Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Magazine Luisa's conference call to discuss the results of the Q3 of 2019. At this time, all participants are connected in listen only mode. Afterwards, we will have a question and answer session when further instructions for you to participate will be given. Now we would like to turn the floor over to Mr.
Federico Traszeno, CEO of Magazena Luiza. Mr. Traszeno, please start your presentation. Good morning, everyone, and thank you for participating in our call for the Q3 of 2019 results. I'm here as usual with all the executive committee, and everybody will be available to answer your questions at the end of the call.
I will be making the presentation, the introduction, and then Bellissimo will continue, and then we will be opening for questions. This quarter was a historic one, full of very important things. Mainly well, even if you consider an over 60 years of age company, I would like to highlight some of these brands for the company. We opened the number 1,000 store in August San Francona, 43, practically after the first one that we opened. And the coming on board of 2 new states in Brazil, Mato Grosso and Para, and the purchase of Netsu, the acquisition of Netsu, although we announced it in the previous quarter, we integrated and now it is part of our financial statements as of this quarter.
In the previous quarter, it was only 3 days. So now it's the first time that we have a full quarter with the consolidation of the results of Netshoes. And we held the 1st large B2B event, Ekso Makalu, in our history. And it was held in September with practically 1500 people, most of them entrepreneurs that are trying to make their businesses digital by means of our platform. So it was an event by marketplace and with sellers and service delivery people in our ecosystem.
It was in the center launch. It was a very special event for us. And I would like to highlight as well, specifically in September, another very important point that shows the results of all these efforts of digitalization of the company in September. As we said in our executive message, with the growth of marketplace, we had 50% of our sales of that tooth. And I think this figure is very important.
It's very emblematic of what we have been saying. We digitalized the company and this represents quantitatively the digitalization of the company. But I think it is especially relevant if we take into account the fact that it was not to the detriment of our physical stores. The physical stores, as you will be seeing, had a very robust quarter as well. Besides having a number 1,000 store being opened and same store sales 9% over 16% of the last quarter.
So overall, our physical store is growing by 20%. So multi channel, omni channel strategy and the summation of the channels, once again, this is very well evidenced in this quarter. And also this quarter, there was a lot of competition, a lot of PR, a lot of investment, a lot of moves. And from the viewpoint of competition, both from foreign players and Brazilian players as well. So I think it's very interesting because for over 15 quarters, we have been delivering very positive results.
And most of them are much higher than the market expectation. And in some moments, I heard that these results were coming from a weak competition and the competition was not well structured and that they were suboptimal from the investment viewpoint. And this quarter, nobody say this because there are many things happening in the market. And I would like to mention this because the result that the company has been delivering is driven by a totally talented and hardworking people and our staff and our team is excellent and performed in a strategy that I believe is extremely winning and assertive. And this strategy is being implemented with a lot of discipline over many, many years.
And recently, it went through a redefinition, I would say. And I would like to start my presentation by reinforcing this point. We presented this during the Magalu Day at the end of last year And trying to give one example of the strategy, we digitalized Magalu, and now we want to digitalize Brazil, starting by the Brazilian retail. So everything that we lived as a company and all the effort that we made in terms of digitalizing the company, now we want to roll this out by means of 3P and the super app and all our endeavors in terms of building a technology and a platform. We want to make this available.
We want to roll this out to the market as a whole. And this is the new strategic cycle that we are already living. So I would like to start with the first slide here, which are the strategic drivers of the company. Here, we have 20 19, but of course, it is pluriannual. As we said at the beginning of the year, we are focused on the strategic pillars, exponential growth, platform leverage, super app, new categories growth, best retail experience, fast delivery and data driven and automation culture.
I'm not going to get into many details. I'm going to focus on the result of the Q3. But what is very clear based on our figures is that when you start the new strategic driver, consistently, you have to show it in your figures, in your quarterly results more than in a PR narrative. And you have to show this quarter on quarter. And the big highlight of the 3rd quarter is exponential growth, which is the first driver.
If we look at the results, and I would like to start by the e commerce slide, you can turn to the next page. You will see that we grew 96% in e commerce, of course, BRL 700,000,000 net shoes, but 54%. But even without considering net shoes, we had a 54% growth over 50% growth base in the previous quarter. So this is exponential growth based on an exponential growth that we achieved in the last quarter. We have been talking a lot about the super app as a main growth driver.
And I always say that this is the future and including the apps of the companies of Netshoes, for instance, and we reached a MAU, monthly average users, of 14,000,000 MAUs in this month. So this is a major growth visavislast year, 14,000,000 people and including Magalu, Super App, Netshoes, Atea and Africa. So the number of expressive users using the app this month and now we want to grow it even further, that is to say from now on, but we have already reached a very important figure there if we consider all the apps in the group. The group of the highest number of downloads, both if you look at the Google Store and iOS Store, you will see that we have 2, 3 apps and the Magalua app fighting to be the 1st in shopping. And in downloads, we are in the top 20 and competing with social media apps that are very relevant to the market.
So the strategy from the viewpoint of apps has been very good. And also for sales, it's not only for downloads. The apps are very representative in our sales growth, and the app sales are driving the sales overall besides marketplace that I will refer to on the next page. And I would like to focus now on net sales margins here, Edu will be talking to. And you see that it's much higher than we expected, the full core totally integrated from the view of financial statements and not from the view of integration assistance.
We have BRL700 1,000,000 sale much higher than what we expected initially. And in the dynamic of supply chain of this category, and we have been learning consistently within Edgeview's team. So these purchases are made ahead of time. So we are programming for next year and we have conditions to increase our supply for the next quarters because these purchases were made in cycles that were before our acquisition. And in spite of that, we had a very expressive result from Netshoes, both in sales based on the previous quarter as well as in a positive direction regarding balancing the profitability, but because we already have practically a breakeven in our EBITDA of operating results, and we reported this as well in a message from the executive committee.
So already reaping the fruits from this match, from this marriage from Magalua next. And the bulk of the savings mainly in SG and A come from the logistic integration, most of them. And mainly from the back office, that will be done over next year. Logistics, We have already announced and in the presentation, we already have the in store pickup at some Magalu stores. 1 of the stores had over 1,000 orders in this modality.
And on the Netshoes platforms, that's in mobile, you can select the Magalu store for the in store pickup. And one store of I think it was on Direta Street had over 1,000 orders in 2 days only. The client bought and chose to pick it up there. And if we roll this out to all the stores and we only have a handful of stores, the power of penetration and the savings in terms of shipping because you also have free freight, there will be a very good impact in the Q4 as well. So this is very positive.
And a few days later or after the authorization by Kadi and the integration of NetShoes, we integrated the catalog and we put it in the super app and the brands, as of they authorized us, we integrated in the catalog and from the viewpoint of search and catalog. So, we already have most of the brands that we integrated at the beginning and some authorized us recently, such as Adidas. And we are still going up in these categories. And we are seeing a very good evolution in our integration. Eduardo and Marcus will be give you more flavor regarding net.
And I'm particularly satisfied and surprised with the Q1 of NET and also the way that we are integrating. And so congratulations to all of you and to all of us. And you responded very quickly after this process because this process of acquisition, M and A, etcetera, is not an easy task. From the viewpoint of e commerce, besides the in store pickup, which is already over 30% of the e commerce purchases, we are rolling out the shipping from store in order to deliver, and we have over 145 stores already in this modality and rolling this further out. So this is another factor that will help us a lot in terms of our delivery.
And I will come back to that later. One of the highlights of e commerce in the quarter, as it was in the previous quarter, And I have already talked about exomagalu, but I would like to talk the 300% growth of our pre team visavis the previous year. So this is a very robust figure. We are talking about almost €1,000,000,000 of GMV in the quarter. So it's incredible from the viewpoint of growth and over onefour of the sales of e commerce overall of Magalu, 11,000 sellers.
And I would like to remind you that we have a very good curatorship for sellers by far. We have the most rigid process for the authorization of sellers coming on board and also the most robust process in terms of obliging the seller to issue invoices in all sales. So we are extremely careful in our marketplace, and we want to grow, but grow in the right direction in the right way. We don't want to have people who are not in the not legal market, so to say. And we want to have sellers that are as serious as we are in terms of paying their taxes and issuing their invoices and delivering the best service to our customers in Vangalu.
I interacted personally with many of these sellers, and I saw that there are so many good people there with the same commitments as Magalu regarding the level of service. And by the way, it has been improving a lot with this exponential growth. All the NPS indicators of 3P have been improving. They are not yet at the level of O and P, but with a consistent improvement with sustainability and informal companies, they do not grow. If you look at the productivity of the informal companies, they come to a ceiling and they can no longer grow more.
And you cannot have a large company growing informally or not paying taxes. We want these companies and our platform to become bigger and bigger in the future. So we made it very clear from the start that in order to work for Magalu, all sellers have to abide by our requirements and delivering the same level of service. And it's very good for the sellers as well in the long run. And I would like to talk about the Magalu Intregas, our delivery system.
We have to tap into this base even more. And we want to monetize this base with additional services, both in tag as our deliveries and Magalu Pagamiento, Magalu Payments. There is a lot of room to improve this GMV. And we do not really monetize this very much. So we are delivering a basic model.
And as we roll out special delivery services and special payment services, we will be able to tap into this more and more and delivering a better and better service to our sellers and to our consumers. And here, I'm talking about 2 points: delivery or fulfillment and payment, which is the pre payment of receivables and credit and financial operations for these three actions that go through the marketplace. So we have opportunities there, and we will probably be able to tap into them as we roll out the services that we are developing in our labs and with the help of our business people in marketplace. And the most basic model of delivery, which is Magalua Entrevels, we already have 72% of our sellers. But I still consider this very basic cross docking and other things.
We will be growing over next year. During the Q and A, we will be able to talk about this. Talking about the physical stores, it was a very positive quarter after a quarter in which we grew less because of the comparison base with the World Cup. And I highlight the entry into 2 new states, Mato Grosso and the historical inauguration in Para. And we practically the whole state practically came to a halt because of this.
Even in the Greater Sao Paulo, Santa Catarino, Hilton de Du Suu, for instance, in the Northeast as a whole. But this entry in Para was really symbolic because we started very strongly with a very assertive market, a very well located base of our stores and a fantastic team. And I went there on the inauguration day, and I was really impressed. And it continues to be very robust. And it is very positive also the fact that we are getting into Mato Grosso.
In this quarter, we opened 52 new stores with an extensive gain of market share. We're very well distributed in all categories, technology, white line, like product. So our core categories continue to be very good, and we are getting to new categories with our marketplace and with net shoes and 1P, many of our categories. And we want to be a one stop shop. But we don't forget our traditional categories.
They are the cash cow of the company, so it's important for us to continue to gain share. And there is a lot of room to grow. If we look at the standard categories, our market share is about 15%. So we still have a lot of room to gain share in our core categories. So we're growing in other categories, but we have a lot of room to continue in our core categories online and physical and many about 15 quarters in this good dynamic.
And to end my presentation and give the floor to Berto for the financials. The clients are one of the most important KPIs for us. We involved a lot, 24,000,000 active customers. We reached this. And here, I include almost 5,000,000 active clients of Netshoes with a lot of representation in our base, which was one of the big objectives of Netshoes acquisition.
So you can see we grew 44% versus the 3 to 2018, and we are growing not only the base, but the service level much higher than the others in the market. We are the only one that has the RA1000, and we have the best score in the reclaiming key site. And we have to grow exponentially, but top notch service level. So I'm very happy with this evolution. And it's very difficult to grow as much as we grow.
And at the same time, improve the level of service at the call center. We have a first call wait time less than 2 minutes and the first call resolution reached 95%. So we're improving our level of service. We don't want any problems to arise. But when one arises, then we need to have a first call resolution.
We have been doing a very good job in terms of avoiding problems. But if there is a problem, we have to solve it quickly. And the average NPS is 79. And those who are familiar with the Net Promoter Score, this is an indicator by means of which you compare with companies all over the world. And this is the first time that we opened this.
So we went up 3 percentage points visavislastyear. So this NPS of 79% is one of the highest levels of retail, not only in Brazil, but in the rest of the world. This is totally impartial. That is to say, we hire external companies in order to evaluate this. And based on that, in the next quarters, I will continue to show you our NPS.
But the NPS is very important, and it is also one of the indicators for the compensation of executives, including the CEO of the company. So it's very important for all of us. And one of the things that has been helping the NPS is the fact that we are raising the bar from for logistics as well for 1P. The data that I'm talking of I will talk about is for 1P, we have over 42% of total last mile deliveries that is Sustai Express delivery. And in Brazil, the average was 5 to 6 days, and we are bringing this down with the fantastic work being done by the logistics and supply people, the commercial people and the operations people as well.
And the stores also participate in that. So 42% is very high. If I consider 48 hours that we deliver in 2 days, we're talking about over 60% that are delivered in up to 2 days. We promised 42%, but in fact, almost 60% we deliver in 2 days. And in some cities, we promise one day delivery for most of the categories of our SKUs.
In terms of I talked about 1P and 3P, and we are making our best endeavors to roll this out to 3 people. So as I mentioned before, this refers to 1P and rolling this out to 3P using Malian Luiz and Log B and everything that we did for 1P, we want to do for 3P. But undoubtedly, the NPS is very high, mainly because of the brilliant job done by our logistics team. And I would like to highlight these factors. And now, Berto, I give you the floor to talk about these financials.
Good morning, and thank you for participating in our call. I will be talking about our figures. We talked about sales already. And the adjusted highlights now, here first, we will be talking about the adjusted highlights because we had tax credits and nonrecurring credits and provisions. And the results are more comparable to last year's, but they include net shoes for the first time.
Our gross sales growing we were able to increase our gross margin at 0.9 because of Netshoes itself that has a gross margin, which is higher around 40%. And also because of the marketplace, marketplace helps us a lot. And Marketplace is based on gross profit, and this helped a lot. Magalu and Magalu with Netshope. On the operating expenses line, we increased operating expenses a little bit because of the acquisition of Netshoes and due to the first steps of integration and also because of the increase in service levels and faster delivery and acquisition of new customers in line with our strategy.
With that, we had an adjusted EBITDA of about BRL 300,000,000 with a 6.2% margin already, including Next Shoes, practically with a breakeven in the EBITDA margin. Then we had a dilution of expenses financial expenses and benefits regarding interest on equity. And we got $136,000,000 adjusted net income, including a 2.8% margin net income growing visavislastyear. So this was a very sound result, and we continue to generate a lot of cash, practically BRL800 1,000,000 in the last 12 months with ROIC of 20% and return on equity very high as well. And we continue to have a very comfortable cash position, €600,000,000 net cash, €1,800,000,000 total, including receivables.
And I think the main message is that we continue to grow profitably and generating cash. And including the nonrecurring events, the EBITDA was over BRL 500,000,000 and IFRS sixteen margin of over 10% and that equaled to 135. Then we go to our client base. The MAU, Fred has already referred to this, then we show you the evolution of new stores. We opened 52 new stores, and we started investments to open an additional 50 stores in the 4th quarter.
And this is already or most of that is included in the total investments that were BRL186 1,000,000 in this quarter, growing over 65 percent visavislastyear. And in the year as a whole, we have already invested almost BRL400 1,000,000, in line with our strategy. On the next page, we show you the quarterly evolution of our sales. Year to date, 33% growth with a major market share gain online and offline and also the evolution of market rate, almost EUR 2,000,000,000 in the year. Then we show the quarterly evolution of our gross profit.
On the equity income line, here we see a better result of Luisa Credge in IFRS 9, already impacted by the improvement of the short term delinquency indicators. So this was the best IFRS quarter this year. And expenses, they went up. Operating expenses went up due to the acquisition of Netshoes and also investments in increased service level. We show you the EBITDA on the next page, the evolution of the EBITDA once again, very consistent, around EUR 300 €1,000,000 every quarter.
Margin, 26.2 percent, EBITDA margin 6.2 percent. And here, we are talking about operating expenses over net revenue. But in GMV, expenses have a lower weight because we are growing a lot with marketplace. And the performance of e commerce marketplace, etcetera, helped growing the nominal EBITDA that went from EUR 281,000,000 to EUR 301,000,000 margin from 7.7 to 6.2. But due to the factors that we have already referred to, financial results, we were able to dilute our financial expenses in spite of all the investments made this year, not only in CapEx, but also the acquisition and the payment of previous debt.
Financial expenses, EUR 1,900,000,000 dropping. And in adjusted working capital, we continue to generate cash based on the working capital around 70 days. The average term for purchases, 90 days. So a favorable cycle forecast generation. And Netshoes has already improved its working capital profile as well and has already improved the inventory turnover and the average term for purchases and generating cash for its own operation.
Here, we show the adjusted cash flow. Adjusted cash flow in the quarter, over BRL 200,000,000 from the operations, and we invested BRL 186,000,000. As we have already said, the net income, dollars 136,000,000 year to date, 2.7% adjusted, including non recurrent events, higher results. In Luiza Credit, we continue to sell a lot of Luisa cards. We increased our base, reaching almost 5 1,000,000 cards in total, 90% active with a very high utilization.
We highlight that the TPV of Liza Cregg reached BRL 7,000,000,000, BRL 1,600,000,000 inside Magazini Luiza and BRL 5,300,000,000 practically outside Magazini Luiza. And we are Cardusco branded. So this means that it can be used in the whole market. And our credit portfolio reached over BRL 10,000,000,000, growing more than 40 percent in the last 12 months, a very healthy figure. And we show that the NPL 90 had a slight increase from 8.5 to 8.8, reflecting once again such as in the last quarter, we explained the very high number of new customers.
But on the other hand, we highlight the reduction of the short term nonperforming loans, which is very positive, and it ultimately generated benefits in our net income in IFRS 9, as we said. So these were the main financial highlights. And now I would like to give the floor back to Fred. And I would like to open for questions already. Our first question comes from Thiago Macruz from Itau.
Good afternoon. I have two questions. Could you share with us the KPIs of the 200 sellers that are doing cross docking with you? And what about the improvement in the sellers' service that you're piloting? And it's very clear that you're going towards the super app, and the brands are already many apps inside, but you have always said that payment will be part of the strategy.
Could you give us an update in this sense? What about the fintechs operations and how do you see this? Good morning, Thiago. Thank you for your question. There is an important component, a strategic component there.
So some information is not public. I will do my best to answer about the sellers that are in the cross docking model. I can give you an overview, but as I said, we have 60% of our deliveries up to 60 days for 1P. And if you consider 3P, I believe that we have then, well, less than 20% and D+4. So the service level and the delivery time in 3P is much worse than in 1P.
And these 200 sellers, they already well, there is time regarding you sending this to the mail, etcetera, and the operation becomes a little bit more complex. But for the sellers that can do this up to one day, we can already bring them on board for the 3 day delivery. So we see a significant reduction already in delivery times and 60%, 70% reduction on average and also a significant reduction in the delivery costs because we have a level of expenses that is much lower than with the standard carriers, both for higher volume products such as courier. I would say that 20%, 30%. But overall, just ballpark figures so that you may understand.
So delivery time and the reduction in delivery cost, only these 200 sellers are benefiting from that. In Magaluentregas, I already have a benefit because my contract with the large carriers, which is this Makalu Intraglia not cross docking, which is a 70% that I talked about, our the volumes are much higher than the small sellers. So there is an advantage that mainly in terms of delivery cost and the level of service is better because when it is in Magalua and Tregas, our tracking of the growth is much better. So for the consumers, it's much better. The NPS is better of the deliveries.
So more or less, this is the answer. But the focus is to roll out the cross docking. The cross docking modality. In Brazil, I don't believe that storage will be as relevant as it is abroad, but we will be prepared to do this as well. So we are going to expand our area to have it also, but million cross docking, not so much in shipping from store.
And then we collect from the store, we pick up in the store and then we do the cross docking using the whole mesh. And storage will be part of that, but it is not necessarily the core in my view. We will be prepared for both situations. About payment, I can say even less because in order to increase the MAU, the monthly active users in the app, We want to do this with new categories and with lower ticket categories and higher shopping frequency, such as the net categories in Mercado Magalu, which is already representative, 25% of the website customers already come from e commerce. But we will not achieve the high frequency.
What we are talking about monthly average users, we want to go to daily active users. And we cannot do this with goods alone. We will have to have other services. And you talked about Mini apps, and we are preparing to connect these Mini apps. And payment is important, mainly in the context of increasing the frequency of utilization.
The Super App is the major part of our strategy. However, I cannot get into details regarding the timing, etcetera, but we will certainly be doing something. What is more in the short run, it is a prepayment, and there lies a good monetization opportunity. Payment to customers today is like a Red Sea. Although it is important from the viewpoint of generating frequency of use, which is important for our strategy, a major investment is being made.
And it's like having the Cutters Magazine without OLED. And in the OLED, market OLEDs for bonus and cash back and coupons, etcetera. In order to give this kind of attraction, it is too expensive. But from the viewpoint of profitability, with everything that is going in the world, going on in the world, even the online, well, of course, sometimes you can have a trade off. But we have to be very careful in terms of this direction not to get into this war of cash back, etcetera.
We will make it some move, but not so quickly. And it has the possibility of representing something more significant to our bottom line. And we have a very good opportunity in receivables discount for the sellers. So this is the priority. In terms of our endeavors in this direction, I'm not saying that payments to final end customers is not important.
But from the viewpoint of results and monetization, the payment or the prepayment for sellers should be the first direction. Thank you very much, and congratulations for the quarter. Robert Ford from Bank of America. Good morning, everybody. Congratulations for the results.
Could you talk about the response of Maaz, Mega Lue as a Service? How does it work in terms of monetization? And how do you expect this to evolve, Magalu as a service? Good afternoon, in fact. Bob, thank you for the question.
Megaloo as a service, the concept is retail as a service. What we do today in marketplace is a standard operation. We are generating sales for the seller. We are working with customer acquisition and taking advantage of the traffic that we already have in our digital channels and stores. But it's the basic service level in the context of the marketplace.
And our strategy is to be a digital platform that will help the Brazilian retail to become digital. And we have to have value added services such as payment. That was the object of the previous question. Magalupa Gamento is part of Magalupa service So that the seller may use working capital, etcetera, from the viewpoint of Fintechs for sellers in this component. This is the most basic one.
But there are many others regarding payment and credit that we can offer the sellers that are will be coming on board. We also have the deliveries and the intregas. If I take a delivery that I do for 1P and I make it available as a service to the seller, it will be under the context of Megaloo as a service. And I talked a lot about delivery in the previous answer, and we have an opportunity to monetize here. Although in the short run, it is more to increase the level of service and decrease the numbers of days for delivery.
So those who use Magalu Intregas here, it is free shipping and Magalu subsidizes this. So we announced this during the act for Magalu and it helped to increase the delivery service. This is a service. I have contracts with carriers, and I have a delivery service. And I am either making it available to the seller or via technology, via APIs, via platform, I'm doing the delivery for them, that is to say, retail as a service again.
And there is an important component that we announced during the Expo Magalupov, which is the following today, most of the sellers that are selling online. Our companies that have well, there are maybe 500,000 to 100,000 companies that sell online, But it is over 1,300,000 retailers overall, and only 50,000 to 100,000 sell online. So we are growing over 1,000 sellers online per month. And via Intacct E Commerce, that was the company that we acquired in our platform, we want to develop systems so that the analog sellers may sell. And we announced one of the first products, well, the startup softbox developed the IPDV.
The physical retailer places this in their store, the small and medium sized retailers, and most of the large ones already sell online. And they installed this in their physical stores, and the system does all the tax part and inventory and issues invoices. But when you have the inventory on this IPTV, it is made available through the Magalu app. So it is still a pilot in urban land. We intend to roll this out.
We have already had some sales of goods that were in the physical world only and that were sold over the Magalu app. And we intend to develop this even further. During ex Magalu, we launched Magalu Techie for the sellers that do it by hand that you say they issue their invoices by hand. And even in the 11,000 sellers that sell through Magalu Luisa marketplace, Some of them have the financial ARP, but some don't. And they do this manually and very small sellers among these 11,000.
So we launched Magaluta in order to help them to collect taxes and issue invoices in an easier fashion. So these are services that we will be delivering to sellers to make their lives easier, and we will be charging a very small fee. And these are opportunities that we have to improve the level of service in 3P. We want to be as good as in 1P. And at the same time, monetizing this space that has already grown 300% in this quarter, almost EUR 2,000,000,000 year to date.
So we developed labs. At labs, we will be developing everything digital with software as a service. And on the platform, we will be making this available to the sellers and, of course, deriving some revenue from that. Thank you, Fred. There is a question about Netshoes.
You said that the Netshoes has already reached equilibrium or breakeven, Which is the highest gross margin in the category, how should we think about net margins in the long run? I will ask Eduardo to describe the integration process, okay? And I will come back and talk about margin. Well, this last quarter, we made a commitment to get to November with the design of this integration already completed with many work groups. And we are reaching the final process, the organization design.
And we are getting to the Black Friday, and we have to be totally focused on that. But right now, we have already been able to step into very important things, integration of catalogs and the possibility of have store pickup for net shoes and we launched a new version, which is much more user friendly with filters. And this is already in our app, net shoes. And we have already taken Log B to cater to Nat Shoe orders in order to reduce delivery times. And we have already done the work in terms of synergy with contract for service providers.
And collectively, we have already decided to marketing initiatives, the Champions League, which will be broadcast by Facebook and our sponsors only because we are together with these two brands. And from the viewpoint of structural integration, we are finalizing the plan to be executed in 2020. And from the business viewpoint, we are already capturing some advantages. And I would like to turn the floor to Marcus, who will be talking about this. Adding to what Edu said, it's very important to have the inventory levels with the best situation possible.
And this is what we have already achieved. We have new inventories. And the payment terms already reflect the partnership that we have with our suppliers, with our partners and growing more than 20%. And with the EBITDA already capturing everything that Euzout said, it's important to stress the new sponsorships with marketing and displaces Netshoes as a very beloved mark and Zaccino, of course, as well, but sports going up. And the creation of a world within Magalu together with the brand in a very well structured model.
We are bringing gradually to a controlled environment, a healthy environment, all that, so that we may grow very quickly. Just to give you an idea, we are already completing over 50,000 products on the base of Magalu for November for Black Friday. So these are some details of the business. From the margin viewpoint, we do not give guidance. But together with integration, we are doing our strategic planning for Natchez.
We hired a consultancy company, and we are drafting a business plan, tapping into opportunities. And my view is the following. Net sales, BRL 2,500,000,000, well, last year in a market of BRL140 1,000,000,000, the penetration of fashion in Brazil is still very low. If you compare this to any other place in the world. So one of the biggest opportunities for growth in e commerce is fashion and there I include sports goods as well.
Net has achieved a high penetration In Brazil, it really changed the world of sports goods. But if you look at fashion as a whole, the penetration is low, about 5%, not considering some figures from marketplace, but some countries already have 20% penetration. So the focus of Nezhus is growth. We want to balance the result, and we already have some signs of this breakeven. We want to improve the cash generation of the company.
And this quarter, we already have evidence of that. But achieving this breakeven, the focus of the company will be growth, growth in revenues because looking at the opportunity as a whole, they're including the fashion opportunity. We can further increase the GMV of all the categories that Netshoes operates with. And this is Matsui's focus and his team's focus, growth with balance because Magalu grows with balance. So this is the way we do things.
So working with higher margins, this is the principle after we get to a higher revenue. But the advantage is that this helps dilute fixed costs and part of the dilution will be with the integration of the back office next year. And that should would have to have a large structure for 2.5. And for Magaluru, for a higher GMV needs less. And part of that has to do with Mala Luiza and the store pickup reducing in many geographies.
Sao Paulo, not so much, but in many other places, this will help reduce the delivery expenses of NET. But the focus of NET chooses to tap into this great opportunity, which is the apparel and fashion and sports goods market. I believe that the major wave that is coming is in these categories, such as was the case with electronics and appliances before. Luis Felipe from BTG. Good afternoon, everybody.
I have two questions. The first one has to do with Netshoes. Can you already see some cross selling? You said that 25% of traffic and the platform already comes from new customers. So we already see some cross selling, Netshoes customers buying products that were only sold in Macauza Luis?
And the ways you monetize, this is the second question. You talked about Mainly in terms of advertising, can you already see an opportunity such as you already see in more mature markets, more mature than Brazil? From the viewpoint of cross sell, very little. We already well, we do have some categories. Adidas will be coming on board this week.
So the major brands are coming on board now and the iOS store was updated during this last weekend. So we still have integration in CRM that are already being debated, but it is still scratching the surface. Basically, we have grown with the new categories that were already in Magalu and the new categories that were already in net shoes. So net within Magalua, but far from achieving the potential. We already see something, and we have to celebrate every million that we generate.
But we are still scratching the surface. It is the tip of the iceberg, And we have a lot of room to grow in terms of CRM and cross sell. About Magalhaouet, the focus now and when we talked about these strategic priorities, I said that we have a lot to grow in GMV as an audience, and we have to grow sustainably. The focus, well, we are very much focused on growth to the detriment of margin even because when you have a large margin base, it's easier to monetize. I'm not prioritizing new services yet.
Magalupa Gamento is the focus in terms of monetizing and receivables of sellers and not end customers, Magalupa Gamentus and even less than Magalupa Gamentus. But I would say that the main focus is to increase the active client base. We are talking about 25,000,000 of 150,000,000 economically active population. So we want to have a much bigger base. We already have Magalua, but this is not our focus, our main focus.
We are focused on increasing the base and the frequency, and we want the customers to return more and use the app more. This audience has to be monetizable. It's not only having the clients that bought in the last 12 months, but always going to the app, etcetera, then we will have relevant results in the future. So this is a business line, an important business line for the future. And this is an important path for our monetization, but the focus is to increase monetization.
The frequency of use, the MAU and the DAU as well. First, the audience and then the revenues. We are focusing on the audience first. Excellent. Thank you very much.
Joseph Giordano from JPMorgan. The first question has to do with the customer base. I would like to understand the behavior in your physical stores and how the Luisa card, which is a major part of the total revenue of the company, how do you compare the use of the Carton Luiza, the Luiza card in the physical world and the online world, you have a lot of room to grow with your loyal customers. And talking about Netshoes, you talked about Adidas and other brands that are coming on brand and leading the assortment of marketplace in the company. And as your competitor has a partnership now with another e commerce platform, Do you have any talks going on in terms of expanding the mix of net shoes because there are some products of these brands that are not available online.
Joseph, could you repeat your last question afterwards? I will start by answering your first questions, and then I would like to ask you to repeat your last question because I have not understood it. Well, physical stores in the quarter and the active client base of physical stores, yes, there was an increase in the client customer base in stores, 16% growth in physical stores. Most of the growth in the active phase of e commerce comes from 3P. And as 1P is growing with and without net shoot, less than 30% with the I'm talking about 1P now, okay?
Overall, 54%. Of course, the customer base grows proportionally to the growth in revenue. So with net you have 90% growth. This is a major growth of the e commerce. So a major generator has been e commerce, 1P.
But mainly, there was a significant impact coming from the active customers of Nat Shoes and also the marketplace that helps ultimately in the Magalu context. But physical stores growing 16% in the quarter. And this is a very important figure, considerable figure for the physical stores. Such as e commerce, the store teams have targets for active customers, and of course, the base is older. But we have a very healthy growth rate in terms of new customers and the active base and we are including clients of other markets as well.
So all these from Para, Matuboros, they are new customers. Some of them bought online, but most of them are new customers. The proportion of new customers is high. About the customer the Luisa card, it is very representative. And the customer that buys with the Visa card is more loyal, and the frequency is much higher than the customer that buys without the card.
And the lifetime value of this customer is 5 times bigger than the customer without the card. So it's super important for us to increase the number of customers that buy with the Luisa card. And the IPP, 50% in physical stores is not so big in e commerce, less than 10%, in fact. This is still a very low figure, but there is a huge opportunity to increase the penetration of the financial product in e commerce. And we are now tackling these questions in terms of the flow of the shopping process and also to have a better product for the online customer.
It's a little bit different from the offline customers. And we have a huge opportunity to increase the penetration of the card in e commerce, not to mention digital payments that are it's not only credit. Sometimes, it's banking bank account, etcetera. And it has to do with what I said to Thiago, there will be an opportunity as well in terms of digital payments as well. But I cannot give you any details because this information is not public.
And could you repeat the last question, please? The Netshoes assortment, the management of channels of global brands, online channels, such as Netshoes. And we saw another company making a partnership with another company with a similar operation? And is there any do you intend to further strengthen the presence of Netshoes Online because of these reasons? Fred has already said that we are doing strategic work with the brands, with net sports, fashion, so that in 2020, we can achieve exponential growth.
And increasing the portfolio of net shoes and sports. So we are talking with all the brands, a very well structured and very transparent talk. Nothing is being done in an underhanded fashion. We're working hand in hand with these brands. And of the 10 biggest brands in sports, 9 have already given us the green light for the natural world.
And the 10th, we are is already underway, and we intend to increase the mix, respecting segmentations, respecting all the different environment, magalu.com, Zatin, etcetera, with a very well structured way and seeing how Netshoes can advance in this portfolio. And the competitors' partnership has not made available the full portfolio. We are already talking with the brands about this as well. Well, when we talk about the integration of net shoes with Magalu, This is an integration that is done in a highly complex level with the systems integration that is much higher. It's not a web view.
We took the catalog and we integrated. We in the Magalu app, you can search products and the catalog is indexed. You have it in Airtel and Gogo, etcetera. You cannot do the overnight. So it's a native integration between the net catalog and our own catalog.
And it is indexed on the Internet. If you do not integrate natively, if it's not in the catalog, it's not in the search, it's the same as not being there. Regarding this, what we did I'm not saying that nobody will do this with another partner. This is not what I'm saying. What I mean is that we have a native integration, and the brands have to be consulted.
And I need to have the authorization of the brand. It is in the search. It is in the world. It's so indexed that I need the brand to authorize me. Otherwise, I will not go ahead.
It is as if it were not integrated. The difference that we have is that we did the native integration, as Fred said, and all the functionality that we can give our clients come also with an Edshu's product. So now we are increasing the store pickup and all the experiences, natively, they are going to be delivered there, all the improvements in the searches. So in the analysis that we carried out, we have this desktop mobile site version, which is a wireframe that invokes the site of the other brand inside the desktop and inside the mobile site. So it's totally different from the experience in which all the features that get into the Magalu app.
All the customers will benefit from there because it is fully integrated and natively integrated. It will be only natural for offline companies making partnerships with online partners. And we will be looking for other companies to have in our app. But we are looking for native integration, maybe with a different look and feel, but with a unique shopping experience. If you do not have this natively indexed in search sites and the catalogs for internal search and external search, This integration will not bring benefit to anyone, neither to the retailer nor to the platform.
We are not talking against any movement, but we are explaining the difference between our approach and how we want to get ahead. I intend to have the IPTV and other integrations with physical retailers that we place their physical catalogs on our platform. We want to be a digital platform not only with our own physical stores. So our mass strategy or part of the strategy is to integrate not only with the large retailers, but the small and medium size, of course, the large ones as well. And we will make our best endeavors to integrate with large companies as well.
But when you have the product or the catalog inserted in our experience, it has to be totally seamless for all customers. I'm trying to explain, it's not very easy to explain. And the cart, the shopping cart is unique. It's only 1. So in I do not want to create many different environments within my super app.
Everything has to be totally integrated with a shopping funnel, so to say, with no friction whatsoever, very user friendly, in other words. Richard Capkar from Bradesco BBI. Good afternoon. I have two questions. The first one has to do with the ODPE.
You said that you're delivering in 4 hours in 40 cities. Do you see any change of conversion and frequency in the client customers that are using the service in these cities? And also regarding the initial results of what you made available in October. I would like to know what you see in this regard. Richard, this is Eduardo.
Thank you for your question. About the impact regarding conversion, it is directly proportional. We have internal studies that show the conversion in terms of the promise of delivery times. And this is very obsessive on our part, that is to say reducing. And Log B today is the main tool or main strategy to get this reduction today in Sao Paulo City.
We can give you more information, but most of the deliveries in Sao Paulo in 1P already have one day promised delivery time. When you go from one day to 2, you have a drop in conversion, which is about 20% drop in conversion rate. About click and collect for net shoes, Richard, I really didn't understand your second question. Could you repeat it? Fred, you saw that you said that the initial results of Click and Collect in the Magalu stores were outstanding.
I would like to better understand the results that you see so far. Well, today, we have 4 stores. And in one of these 4 stores, we had 1,000 orders that were done in Click and Collect in 10 days, not in one day, in 10 days And in one of the stores only. So we are very positively surprised. And in all the stores, you see many a big amount or big number of you have the center, the LAPA, the Centodre and the other.
These are 4 stores. And I visit LAPA yesterday. I went to 595 as well, and all of them have a lot of items available in the store that are being collected by the client. And talking with the teams, it's great to see that most of the customers go there and they are new customers. They had never been to a Magalu store before.
So there is an opportunity for the physical stores to convert both selling financial products and financial services, physical products or like insurance or other products, financial products. So there is a big opportunity there. And of course, we are going to roll this out. We should be rolling this out very quickly. What is done for Netshoes is valid for 3P in general.
So we have a pilot for Netshoes, and we are going to roll this out to Netshoes. And soon, we are going to roll this out to other partners of the platform. Other sellers well, Netshoes as a seller and other sellers will benefit from this movement, and it's part of mass. Thank you, Fernando Eduardo. Ruben Coutu from Santander.
Good morning, everybody. I'm curious about Netshoes and Click and Collect. What about opening new stores focusing on this category? I understand the relationship with the industry is very specific and it comes from Natchez. And with all the benefit that you see from Click and Collect, I would like to know how do you see this possibility?
This is Marcio. Thank you for the question. As we said before, we already have 4 stores of Magalu, super surprised and the orders going there. And we are using this as a pickup point. Right now, we do not intend to use Magalu stores for sales or just to show the products.
And we will see how net shoes behave and thinking about online, physical, digital, all the models portfolio and have a bigger footprint and also using these portfolio and have a bigger footprint and also using these stores in an omnichannel operation, more on the Magalu chassis, so to say. We are very happy with the click and collect so far. And the customers, well, there are new customers on both sides, and we did not expect to have this level of adherence. So we have to fill the Magalu stores with these purple bags and bring other clients to Macalua, the customers to Macalua. I would like to go back to the initiatives that you mentioned to increase marketplace and mainly the reduction in the prepayment of receivables.
What do you intend to do in the Q4? Can you see already some degree of acceleration in sales from sellers that are now participating and were not participating yet, but that want to take advantage of the free shipping or free delivery? Do you have people coming on board only because of that? Well, it's still very incipient. We launched this last month and many things have to be done by the seller, such as the time for mailing it and many other requirements.
So we are not going to give you a guidance regarding impact on our margins. But we made our studies, and there is nothing very significant in this regard. The logistics is very efficient, and we have good cost. And there are some criteria for the act, like over BRL99 and so on and so forth. So we are already giving free shipping or free delivery for 1P.
So the investment is not so difficult in the context of 3P. And it's very difficult to segregate 3P because it's going well overall. And to know exactly what contributes, it's very difficult. It's going very well. And payment, likewise, Pagamento, likewise.
The advantage is the fact that the seller uses the platform more often. And today, we still have a 3rd party platform. And when we already have Magalupa Gamentus, but the economics is at Paragay, the company. And we intend to do this 100% internally and not using other acquirers. And the objective of giving this discount to the sellers is to help them have working capital and have more products and also so that the seller uses the tool.
And as the seller gets used to that, it will facilitate a rollout. Just to give you some more color, the main driver to make the seller join this free delivery is to give him a better term of payment. All the sellers that came on board in the program had a significant reduction in the delivery times promised. In Sao Paulo, it was about 30% drop. And when you go out of Sao Paulo, it's over 15% reduction in delivery times connecting to what I said before.
This has a direct impact on the increase in conversion. So we are learning a lot with this initiative. Thank you. Ian Masgaard from Goldman Sachs. Thank you for the question.
Conceptually, marketing is under SG and A. Of course, the level of investment has to be higher right now for competitiveness reason. So how do you think about this line? In the future, Maybe if it impacts your profitability, will you be still looking or focusing your eyes on growth? And the second question has to do with the macro environment.
Do you believe that customers or the market has a higher degree of confidence and what are your plans for 2020 and for the end of the year. Once again, we do not break down the marketing expenses. What I can tell you is that when we look at our investment in the context of SG and A over revenues, there is an important consideration by Beth. When you look at the quarter figures, you have to include the net effect because we got to a breakeven in the EBITDA. There is an impact on our margin.
And you have to exclude the following. As the GMV of the marketplace becomes higher than the total GMV of the company, it's already 25% of e commerce, Then when you compare the operating expenses with the net revenue, you're not considering GMV. You're considering the take rate. But when you look at your expenses, visavishetotal GMV and also net revenue, it has been increasing much less than it's shown in the financial statements. The marketing expenses per century visavis the GMV have not been going up significantly.
They are remaining flat. And I'm keeping it flat. And you asked me why are financial expenses going up visavisor GMV mainly because of logistics, investments in teams, and we have been doing a work for B plus 2. We are investing a lot. In the whole supply chain, more truck frequency, more travel frequency, a higher number of people in the DCs, a higher number of people in the brick and mortar stores.
We had to increase the number of inventory clerks because a lot is being picked up at the stores. So the inventory guys are the ones that are doing the hard work, that there is a team of inventory people in the stores. So we are investing much more in logistics percentage wise. And I'm very careful, and I do not do any overstanding in marketing. We have a more assertive marketing investment, more focused on the app and on customers that give us a higher CLV.
To client card customers, channels and others who have a higher frequency. A major part of the investment that we are making and shows in our results are not in marketing. We are increasing the team in our marketplace and labs people. So we are investing in many different areas so that we may grow our revenues and not overspending in marketing. I don't like the dynamics of companies that grow based on customer acquisition costs, that is very high.
And our customer acquisition cost is very low visavis the market. And as I said, we have not started digital payment, for instance. So we are not participating in this expensive game of wallet. The idea is to get into that, take advantage of the super app and not making an investment in order to have an additional app base. So it's different from what the market is doing, and I think it's going to be cheaper.
What about the macro environment? The second question. I'm very bullish about the market. We had the approval of the reform last week. The decision about the FTTS, which was very good because the government had done this in one and a half years, and it would not give the impact that retail needed and with the stronger stimulus given by the government.
Now we will see in next quarter or Q4 that we'll be very positive with tailwind and not frontwind. We have been growing for 4 years. But the best that we got was 1%. It was either negative or 0. So finally, we have to grow with the help of the macro environment.
And I'm bullish because with all the players I have been talking with, I see that the economic recovery will be driven by the private initiative and not the public sector. And it takes a longer time because companies have to set up a business plan and submit it to the board, and it has to have the necessary funding because companies or private companies usually do not spend money that they don't have usually. And I see a high cycle of investments, and this generates jobs and jobs generate consumption. And I see this as a recovery that will be slower initially, slower than the ones that we saw in the past. But once it comes, it will be more sustainable and sound.
I'm very bullish about it that we have been accelerating investment to see many initiatives in terms of automation of DCs, and we already have this in place in the LOVEDA DC, a very heavy investment, and we are accelerating investment in all the fronts, and we are very bullish. We believe that recovery will come, and it will become stronger in 2020 and in the following years. Thank you. The Q and A session has come to an end. I would like to give the floor back to Mr.
Federico Trasuno for his closing remarks. Well, I have already talked a lot. It's already 5 minutes past 1, a very long call. And I would like once again to congratulate our team for the outstanding job done during this quarter, and I wish you all a very good afternoon. Thank you.
Magazine Iluisa's conference call has come to an end. Thank you very much for participating, and we wish you a good day.