Good morning, ladies and gentlemen. Thank you for waiting. Welcome to Magazena Luisa's Conference Call referring to the Second Quarter of 2019 Results. At this time, all participants are connected in listen only mode. And afterwards, we will have a question and answer session when further instructions will be given for you to participate.
Now we would like to turn the floor over to Mr. Federico Tarzanov, CEO of Magazenov Luisa. Mr. Tazenov, you may proceed. Good morning, everyone.
Thank you very much for participating in our call about the results of the Q2 of 2019. Here, I have all the executives of the company as traditionally we do in our calls. And we will all be available to answer your questions at the end of my In this call, we have the presence of Mike Kruger from Netshoes, and he will be available as well to answer questions about the operations based on the results of the second quarter that will be incorporated into the balance sheet of Magazine Iluisse. Now turning to the Q2. A lot of the good results that the company has been delivering in the last few quarters comes from clarity from strategic consistency together with the disciplined execution and this was what happened in the cycle of digitalization of Magalu and it will continue to be so.
And in this quarter, we see the beginning of this new strategic cycle as well. And our focus is the construction of the platform, popularly known as marketplace. And due to the dynamic of the platform itself, we have a nonlinear growth, I would say, a Chinese type growth since the beginning of the year because with a platform, you do not grow all by yourself. We are talking about 1,000 and 1,000 of companies, small, medium and even large companies, and that have their products sold to millions of clients through the platform. So I'm very happy to see in the first, but especially in the second quarter, very consistent indicators of progress in this new strategic cycle that we announced at the end of last year, even more so because I usually say that the main competitor of Magalu in 2019 is Magalu 2018.
Our comparison base of last year was extremely strong. No retail company in Brazil has a comparison base as strong as Magalu of 2018 and especially the Q2 of 2018 in which we had maybe one of the best quarters in our whole history, which had the World Cup with a campaign, a successful campaign. And in the first in this quarter, we sold 1,000,000 TVs, smart TVs, over 20% market share at the time. So it was a big challenge to grow at Chinese levels on a very strong comparison basis as the Q2 of 2018. And the strategic pillars of this new cycle are, as we have been saying in our calls at least in the last two calls, Chinese growth mainly in active clients and frequency of purchases, growth of marketplace and the services rendered to the sellers, which is the 2nd pillar.
Both in our client base and the app, we are focusing a lot on our app as a universal remote control, as a center for universal control of this platform, which is our super app and a very good evolution there. New categories, fast delivery, efficient delivery, besides the best level of service in retail and a very strong work on big data as well, which are the pillars that we mentioned at the beginning of the year. And in this quarter, we delivered in all fronts. We will be talking about some figures in order to evidence this delivery and to make this delivery more tangible to you. But I would like to stress 2 relevant points in this delivery, which are marketplace, the second pillar of our strategy that our core platform, but it goes much beyond because it has to do with taking your whole infrastructure and deliver this as service to sellers.
And this is a construction that is achieved in the long run, but we have already had significant already had significant deliveries and we have grown the number of sellers and sales. And it was really brilliant, our performance and it was even beyond our internal our in house expectation. And new categories is the second one. Most of the time of our executives and my time was invested here in order for us to conclude one of the most emblematic acquisition in our history, which was Netshoes. And it was fundamental for us because we have 70 years of history at 1 specific category to really get into this business as a new category and do a very strategic move such as the conclusion of the Neptune acquisition.
It was a very competitive process, a very complex one because it involved a company that was built in Cayman, listed in New York and operating in Brazil. So you can imagine one of the most complex deals and totally complex deal and it took quite a lot of our time and started in the Q1, but April, May June were taken. And Marcela Garett and the whole team of Netsu, they all worked very hard in this process. In this quarter, so we delivered on these fronts, and I will start the presentation on Page number 3 now with the first pillar of our new strategic cycle, our client base already incorporating Netshoes clients. We have about 10 days of Netshoes balance sheet, but already incorporating the client base of Netshoes, we have 22,000,000 active customers in our base, 53% increase visavis2q 2018.
And even without NetUs, it would be a 30% increase, a very sound one, and the comparison base had the World Cup. And in spite of that, we had a growth of 20% visavisheprevious year, and we are focusing on selling lower average ticket product as well because it's important for us to increase the number and the frequency of clients. And with the growth of marketplace and exponential growth, we were able to evolve the client indicators at the same time. This is a huge challenge as you have less control over this base than on your own. So the RA1000 field in the reclaim Yaqui, we do not separate e commerce from marketplace.
We contemplate both in the same indicator and most of our competitors separate 1P from 3P. 25% of our total sales is marketplace and e commerce, but we kept them together here in this analysis. And we evolved, for instance, the growth of 23% in first call resolution In our call center, a significant reduction of procon complaints and several complaints as well. So a very significant evolution in all fronts and physical stores, e commerce and also a very positive NPS for well, not at 1P level, but higher than our expectations, original expectations and growing. So client indicator satisfaction indices that are very important for the compensation of our team, all this evolved quite a lot in the last quarter.
E Commerce specifically had a significant growth in the client base, the MAU or the super app with the Netshoes base, which has a very high monthly frequency, which is the monthly average users MAU reached 12,000,000 in this quarter. And recently, we had 3 apps among the top 3, the most downloaded ones, and that shows Magalu last week. We did the NetApp in all our apps. So we have 3 of the top 10 apps in Brazil in terms of downloading Netchos, and Magalu continued this week as well, showing the strength of the combination these companies. And I would like to highlight the logistics work of Magalu.
We got to an indicator of 40% of deliveries, being last mile delivery, that is to say in a couple of days. And in the consumer's home, if you consider the click and collect, we are talking about 70%, 75% of deliveries of Magalu today being carried out in up to 2 days. And these numbers are already compatible with U. S. Operations and Chinese operations.
And most of these deliveries, we are already doing in one day, enough to one day because of a huge endeavor made by our whole logistics team and with the acquisition of our Uber Life of deliveries, Love B and helped us to have this participation and we already deliver in over 100 cities. And another highlight, 10% of all the products sold by e commerce are built They are done by e commerce, but they use the brick and mortar stores inventories. We have been talking about that and conventional stores instead of distribution centers. And we want to make this available and roll this out as much as possible to net shoes, ship from store and click and collect. So we are evolving in e commerce and one of the main highlights of the app in the logistics level, that is much higher than the market average due to the fact that we work with our own network driven by Logby now.
And undoubtedly, the major highlight in the quarter was marketplace. And as I said before, it was higher than the market expectation and higher than our own in house expectation, 2 89% growth year on year. And I would like to remind you that it took us over 40 years to reach 1,000,000,000 in 1P and in marketplace, less than 2 years to reach EUR 1,000,000,000. So it's an exponential growth in a way that we have never had before in our history, €583,000,000 GMV. And one thing that we mentioned in our message, 100 percent of our sales with issue of invoices, 100% of transactions have invoiced issuance, so we do not encourage informal activities.
They will have much more control over all transactions, and they are much more formal nowadays and much more formal than we see as the pattern in the market. So we believe that there will be a very strong regulatory initiative and operators will have to sell original products and will have to take care with their quality of service. So our growth is not based on informal operations or non original products. And as I said before, we are talking about over 8,100 sellers that play according to the rules of the game, and we want to stimulate sellers that do not have any informal operations because we believe that this is the only way a company can grow in an organized country such as is the case of Brazil, what we are trying to do in Brazil. And at every 2 clients, when buys at the marketplace growing a lot in lower ticket product and this helps e commerce to gain new clients.
And I would like to mention also our brick and mortar stores. We did a lot of work in this quarter because the exchange of TV was a very big highlight and 27% same store sales driven by these promotions that happened. And the focus was on physical stores. If we exclude the TV or smart TV line, in spite of that, we were able to grow at double digit, 10% in this quarter, excluding one category, which is smart TVs and all the other categories grew and we already see our physical stores with a strong base in the Q3. So the level is already similar to the other quarters in July August, and we expect to publish these figures at the end of the Q3, but it was a great work.
We grew 20%, our active client base. And I would like to highlight the quality and the sales higher than expected in the stores that were opened last year in Maranhao, which has all the stores that we opened in other states and very big success and sales higher than our forecast for the stores that were opened in the last 12 months. So a very good job done. We are very successful in these new markets, and we are about to get into Para, as has already been announced and very encouraged with the state as well as Mato Grosso and Brasilia. And we will be opening stores by the end of this year.
So we are very much enthusiastic with the expansion of our physical stores and the remodeling that is being done in the stores. We launched the Smartphone IS Brasil, the exchange of smartphones and we give a certain amount for the exchange of your mobile phone, your smartphone, and we launched this campaign at the end of May. So now in the Q3, it will be 3 months as a comparison base and a very successful campaign as successful as the other one that we did last year in which we exchanged smartphones now smart TVs. And now we are exchanging smartphones. And this buyback system was not popular in Brazil before.
And this benefits our physical stores as well because people come and they exchange and it's fixed frictionless. Now let's talk about Luisa cred. We continue to grow significantly our financial operation, 50% in the second quarter credit portfolio, 44% year on year, almost SEK 10,000,000,000 It's already the biggest independent consumer finance company in the market in terms of credit portfolio. The Luisa card base grew 24%, reaching DKK4,600,000 into Q 2019. We are selling the Luisa card also by Internet and then Netshoes card also with a very good performance.
And the highlight here is that our card is co branded, issued by a JV with Itau, it's a Mastercard Luisa. And the frequency of use of the Magasin de Luisa card is 7 times per month. So this is a very strong figure. And it shows that it's the first card for most of the clients that they use not only inside Magazines de Luiza, but they use the card very often in supermarkets and drug stores, etcetera. Sales outside Magalu represents 75%.
Net shoes, we have already highlighted the strategy. And Duarte and Marcio will be available to you to talk about integration. Marcio will be talking about the situation in Etchu. We cannot talk about quantities. We can talk about quality.
Quantitatively, not but qualitatively, okay. Now I give the floor to Berto, and then I will be opening for the Q and A. Good morning, everybody. Starting with the highlights of our results. Total sales growing by 24%.
On a 43% page, very strong, reaching BRL 5,700,000,000. We have already talked about the sales and marketplace, e commerce. In gross profit, market growth growing very strongly and giving it already a very good contribution and the gross margin dropping 0.8 percentage points because of the end of late operating expenses, We kept at the same level around 22% of our net revenue in spite of an increase in the level of service and the acquisition of new clients and services and faster logistics. With that, we were able to deliver an EBITDA of BRL 304,000,000, 7.2 percent margin, a net income pro form a net income of BRL 108,000,000 to 22.6%. Operating cash generation from operations continues to be very strong, BRL 700,000,000, ROIC 17% and twenty 3% in the last 12 months.
We continue to have a strong return and very good cash generation at the same time. And we closed the quarter with adjusted net cash BRL 800,000,000 even considering all the investments made in the acquisition of Netshoo Shu and the payment of the Net Shu debt and the net cash position of BRL 2,000,000,000 based on receivables from credit cards as well. And then we show the evolution of the user base. Fred has already referred to this. It's growing.
Number of stores, over 100 stores opened in the last 12 months, 27, 28 in the last quarter with the ShoeStock store and opening about 50 new stores in this half year with the Para coming on Para State coming on board. We are increasing our investments according to our strategic plan, over DKK 200,000,000,000 in the first quarter, highlighting technology and logistics that are the fastest growth areas. Then we go to the sales performance once again, accumulated 26% growth visavishemarketaboutaround3%, so an extremely high market share gain. In e commerce, 56% growth in the quarter, visavis the market, much higher than the market and marketplace reaching BRL 1,000,000,000 already in this quarter and total e commerce almost BRL 5,000,000,000 in this quarter with just a few days of integrated operation with Netshoes. Then we show the evolution of our expenses from 21.7% to 22%, a small variation and totally in line with the strategy of increasing our level of service, the Luisa car, the and the focus on our clients.
Equity income from €10,000,000 to minus €3,000,000 basically because of Luisa Krejji and we will be because of the IFRS line and the gap, but with a good result BRL35 million in the quarter. Now the EBITDA margin going from 8.5% to 7.2%. And with the nonrecurring effects, IFRS 16, they were positive, and the total EBITDA margin was 8.8%. Financial results from 2% to 2.3% financial expenses basically due to the growth of sales via Qatar Luiza in line with our growth strategy for Luiza Creggi. Working capital continues to have a very good performance in the quarter.
It continues to be negative by BRL 600,000,000. Inventory turnover very well balanced, around 70 2 days, very much similar to the same quarter last year. And 92 days similar to the Q3 of last year. So this variation in our cash position is totally related to the acquisition of Netshoes, as I said before. And then we give you more details in this breakdown of our cash flow and the total cash position.
Once again, we maintained practically EUR 1,900,000,000, almost EUR 2,000,000,000 in total cash with cash generation of the investment that we mentioned, including the acquisitions of Sautidoka net last year and Netshoo this quarter. So the net income was EUR 251,000,000 pro form a in this quarter, EUR 108,000,000 in the quarter. Considering in IBRF, it would be EUR130,000,000, the pro form a Luiza. And talking about Luiza continues to grow very consistently reaching 4.6 1,000,000 cards, almost 600,000 downloads of the app, expense CHF 6,400,000,000 in Luisa Card growing over 30%. And the net revenue of Luisa Caregi has been growing consistently.
And in this quarter, we had most of the growth of the net revenue in the last 5 years, a growth of over 50% year on year. And also because of that, the efficiency ratio has been improving quite a lot from 46% to 40% in this quarter, one of the lowest ever level of operating expenses in the last few years and with a downward trend together with growth in our sales. And still talking about Vysek Reje, we talk about the evolution of the portfolio. The over 90 days past due went back to the level of 2 years ago, basically because we have many more new clients than we had a couple of years ago or 1 year ago even. And as you know, the new clients usually have 10% compared to the other clients, older clients, 7%.
And today, our portfolio has much more new clients than 2 years ago. So delinquency continues we continue to have a very good expectation with this new client and short term delinquency very low, 3.2%, very much under control and the coverage ratio, 78% of the portfolio. So with that, Luisa Swed had €8,000,000 in net loss in IFRS. So very high provisions also due to limits granted to the best clients in our portfolio. So there was a rise in provision because of the IFRS 9.
So we expect to have a very good result for the full year. So these were the main remarks that I had regarding the financials of Magazin de Luiza. So I will give the floor back to Federico. Before opening for the Q and A, I would like to give you a highlight about the 3rd and the 4th quarters that we are starting. We will still have a very strong comparison base in the 3rd and the 4th quarter, but it will not be like the 2nd quarter.
So I believe that this will be reflected in our growth indicators for the Q3 and the Q4 as well. In the Q4, we had an exceptional Black Friday, and we intend to continue now to plan our Black Friday so that it may be very strong in the Q4. I would like to make a highlight. A winning team has to be very good everybody and we have very good players in our legal department and a big gain regarding the intermittent employees, this was a new legislation that was enacted and there was dispute and we had some defeats in the first level, the Q1, the lower court. And our team was excellent as well as our legal advisers and everybody in retail was turning their eyes to us because they all have intermittent workers, intermittent employees.
So this was a big victory on our part and on the part of labor legislation so that we continue to have the right people that we need them at the peak of retail. And we continue to grow a lot, the marketplace team and all the bow labs and with the team of Netshoes, we have over 1,000 people in 4 different locations, Sao Paulo Franca, Ubele and Sao Carlos. So we need to have these 4 locations because we dilute the risk because I feel not only at the lab, but well, the economy is not growing still, but the labor market is growing. And our professionals, our leaders are being contacted by many people. And we wanted to set up a very robust team for the long run.
We have over 50,000 people, 250 people in Magalu, our partners of Magalu. We have already attributed shares of Magalu to the main leaders of Netshoes and we want to go more in-depth in this program and considering other levels and to be contemplated by the program. And we had only just a handful of people leaving the company during these months. We have almost 40 directors of Magalu, 15 in net shoes that we maintain. We want to count on them, so we kept the team.
And they are important for our development, for our growth. And we so this was a very big concern on my part, and we are very well protected now. I don't mean that there will be a few changes, but we are very well protected. And I would like to highlight the integration plan for Neurto we started and the officers of Met will be talking about that in the second half year. We will be planning this and the heavier systems integration will be after Black Friday and the end of the year.
It wouldn't be prudent to accelerate this. And there are many things that they will be talking about during the Q and A. So now we would like to open for questions. Ladies and gentlemen, now we want to start the Q and A session. Our first question comes from Robert Foe from Bank of America.
Good morning. Congratulations. Thank you for the question. Could you talk about the changes being carried out in the 1P inventory? Good morning.
We made provisions for the sales that we will be doing in the second half in order to sell the product that have a slow turnover. We want to accelerate the turnover of our inventories, and the turnover is already good. It has always been good, that is to say 60, 70 days. But we will want to have more campaigns in the second half for these goods that have a slower turnover. So this was a provision that we built for that specific purpose with the objective of moving these products faster from now on.
I don't understand the second part of your question. You talked about changes in the assortment. What was your question? Your use of technology in order to optimize your inventory situation. But there are many fronts of technology here.
They are proprietary algorithms that we are creating to forecast demand, and we also use external information, Google and other kinds of information to for a forecast and also the assortment and the forecast of demand. And for the stores, we use information from our website, searches for products and we are being more assertive in this assortment and the algorithms of replenishing and the process of replenishing is more and more automated, no human factor involved. So most of these algorithms are very recent. They were developed with the commercial team and the e commerce people and the labs team and the physical store team. And at the lab, we have a team fully devoted to that.
Because of that, we believe that, well, we will take advantage of the sales, special sales, and we have one holiday coming in September. And we want to use this provision made in order to move these products in a more assertive fashion than in the previous model? Thank you, Fred. Growth in credit continues to be high, provisioning even higher. How do you think about Luisa Crede and the sustainability of the growth rates that you have today?
Liza Kredge has a very specific factor. All the consumer finance companies are under IFRS now, which is a different accounting method than the BaSANE GAAP. It's another model. And the IFRS 9 is a peculiarity, so to say, and we and Carrefour and everybody or a company or a retail company that has a consumer finance company has to follow this model. So it has to do with the provision it anticipates or brings forward long term provisions.
And the disadvantage is that when you grow a lot, you have to make a lot of provision. But when you project the result to 2, 4, 5 years, you see that in the 3rd, 4th year, your income will be much higher. So no surprises there. So from the viewpoint of our projections, the results the future results are very healthy. And as we said at the beginning of the year, this is a strategic definition.
We want to grow even if it comes to the detriment of the short term, we want to grow our portfolio 40%, 50%, not very much concerned with the results of the 4th quarter being affected because this is only an accounting factor. And if you analyze our result, the result of LizaCare is very sound and the EBITDA margin could be better. But I will continue to grow our client base because this increases loyalty and frequency. And I'm not going to stop doing that because of the short term results. So we are very happy with that and Itau is very much enthusiastic about this operation.
They even want to accelerate this further. So we will continue to go at Chinese pace in all products and services that we are selling through Luisa Crede. And also the digitalization of Luisa Crede, the app of Luisa is one of the biggest downloads of financial apps. Over 600 clients are using this app and with a very strong and the process of sale of cards in the stores as well. So, Visa Credit is becoming more and more digital and this will help to help us to continue to have our clients using the Luisa card as their main we're talking about pre approved clients.
They are all trying to activation is improving the portfolio, the frequency is improving as well and operating expenses are improving. We are improving the efficiency of Luisa Credi. This is just a temporary situation, and it only has it is just an accounting point. Joseph Giordano, JPMorgan. Some qualitative questions here regarding etchus.
I would like to understand that the short run, which are the main measures regarding the gross margin of 1P of net shoes and understand also the relationship with suppliers during this process in which there was a sensitive financial situation. And when we think about Black Friday and Christmas, maybe this is the focus for Netshoes, could we think about driving Netshoes in the Malia Luiza, the Luiza network? And now about Magasin del Luiza, you said that about investments in new clients. When we look at Magalu, will we continue to see investments in image and improvement in logistics? And in Luisa Creggi, you have the app in order to do the card.
But I would like to know why this is not integrated into super app of Magalu yet? Thank you for the question. And the first one will be answered by Marcio. He will be talking qualitatively. Thank you for the question.
I will give you a general overview here. I would like to mention that Netshoes Brazil came to Magalun Netshoes. Brazil. We had some other M and As before the M and A in Brazil. El Magalu acquired the business units that were more mature and more profitable of Netshoes, mainly sports and fashion.
And secondly, and most importantly, we gained this confidence during our negotiations and we saw that the cultures of the companies were very similar and we were very well received by the Magalu executives and net very quickly got into a Chinese rate growth together with Magalu. And the other step that was given by Magalu was the payment of net debt. And trust, of course, was very quickly to come. You have payment of the debt, a favorable environment in the process that was very tough during April, May June and very quickly net came back. And we were working in 2 great fronts.
1 is the integration. We have 4 areas focused: operations technology, back office and businesses. And focusing on a super planning for 2020 is systemic execution, systems execution. But we can already reap some fruits because we have expenses more under control, our base is smaller and we everything was published in our last releases. So the work of integration is being done.
The 2 teams together with a consultancy company focusing on the full systems integration as of 2020. And on the other hand, thinking about the business as acceleration net had already the level of suppliers. We have 100% of the base already understanding this moment and the inventory level of net continues to be under control. And I would say it's just that the best moment we have never had before in our history, in the recent history of net such a wonderful level of inventory. And with that, we resumed our growth pace and of course, a lot remains to be done.
And we have a joint campaign with Magalu. And as Fred said, 22,000,000 clients, we are already working on this client base together. And everything is okay with our suppliers. The inventories are under control at excellent levels, and we have already resumed a very good pace, higher than the market, 10%. In a very friendly environment, building things together from now on.
Would you like? Well, some highlights about integration. We divided this into 3 stages. The stage 1 was the 0 moment and with a very clear communication, a second stage that in which we are capturing coming from negotiations of contract and understanding of the back office structures, and we have a team that is supporting us. Also, tapping into joint business opportunities and the Black app is very important.
It was done hand in hand with Netshoes in the with very good results here in the last few days. And we are also focused on designing very clearly and detailedly the coming together of the 2 companies' operations, logistics and customer service, regarding the use of the Luisa network for net shoes during the Black Friday? Probably not because it requires a lot of systems integration, and we don't want to risk anything at this important moment. But execution will happen in early January and as soon as possible during 2020. I would like to add that we have one characteristic when we do acquisitions.
We must the best process must prevail. We want to tap into net advantages as a whole. We have a long haul work like aircraft that we didn't have the transfer of goods from one side to another. They have last mile in some cities, some even better than ours. All the automation is more developed than in our case.
So they have quite a lot of things. And it's important for us to learn from them as well and choose the best process. If the best process in a certain area is Magaluz, this one will remain. And likewise, net and Magalu. Regarding investment in clients, etcetera, our focus has been very strong in service level, mainly in express delivery.
And we need investments because we are increasing our major DCs and their inventories and expanding to other cities, the number of people who work in DCs and we are making a lot of investments in automation and we are focusing our investments in SG and A. It's more an effect of the delayed of being the effect on our gross margin. We are not traditionally aggressive price wise, but we simply did not transfer this. It was a strategic decision. Our investment is very strong in our client service, and we invest a lot in order to grow our client base, mainly in the app and also the Luisa Credge client investments in terms of awards given to employees to sell the car, etcetera, because the CLV is higher.
And it's an intelligent investment in the long run, not in the short run. So what interests us is the future frequency of views, not only in our client not only the size of our client base, but also the frequency. And the super app integrates now the NetSuite catalog, Edzatini Net catalog. And the sellers of marketplace are coming on board with new products. And we are very much focused on the hashtag netmagaloo to have a wider category array in financial services and cards will be added to the process of the app.
Our app is a shopping app and the other ancillary services will help the daily frequency of use and the monthly frequency of use. But our objective is to have the best shopping app in Brazil and you cannot do everything at the same time. Thank you very much. Richard Catcoat from Bradesco. I have two questions.
What is the speed of your speed to sellers of Parkspace, the cross docking, are you going to roll this out to all sellers? And the second question, could you talk about the dynamics of Marketplace visavis the 1P operation of Magalu, the growth of Marketplace? Is it totally incremental? Or is there some cannibalization level from 1P to 3P? We are focusing now Magalu Intregas, Magalu delivered in a more standard operation where you use the carriers in the market and not the Luiza network.
So this is a big systems development to integrate the delivery of 3rd parties into Magazini Luiza's network. We started with Log B, which has already a very good participation. We want to roll this out, including the click and collect over the next 2 quarters. I'm not giving you any guidance or mentioning any quarter, but what I can say is that this is one of the main targets of the lab people, the business people and the logistics people shared by some people in our brick and mortar stores. This is a very big target, important one, we have a very big participation of excess delivery of O and P, and we cannot deliver this yet to 3P, and this will be the big difference for Magazine de Luiza in the next few years.
This is very complex because we have to create a different legal entity in logistics in order to operate this. We have already done this. But over the next few quarters, I will be able to talk about the progress in this area. Thank you for the question. This is Eduardo.
Regarding 1P and 3P, Naturally, what we expect is to increment is not on the number of categories and products, but also in the categories that we operate in the long tail. This is what we have been seeing in the last few years, so much so that in 1P, we continue to have a very sound growth. And say that there is no cannibalization, well, I cannot guarantee this to you, but we try to deal with that in order to minimize any degree of cannibalization, focusing mainly on distribution and products and lines that are more complementary and the sales coming from these increments? Perfect. Thank you very much.
Good morning, everyone. I have two questions. One has to do with new clients in the platform. Could you give us some more color, Fred, about how many of these clients that go directly to marketplace? And still along these lines, do you already see any cross selling among the clients that come to the Netshoes platform and those who buy 1P and 3P from Magazine Luise?
And another question about logistics. You said that Magalu Intragers is already delivering to 60% of sellers on the platform. So what is the penetration of Logby for these same sellers right now? Well, first regarding Magalu Intregas, of these 60%, we have 2 modalities. 25% already go through our network and growing, growing because of the expansion of Log B.
In relation to cross sell between NET and Magalu, we started by analyze the basis and we identified what part is common to both. And we are working on our business plan and how to do this legally in order to tap into better results. And this is still in an embryonary phase. And new clients, we have the participation of new clients in the marketplace. And in the beginning, marketplace was working for recurrent clients, and this has already changed.
We have already had new clients, a higher number than we have in 1P. So overall thank you very much. Euros 22,000,000 are the single client. That is to say we did not include the repeat clients. So this base is already clean and this already gives you the very good perspective.
Ruben Couto from Santander. Going back to investments in new clients, can you give us some color about marketing expenses and your selling expenses? How much of your marketing expenses is divided between online, etcetera. Could you compare the marketing activities of Luisa and Netshoes, today over half of our marketing investment is online because the online base is growing a lot. We have contracted Fausto in commercial TV.
We have contracted Maesa and Faroo. We are very strong. And online growing proportionally, but brick and mortar stores capturing more of this participation. But online, And this number is stable in spite of this growth. We are not it is not diluting because we keep a very good focus, marketing investment in order to increase sales, but it's different from the marketing ROI, return on investment, we are focusing on client base, and we have to further integrate this in terms of our marketing decisions, but to bring new clients to our base.
And that it's very difficult to compare because it comes from another category. And in fashion, for instance, it is higher than electronics or consumer electronics or home appliances. So you cannot really make a comparison here, but their catalog is already in Magaloudis will be generating sales and we are going to approve our algorithm. We are going to increase their sales. So this will generate many new clients for Netshoes.
But all electronic consumer electronics and home appliances have a higher ROI. So there will be a cross selling between the platforms and not really increase investments in net shoes. Well, I believe we will accelerate investments there, yes. In the last year, Netshoes decreased investment in marketing because of cash situation. And there was a very good campaign for the marathon and the black app and full banner in wall, etcetera.
So it was great to see netback and delivery sales through these media. But you don't have to do one to the detriment of the other. We want to grow at Chinese levels based on synergies and also stand alone and the channels. But of course, we want to get new clients with 22,000,000 clients, 150,000,000 consumers that are active. So we still have a lot to include in our base.
We only have 2% of the onlineoffline retail in Brazil. It was 15% rubles and the onlineoffline retail is, as I mentioned. So we have a lot of room to gain space and we have a huge avenue for growth and we will tap into that because our focus the focus of Makalu for the next few years is growth. And I will be repeating this all the time during the next few quarters. This is our top priority growth.
Good morning, everyone. We have 3 questions. Nonrecurring volumes in the quarter, Could you talk about this? There is some tax effect there. And how could we think about the evolution of this line for the year?
The second has to do with Netshoes. Could you give us an update about the model of store that you are thinking? And in the opening remarks, Fred talked about the regulation that he sees coming in the future regarding informal operations. So what do you see there? And how this shift could materialize over the next few months?
Thiago. First, the nonrecurrent. So they are nonrecurrent, so there is nothing to be said about that for the next few quarters. And the main thing is the tax credit that is related to winning a suit, excluding the ICMS from the calculation base of the PIS and COFINS taxes. And we had a gain of about BRL1 1,000,000,000 in this line and we talked about the provision and tax expenses and compensation regarding these gains.
Expenses regarding acquisition, very complex, involving foreign lawyers and Brazilian lawyers and banks and auditors, etcetera, so expenses related to the acquisition. And some result of net shoe in these 14, 15 days. And in this case, we left this out of the result because otherwise we wouldn't be able to compare this to the Q2 2018. So these were the main effects in the adjustments in the financial results line. And some nonrecurring effects and the tax effect tax credits were restated.
So the restatement of these credits is included in the EUR 1,000,000 that I mentioned posted to the financial revenues line and the PIS and COFINS that I mentioned. So there is financial expenses related to the acquisition, mainly swap and hedge operations that are in U. S. Dollars and the prepayment of cards that in order to pay the debt 14 June at the closing date and other smaller expenses and the tax effect on all that between positive and negative, this BRL 291,000,000 positive for the total result of the company, but they are nonrecurring events. And we published our results focused on the recurrent results.
And of course, they are nonrecurrent events. They are positive. These tax credits will become cash during over the next couple of years or 3 years. So there is a positive impact on our cash and in terms of cash generation for the next few quarters as well. About the regulatory risk.
When we launched Marketplace, we made the decision of anticipating any regulatory risks because we believed there would be a huge volume in terms of revenues in Brazil with a very high penetration in the total transactions carried out by the Brazilian retail online and offline, you see all the marketplace operations growing a lot. And we thought that most probably governments and authorities and regulatory agencies would not accept for a long time operations that didn't have control over the sellers in terms of their issuing an invoice or not. So obliging them to issue the North A Fiskau or the invoice and demand the sellers to be formal in all their operations. So I do not have any privileged information about that. There is a lot of debate going on at the level of many agencies that deal with tax collection.
We are talking here about the executive branch and the judicial branch as well. And this is going to be more this will be increasing over time because marketplace is growing a lot and the agency, the regulatory agency will not allow this Amazon until a while ago did not collect that tax in the U. S. It became too big and the state saw that and now they are obliged to collect this tax. And in the U.
S, you know that the situation is not very easy. And this happened around 2011, 2012 and more than doubling the net. In Brazil, we will see a similar situation. And in Magasin de Luiza, we wanted to set up an operation already imagining that this regulation will be coming and being proactive in this regard. So we do not want to be worried about that in the future.
Should this regulation come, we will be ready and we will have a structure already prepared for that. And besides regulations, it has to do with ethics. So it would not be ethical for you to offer products that are being put on your platform by smugglers or by people who do not pay the due taxes, we have always grown being a very formal company, paying all the taxes and only offering products that are from ethical companies, so to say. And our board would not ever let us do anything differently regardless of any legislation. About net, the main focus is that we will become a super seller together with Magalu.
Integrations will start next year, as we said. But the ones that we already have in our hands, we're already executing. So our focus is to accelerate and place net in a position such as it had in the past. And strategically, we will be discussing new business models, new stores, new possibilities. But now we are reaping the fruits of what we have in our hand, the integration that already exists between Magalu and Sellers.
The Q and A session comes to an end. I would like to give the floor back to Mr. Federico Trajano for his closing remarks. Once again, thank you very much for participating in the call. Pagacini Luisa's call is comes to an end has come to an end.
Thank you very much for participating. Have a good day.