing 21%.
We should also consider the competitive base with the quarter of the previous year at 15.9%. Very strong growth last year. This quarter, we opened 2 additional stores and closed 14 branches, 3 from Baú, which were overlapping in terms of geography. We forecasted that we would do that as soon as we concluded the 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-à-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-à-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 points reduction in operating expenses. This stems from our cost and expense reduction program, which we started last year. We also improved our productivity at the store. 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, LuizaCred's quarter, which was very solid growth in our revenues, 9.8, improving six percentage points of the gross margin of LuizaCred, and consequently, the EBITDA went up to 8.5. Net margin at LuizaCred, 4.5. We had a reversal of BRL 16 million losses in the first quarter of 2012 vis-à-vis BRL 16 million profits in the first quarter of 2013.
All these drivers and factors made us move from a significant loss in the first quarter, incurring extraordinary expenses, to profits. 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 number five, we show our growth in number of stores. We closed last year with 743 stores, marked with 731 stores, and we closed 14 stores that were overlapping and opened two additional stores, new stores this quarter, within our plan to open from 20-25 stores by year-end. And we closed these stores because now we're focused on improving the company's profitability as well.
On the next chart, we show our investment plan. BRL 27 million were invested this quarter. We optimized investment and invested less compared to the first quarter of last year when we had invested BRL 43 million. Please note that at that time, we were investing to expand our DC in Louveira, 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 a market share. Please note that this is the poorest quarter in retail as a whole.
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 Luizacred performance, which was a great highlight in terms of results this quarter. In terms of sales mix, third-party credit cards grew from 30%-36% stake. Direct credit to consumer grew from 14%-18%, and this has really helped the results for Luizacred, expanding our growth margin, EBITDA margin at Luizacred, and also Cartão Luiza down from 24% down to 16%. We continue to be very conservative in terms of credit granting.
However, on the next chart, we can show the total billing at Luizacred. Growing virtually 10%, from BRL 1.9 billion-BRL 2.1 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-à-vis the first quarter of last year, reaching BRL 3.6 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 Luizacred's portfolio. It was greatly improved vis-à-vis one year ago, improving four percentage points.
Over 90 days overdue went down from 12.7% down to 8.7%. It was very good performance, as you can see. A slight increase vis-à-vis December, stemming from seasonality, the normal seasonality of our segment. 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. Moving to slide 10. We show our gross revenue on a consolidated basis. Just to clarify, we changed our booking process for our results. We are using a new DC in line with IFRS. Now we are consolidating 100% Magazine Luiza and retail, which was already fully integrated at a controlling company. Luizacred and Luizaseg, which consolidated as a proportion, are now being posted as equity income. Affecting revenue, expenses, assets, and liabilities.
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 BRL 8.2 billion, growing 7%. Internet sales more than BRL 300 million this quarter, growing 21%. Consolidated net revenue, BRL 1.8 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-à-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.
Please note that in the previous format, when we would consolidate Luizacred as well, expansion was one percentage point vis-à-vis last year, considering the increased gross margin of Luizacred 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. 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 store maturation and synergies of our integrations as well. In terms of selling expenses and SG&A, there was a slight reduction. 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. We include equity method as well. There was an increase in gross margin, a dilution of operating expenses, and also a substantial reversal in our equity income results. As a result, our EBITDA margin grew from 1.4% or BRL 23 million to 3.6% in the first quarter of this year or BRL 63 million. This shows the beginning of our gradual improvement in the profitability expected for 2013. At the bottom, we show last year. BRL 56 million, 3.4%, our recurring margin, and this year, 3.6%. No recurring expenses. On page 14, we show a drop in financial expenses also contributed to improve our final results.
A reduction in financial expenses stemmed from CDI 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. These factors all together have really helped us to lower our need for 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 slightly 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 BRL 40.7 million, then BRL 21.9 income in the second quarter, BRL 2.4 million in the third quarter, BRL 9.7 million in the fourth quarter, and virtually BRL 1 million 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 single-digit growth for 2013 is assured. It had been growing. April was much better despite Easter last year vis-à-vis this year. Mother's Day was also slightly above our expectation, really positive. We expect to open between 20-25 new stores, and we'll keep on growing consistently, both in terms of sales and also number of stores. 20-25 new stores this year. 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%-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 have the same visibility of other Magazine Luiza 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. Our price policies are more stringent. We are having this in our zero-based budget.
The most significant gains are expected to happen in the future, more and more than they happened in the first quarter, including gains of synergy, because now we have already integrated Maia and Baú chain. 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. Now with price management, improved stores in the Northeast. In terms of profitability, except for seasonality in 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 tariffs, and we are improving productivity in all our company stores, ODCs. Luizacred continues to have an expense rationalization program that is still very strong. All these synergies will be much higher. 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&A session, I would like to give the floor to our president, Luiza Helena Trajano.
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 in practice.
We knew things would happen this way. Well, we bought Baú, and when it had the merger of other stores, we had two very challenging years. We also follow very closely. In the south, we had a drought, very strong drought. Now we had another drought in the northeast. 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. Baú was something we really wanted to have. I particularly wanted to deliver 100 virtual stores. I believe the change from brick-and-mortars to five and 10 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. Virtual stores are something that. By the way, we expect to have a mixed store in Heliópolis, and 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. The 13 stores that we closed with Baú were not in the valuation because when we bought them, we took another year to see if it was really worth it. 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, and 35 that we have already fully converted in Paraná 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 a capital city. We were very confident, now we have no excuse about the merger. Still, we'll keep on growing. I'm really excited this weekend. We had the right product at the right time, the right campaign. Well, we sold 7,500 pan sets last weekend and home appliances. We want to improve our margin. We will be improving our margin, not by buying new chains, because that interferes. I'm not saying we're not growing. I'm not saying we're not going to increase our sales. Chains sometimes impair results in the first years.
It is good on the one hand, but not on the other. Now we are focused on profitability. Profitability will happen, that is why we are focusing on stores growth, reduction of expenses, and opportunities. I would also like to say that tomorrow I am going to Brasília. President Dilma will. We have been working in a group with technicians and also with the President and several ministers. President Dilma will approve this week or early next week something really good. Minha Casa, Minha Vida program. People can buy through a Caixa card with Magazine Luiza. We were the first with furniture tests, 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 worked to increase from one-door fridge.
People like frost-free refrigerators. People will have up to BRL 5,000 according to their credit to spend in our stores. Those who are already in MCMV will also be entitled to it. Caixa will really facilitate loans. We have already things in the media, but we are going to Brasilia because we hope to make this process work. We are also very strongly engaged in tax distribution, and we are sending back everything we paid more in retail as of July. We have been really working hard to help the government to create something consistent. Minha Casa, Minha Vida, 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 BRL 1 billion 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. We are studying with all the bodies how we can sell insurance properly in order not to bring insurance to an end. We are firmly engaged with the government. More than 2 million products within two or three years and financing in 60 payments, and we will not have problems of default because we have cash through a card. Magazine Luiza helped to make this card with Caixa. We have a lot of novelties, many things happening, and we are really excited this weekend. Quite a long time, we had been expecting to do something. We were really surprised, and I was really happy this Monday. It is great when Mother's Day is good. The market was really warmed up, and it was really amazing.
I will be here for the Q&A session. Thank you very much. We might not have bought a chain, but no, we had to buy the chain. Otherwise, we would not be in the Northeast, which is an amazing market. We have been through serious droughts, but this is really a boom, and all investments will be there. I do not regret having bought about 35 virtual stores in Paraná, in the interior, and other states, and we greatly improved our stake in São Paulo. That had a price to pay, and we paid that price, and now it is over. Everything is over. 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.
Adapting a system, well, this is really challenging, and they did it very smoothly without interfering with our daily business. 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&A session for investors and analysts only. Questions from the web will be answered later through email messages. Feel free to contact us for any further problems. If you have questions, please press star one. João Mamede 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.
I'd like to know what the company imagines to be the stake of this project in sales later on. I think there are more expenses to gain, right? 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 mortars, and e-commerce generally has a lower margin compared to brick and mortars, this gain was even more significant. What about the future? What are further gains? I think Marcelo already made some comments saying that there are future opportunities. I wonder if you could quantify what you envisage for growth margin performance down the road, and also with e-commerce growing more, you also expect to grow from 20-30, more than one digit compared to retail.
Can you make comments on these dynamics? It would be excellent. Thank you very much.
Can I answer about credit cards? Maybe Marcelo can address gross margin later. What happened? Brazil gave credit cards to everybody. People you would use didn't use credit card properly. 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. I've been following default at Luizacred on a week basis. We follow the whole operation, and default and delinquency is under control. Our payment card is also under control.
Remaining Cards, like Roberto mentioned, are those that are really profitable to the company. There was a strategic error by all banks and financial institutions. The premium should be on card volume, but not what would be bought by card. The cost to the company was of cards that were not used. By saying 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.
That answers my first part of the question. I'd also like to mention our satisfaction. It is the only dotcom that is profitable, and it has been growing profitably. If you get into our website, it is a really cool website.
People buying wedding presents, for instance, it's really agile to buy, really friendly to buy. I buy myself because we all pay everything on the right spot. Even Luiza pays and buys.
Roberto is going to answer the second part of the question, and I hope I've answered your first part of the question. CDC was a way out until we could get cards back on track and put delinquency under control.
Thank you, Luiza.
Good morning, João. Just adding something as well. CDC stake grew a lot since the beginning of last year. 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.
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% or almost 15% of our sales. That was a growth or a good performance in the gross margin of other regions net of e-commerce.
This is Frederico 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. It is more than offset in this proportion of brick and mortar. The impact of e-commerce in EBITDA growth is very positive.
Actually, although we grew more in e-commerce than brick and mortar the first quarter, the Northeast factor was very representative and significant, and the consolidated gross margin went up. E-commerce did have a positive impact in EBITDA, just as it happened in previous quarters.
It's clear. Thank you.
Thank you João.
Irma Sgarz 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. 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.
Except for that, anything that you 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 Frederico 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 one to one. 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. For upcoming quarters, our comparative base will be softer compared to the first quarter of 2012 because the economy last year had a slowdown, and the first quarter was still strong.
This is the main driver in this reading of results for the first quarter. Another important factor, Irma, is that we have 3 days less this quarter. Remember, last year, Easter was in April, and this year, Easter was in March. The 3 less business days have a 3 percentage point impact 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 high single digit for same-store sales. The same for Mother's Day, considering the positive weekend we had. We are excited, also being very bullish vis-à-vis e-commerce growth. It is still solid, robust, and maintaining our profitability.
Irma, this is Luiza speaking. I would like to say that we're going to have the Confederations Cup, and there we'll sell a lot of TVs.
We are selling smartphones 4 or 5 times more than we usually do because the government gave us a lot of incentive in April. As of the day 20, we are booming in the broadband, for instance, BRL 10, and this is going to hit 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 10 days in April were 3 or 4 times higher in terms of sale. Then we'll have the World Cup and then the Olympics. Brazil has 6 years of consumption, amazing consumption. When you have a strong game, people change the fridge because they want to entertain friends at home. We're also working a lot with communication.
On top of all the products that I said, more than 2 million products that will be launched as of next week, encouraging people who are in MCMV, who had no previous loan. 60% of C-bracket households don't have credit. That's only because they have no access to credit. 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. Just imagine if Brazil still needs 23 million for MCMV to have satisfactory levels of cash at sustainable levels, socially speaking.
Perfect. Thank you. Certainly, these are important drivers. 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. Generate 100% through the DC in Louveira. Now we are already testing a pilot study of a center in the South, if I'm not mistaken. 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, or 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. Since early last year, just 1 DC center early last year would build. Just Louveira DC would build e-commerce sales for the whole country. We are the 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 separated. Our operation gives us the chance to work integrated with DCs that can deliver both through e-commerce and brick and mortars. What we already do in our rollout, we already have Caxias do Sul DC and another in Minas Gerais with e-commerce. For these regions, the delivery term goes down 60%, and we also have a drop in delivery terms. We have a very positive impact both in sales increase, because if I'm more competitive and I deliver faster than our competitors who don't have that benefit in that region, and we also improve our logistics costs. The main e-commerce cost is freight expenses. In brick and mortars, it is the payroll.
If you manage to lower freight expenses, you can greatly improve the EBITDA commerce in EBITDA, which is already positive and above the market average, thanks to our policy of multi-channel. We already have two DCs in addition to Louveira, 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're 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. In our case, all we have to do is to adapt our system with very low investment to work on an existing DC and operate on e-commerce.
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 invested.
Perfect. Now, just as a follow-up, what about these reductions in logistics costs? Do you intend to transfer them, or are you already transferring that to customers? Maybe that also helps to drive sales. Are we going to keep on doing that? At the same time, obviously, this also brings operating leverage. How will that happen in the earnings results?
Absolutely. We're not transferring that to our customers yet. We only do that once our operations are more stable.
For the P&L, what we can see is a reduction in SG&A, particularly in an account that represents SG&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.
Perfect. Thank you.
Ronaldo Kasinsky 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? How about Minha Casa, Minha Vida 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 Minha Casa, Minha Vida.
It takes some time to happen, but it was not in our guidance. Tomorrow we'll have a meeting in Brasília, and we'll set the final aspects. President Dilma is in a hurry to set that, and once Marcelo knows what happens, he will add it all to these other aspects. Maybe in the second call, we can say how much it represents to us. That's something really cool because there is no default. You have it right on the spot. It's really cool because it adds customers that would not buy from us otherwise, those who currently have no credit, like I said before. It's a new consumer that will get into this project of essential or basic products.
João, we cannot measure yet what the effect will be.
Like Luiza 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 margins. That's what we already do. Products, home appliances, TVs.
About the mix, can I just say something? This is Luiza 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.
Now they're buying a multiprocessor, new pans, and we launched a new multiprocessor this weekend, and it was a great hit. We will always sell gifts, presents, and toys, portable equipment, and now portable equipment for women's hair, for instance. They have a very high demand. They like to buy in the brick-and-mortar store so they can take it home right away. I'm also helping our managers in the gift line because I'm very confident that color pan sets are really selling high. By the way, we sold about 8,000 sets last weekend. There is no delivery, no technical service, and the margin is greater compared to our products. Once that grows, and Magazine Luiza is ready for that is a strong market trend, considering nobody expected to sell this high number of pans. It was an unknown market.
This mix will really help to work on our margin. I believe this so much that I'm working with Fabrício so we can sell gifts for the team as well.
Great. Thank you. We firmly believe this.
Thank you.
[Ricardo Pascow] from Itaú 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 Luiza's opening comments on virtual stores. Since last year, 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 Baú. By the way, this was the reason why I struggled to buy Baú.
I thought the price was cheap. We turned 35 stores, and we have 105 virtual stores now. Regardless of e-commerce, billing will be very high. We grew. What happened was that some 35 stores from Baú converted into virtual stores. We grew in virtual stores, and we keep on growing. Heliópolis, 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 Heliópolis, and we also have communities like Paraisópolis. You could go and visit. It's really cool. I visit them very often, even with people from Samsung and Whirlpool. I take these people there, and we will be opening a very good and better store. We never stop.
We opened 38 or 39 last year. Roberto can give you the right figures, and Tatiana and our team can also give you the right figures. We never stop. Quite the opposite. Baú was my go to increase the number of virtual stores and have a leap. We never stop. 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 statements. This is inside Magazine Luiza. 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 Lojas Maia or Vasconcelos, not even Luizacred, nor Luizaseg, 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, but the systems are the same. We already have gains in brand improvement in the Northeast in the first quarter. Now we have another opportunity. The operations and commercial areas are working together so that gradually we can improve the margins in the Northeast. There will be a time in which it will be equivalent to the Southeast, just preserving some peculiarities of the region. 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. 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.
Only when it happens, only when you have something different. Right now, we have gradual gains in gross margins in the Northeast and also gains of synergy, considering we had the integration until October. As of November, we also have gains of synergy for SG&A in the Northeast as a whole. Marcelo, the whole operating part in the Northeast, payroll, controls, everything is ready. Well, all the operations are ready there in the Northeast.
Payments, everything is electronic now. The Northeast right now. Well, we have already worked on the whole administrative part, and the effects will also appear in the future. It's not easy to take 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 ready with the CSE in Franca, where we have our operating part because everything is easier and cheaper for us.
Great. Just to clarify about virtual store, I'm looking on the chart on page three, and I can see the first quarter of 2012 with a flat number, 106 stores. Am I missing something here?
I'm sorry. Roberto will explain that.
Me too.
We acquired Baú Stores in mid-2011, and until the first quarter of last year, we were working on store remodeling, opening. 35 increase happened in 2011, right? And in 2012, we had a constant number over the year. That was at the very end. We opened stores in December because 35 stores had to be readapted. They were conventional and small stores. 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, we are counting on it this year. Thank you, Grace. We'll keep on growing with virtual stores. Low cost, low investment, convenient.
Graziella 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. 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. We cannot close an organic acquisition, right? I called Via Varejo CEO, and I said we would be interested. I'm not saying we will buy it, but we'll be analyzing. We are in game because this is not growth in terms of buying inventory or customers, but only considering our organic growth.
We are interested in Rio, and vertical stores will greatly support Rio, particularly the one that Frederico is testing in Heliópolis. It will give us great support. You can have conventional stores supported by Heliópolis stores in Rio. 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. To tell you the truth, when it comes to me, I say, "Marcelo, please, you do it." When we have chains to buy, that 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 points of interest, because that's common organic growth, and we are interested in it.
Thank you.
As a reminder, to ask questions, please press star one.
As a reminder, to ask questions, please press star one. There are no further questions. 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 2013 have been improved vis-à-vis the first quarter of 2012 in general. We are confident that according to our purpose and our mission about the strategy for 2013, we'll keep on growing. We'll be assuring our gross margins, lower operating costs. We're extremely confident that we will be delivering quarter on quarter, gradually positive and consistent results, so that by the end of the fiscal year, we'll be delivering far more satisfactory and significant results compared to what we had in 2012. Luiza, 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. I'm really happy with the results, like I said. 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 Luiza we've always been, investing in culture, people, and education. Please count on it, and I'm very happy with the path taken by us. Now our company is based on this 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. Magazine Luiza's first quarter of 2013 earnings conference call is concluded now. You may disconnect your lines now. Have a good day.