Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Magazine Luiza's conference call referring to the results of the Q2 of 2018. At this time, all participants are in listen only mode. Afterwards, we will start the Q and A session when further instructions for you to participate will be given. Now we would like to turn the floor over to Mr.
Federico Tragena, CEO of Magazena Luiza. Mr. Tragena, you may proceed. Good morning, everyone. Thank you for participating in our call regarding the earnings of the Q2 of 2018.
Once again, as usual, I'm here with all the other officers of the company that will be with me all the time and will be available to answer your questions at the end of this presentation that Roberto Bellissimo, our CFO and myself will be making now. Talking about the quarter now. I can say that we had an outstanding result. Broken sales is the best use for a retailer, and undoubtedly, this was the major highlight of the 2nd quarter. We grew 43% of our sales in all channels, and we have a sound and consistent result coming from work done by the whole organization, brick and mortar stores growing 27%, same store sales, a historical record.
And e commerce, once again, showing 66% increase outstanding increase very much because of the fruit that we are reaping seeing from our marketplace development, and marketplace had a very big contribution. And we have been reporting this since this is the 3rd quarter in a row that we are reporting GMV of marketplace. So this is really even a Chinese company would be proud of that. And although we had a very balanced growth in our channels and all categories went up, I would like to highlight the fact that we had a very assertive action, a very successful one on the part of everybody. We had the World Cup and the effect of the World Cup on sales already started in the Q1, but it is mainly on the Q2.
And we set up a campaign, a very successful one, which is called Saizika, which means go away bad luck. And we invited our clients to exchange their OTV for old news. And we even bought the OTV from our consumers. And this was a very creative action on our part and with a very good and interesting process engineering behind it. And we bought back thousands of TV sets during this period.
And the campaign was successful internationally. It was highlighted by international media and even the German TV talked about our campaigns. We had a very big voice share equivalent to brands that were the sponsors of the World Cup because we were not sponsors this time. And we were very successful with this campaign. And of course, this is reflected on our figures.
During our management, we had many crises, and we had a big one now, which was the strike on the part of truckers. And in spite of that, this not decreased our sales. At the first times of the strike, we set up a crisis committee involving the executive committee in all the areas of the company that could, one way or another, make decisions regarding minimizing the effects of this crisis. And we did a wonderful job there during this period of the truckers' strike. And that, of course, had repercussions all over Brazil.
First, we increased the delivery times both for e commerce and for the brick and mortar stores before the competition. And we were totally transparent. We had even over 20 days delivery times because we knew that there would be a big impact on delivery times because of the truckers' strike. But this is the consumers' year for us. We are totally focused on our consumers, and we had to start this way even if we risk losing sales.
And we channeled the marketing campaigns of brick and mortar stores and e commerce and very much so in the stores where we had or the product that we had and the necessary inventory giving special conditions. And for e commerce, for these long delivery times, we carried out a campaign that was called It is Worth Waiting for It and in the sense of making a lemonade from a lemon. And I would like to highlight the work done by our logistics. Our team is more and more aligned with our business, both in terms of express delivery and in normal days or the commercial area as well. And with normalizing inventories, after a few days, we already had 98% of our inventories already in normal levels.
And we in a few days, we reduced the delivery times of e commerce, which this was exceptional. And we did not lose our seal for e commerce and for all the other areas of the company. And I would like to talk about this now. As we said during the first call of this year, and we have been repeating this, what is really impressive about our company is the total focus on our client and with improvement in all indicators, both in terms of the active base of clients and repurchase and those who buy with credit card and that have a higher value and also indicators of level of service, talking about the express delivery and time for you to make an exchange of a product and NPS as well, which is an indicator that is important for all channels and also is a part of the variable compensation in all levels of the company, and we were able to evolve a lot in all indicators. And in spite of very high targets, we have been growing our client base, marketplace helping us quite a lot.
Most of our clients are generated from marketplace now or many of our clients, and we also have new brick and mortar stores. We are conquering new clients and opening new stores, opening new markets, 27 stores in new markets and areas such as Goyas and Maranhao, which are smaller compared to the others, and we doubled the number of cards issued vis a vis last year. And we also increased our credit to clients, and we brought express delivery to over 100 cities and all operators working in this modality. And these sites, we reduced 60% the average time of the return of the amount to a client that returns the product or wants to exchange the product. And last week, we had 30 seconds wait time at the call center.
And it was a fantastic work done by the stores and a lot of application of technology in the stores, in the offices in general in all areas of the company and also a lot of use of IT with growth in our investments in system development. And we have a new fact. We have the lab. We have the headquarters in Sao Paulo, and the team moved to a new area, a new location by the end of May. And we are going to take the Franca people to another area between August September.
So this is the estimate for this change. And we continue to be focused on our digitalization process and also in the application of technology in our business end to end. And I would like to finalize my introduction before giving the floor to Roberto by talking about our outlook. We do not have a World Cup every single quarter. So there was a one off situation in the Q2.
And of course, this growth will be more similar to other quarters without the World Cup that we have been delivering. We also have some factors that make us more cautious regarding the second half of the year, which is the depreciation of the real and also the pressure on the part of many companies in terms of price increases. And they still have to be absorbed by consumers. So we already see some pressure on prices. And of course, this changes costs.
And in a way, it also impacts sales. And I would like to remind you that I have been giving you this warning that we are also accelerating our investments in clients. These are investments that could bring about a reduction on our margin visavislast year because we have a huge objective, which is to have the biggest growth in the client base in the Brazilian retail and the best service level. And of course, there is a trade off involved. You cannot make an omelette without breaking the eggs.
And I see that these investments and these characteristics will be reflected on the results of the next few quarters. So I think it would be prudent for us to inform you that before investors review their expectations without considering these aspects. So I would like to give the floor to Roberto now. And at the end, I will return to answer your questions. Good morning, everyone.
Thank you for participating in our call. Let us start with the highlights of the quarter. As Roberto said, we grew 43%, BRL 4,600,000,000 in sales over a very high base in the Q2 of last year when we had already grown 27%. So it is growth overgrowth. In a market that didn't grow that much, But up to May, the growth of the market was quite low.
And in some cases, it was even negative. In brick and mortar stores, we grew 34%, 27% same store sales over a very high base, which was 14%. And we highlight the participation of the new stores driving growth in 7 percentage points with a very good result as well since the beginning. In e commerce, we grew 66%, also on a 61% base. EBIT published 13% growth in the second quarter.
So we gained much more market share, and marketplace went from 30,000,000 to 150,000,000, so a fivefold decrease, reaching 10% of our overall sales in total e commerce. In relation to our gross profit, 0.9 percent margin drop, in line with the other quarters and slightly higher because of the World Cup, because of the major participation of e commerce, which increased about 5 percentage point entering the World Cup. We had a very good performance in the image category and TV category. And on the other hand, we further diluted operating expenses, 1 percentage point dilution, mainly in terms of fixed expenses and bringing our SG and A to 21.8%, even if we consider the investments in this new phase, the acquisition of new clients and the higher service levels. EBITDA grew 32% with a record level for this quarter BRL 312 1,000,000 with an 8.5% margin.
We also diluted our financial expenses, and our net income was BRL 141,000,000, practically a twofold increase visavis last year. We continue to generate a lot of cash, BRL 1,000,000,000 from our operations in the last 12 months. And in the quarter, we also had a very good cash generation, and our working capital continues to contribute debt in 12 months, going from net debt to net cash BRL 1,300,000,000 and closing the half year with a total cash position and cash equivalent of BRL 1,900,000,000. On the next slide, we see the evolution of the new stores. The biggest organic growth, 61 new stores in the last 12 months.
And for this quarter, 27 stores opened. And in this quarter, we will be opening an additional 30 stores more or less. And so the expansion phase continues to be accelerated and our CapEx in the quarter doubled vis a vis last year to BRL 85,000,000 in line with our growth plan and with the funds that we raised in our offering in the follow on last year and in the half year, our investment grew over 50%, reaching BRL121 1,000,000. We show the evolution of sales on a quarterly base, almost BRL 5,000,000,000 in sales in the quarter, BRL 1,500,000,000 in e commerce sales, growing in the half year, 65%. And the other figures that we have already reported and mentioned here, this is the 10th consecutive quarter in which we accelerate our growth and also with gains of market share.
On the next slide, we see the evolution of our gross profit operating expenses, and we diluted SG and A quite a lot, in fact, office expenses and the management of our DCs and also the fixed expenses such as rents, we decreased this and rent increasing because of the new stores and with a very low adjustment lower than inflation for the other one. Selling expenses growing mainly in variable expenses impacted by our decisions to increase our investments in marketing and logistics and payroll in order to further improve our services, both in sales and after sales. And equity income, while we had increasing provisions because of the IFRS 9. And afterwards, we will show you the results of Luisa Creggi. But contributing BRL 10,000,000 in the quarter, 0.3 percentage point.
On the next slide, we see the quarterly evolution of the EBITDA, highlighting the growth in sales and the very positive contribution by e commerce and also dilution of operating expenses. Then we show the financial expenses. We reduced significantly our financial expenses by 0.5 percentage wise, going from 3.7% to 1.9%. And excluding the prepayment of receivables, we had net revenue. And the expenses would be this area are in line with the growth in sales and the increase in the participation of the Luiza card, which is also part of our strategy.
Talking about the working capital, 73 days turnover with an average term of 90 days, which means that we maintained a positive cycle of almost 20 days. And with that, the need for working capital continued to improve, giving a contribution of about BRL200 1,000,000 in the cash generation in the last 12 months. And when we look at the net cash position, we increased this significantly visavislast year and even visavis the last quarter. And in this quarter specifically, our operating cash flow was almost BRL 300,000,000 And in spite of significantly increasing investment and paying dividends and interest on equity, We increased our cash net cash position in the quarter. And also a highlight here is the fact that St.
Pete upgraded us to AAA, And this is very important for our capital structure. And another highlight has to do with our shares. We joined the NSI this quarter, and the average daily traded volume increasing significantly between BRL 150,000,000 200,000,000 per day. On the next slide, we show the capital structure reducing our debt our net debt over BRL 200,000,000 in our gross debt reduction, maintaining a sound cash position. Net income, BRL 141,000,000 went up significantly with an ROI of 26% and ROIC 29 percent ROE 26% and ROIC 29%.
So consistently growing and maintaining a very high ROIC and also generating quite a lot of cash. Afterwards, well, let's turn our attention to Riza Credit, the evolution in our card base. In the quarter, we showed 2x the number of cardvisavis the same quarter last year and in net terms, 240,000 new cards added to the base. Ever since the beginning of this year, we had decided that one of the top priorities in terms of our focus on clients was to further increase our Luisa Card base because they are more loyal. They have more repurchase and they spend more higher average ticket and higher frequency.
And in the last three quarters, we have been growing our base significantly. This increases the revenue of Luisa Credi growing 37% visavisamequarterlastyear. And the highlight here is the growth inside Magazine de Luiza, 78%. So these clients give a very good contribution to the growth of e commerce and also in brick and mortar stores. Now the portfolio of Luisa Caregi.
Overdues are improving. This rate is healthy, 1.3 percentage points visavislastyearimprovementandnplanadditional0.6 percentage points, which means that we are growing our client base and our card base with a very good quality and net income had the negative impact of the new methodology of provisioning by the IFRS 9, and we highlight here that the coverage ratio, for instance, went from 132% on the same date last year to over 200% this year. According to the IFRS 9, we are obliged to make provisions, not only higher provisions for our portfolio and new provisions for or the limits available and that have not been utilized yet by our clients. And as in this quarter, we increased the sale of new cards and also we increased the limit or the cap for the best client, there was an increase in the level of provisions required. Nevertheless, they are not permanent, and the quality of the portfolio continues equal.
And if we look at the net income in BRGAAP, which is comparable to last year, it was BRL 40,000,000 in the quarter, growing visavis BRL 32,000,000 in the same quarter last year and with ROE at 22%. So once again, Uyseh Acre gave this contribution to our total earnings. And we will continue to focus our sales and our efforts on increasing the Luisa Carte base. With that, we finish our financial highlights. Now I would like to give the floor back to Federico, and then we will open for questions.
We can go straight to the Q and A session. Ladies and gentlemen, now we will start the Q and A session. Our first question comes from Robert Fow from Merrill Lynch. Thank you. Good morning.
Congratulations for the results. Could you give us more details about this quarter? And the rest was not understandable. We apologize. Good morning, Bob.
Thank you for the question. How many TVs were sold? The information that we published was that we doubled the sharevisavis the last World cup, and we also gained a lot of sharevisavislast year, and we were already gaining share over the last quarters. We sold over 1,000,000 units, I believe, in the half year. But more than that, we showed other products as well because, for instance, people wanted to exchange their TVs for a better one.
So we sold a lot of big screens, 50 something inches and better TVs. And it was a very good performance. But we did well in all categories. In this quarter, TVs or the image line, as we call it, have a very good share and exceptionally high share because of the World Cup. But we gained share as well in other categories.
Fabrice, if you want to add? As Fred said, both in e commerce and brick and mortar stores, we more than doubled the growth in TV, 3 digit. But our performance in Whiteline and Furniture and Portable, we grew a high 2 digit, both in brick and mortar stores and e commerce as well in all categories. So this contributed a lot to the overall growth in sales. So we gained a lot of share everywhere.
Our performance was very good in all categories of the company. So you can see the volume that we sold. What is behind that? And what is your expectation for the remainder of the year? Bob, I will start to answer and then maybe Roberto or Marcelo Ferreira can add to this.
The growth strategy for our card base is mostly based on the study that we carried out of customer like value at the beginning of the year. And what we saw was already we knew it was true, but it was much higher than we thought. The consumer who buys with the card has a higher value than the client that buys without the value because the repurchase rate is much higher than the clients, and they are also more faithful. They are more loyal, and they become a strength for the maintenance of growth also of the brick and mortar stores because the card is very much a phenomenon of brick and mortar stores yet and the penetration in the Internet is still low and we are carrying out many initiatives in this sense. And we will be announcing news in terms of approval approving the card for clients that buy for the first time in e commerce.
So we decided to increase our target of investments to attract credit card clients, and we increase the limits as well for the purchase by these clients. So the strategy is very much based on that because at the first moment, you have some impact that is felt, but this is more than offset in the long run. This is a typical decision of short term visavis long term. If we are investing part of the short term results in our long term investment long term growth. I would like to add to what Fred said.
The card has a dynamic that is different. As we see in the industry, the 1st 2 years, they do not give us a real income. And it is only after the 2 1st years that you see that what you generated will bring you net income. IFRS 9 also increased this bar. It brings all the expected losses to the beginning.
So this is why the allowance for bad debt happens in the short run. And why did it grow in this quarter? Of course, with the World Cup, we had an increase, which was higher than in the next quarter. So the strategy of placing the card at the core and as you saw, all the communication about the card, this was very much mentioned in the promotions of Magazine Luisa. So this brought a higher effect in the Q2 in our provisions.
And as Fred said, this was a decision that we made. And in spite, it looks like a reduction in Luizakar, everything is correct. The performance indicator, as you can see, are better and better consistently. And the BR GAAP is being shown to you so that you make this comparison because in VR GAAP, you had a very big growth. And here, you have the investment in the card.
And without that, this would be higher. And the strategy continues to be the card at the core and the clients becoming more and more loyal. Do you expect a higher number of issues? And is this what you are preparing? Yes.
We will continue to grow. We will continue to invest a lot in the growth of our card base. Bob. We launched a new campaign, for instance, to encourage our employees to channel their efforts to clients in terms of acquiring and using our card. And we started to have merchandising of Luisa card in TV show.
And we are doing a marketing campaign focusing on Luisa card and exclusive promotions for those who use the Luiza card. And with Luiza card, we are able to give longer terms and sometimes no interest charged. And with just to give you an idea, 90% of our clients are active, 66% use the Luiza card every month and on average 7 times per month. So this is a very active card. This is the main card for our clients.
And if you look at the statements by these clients, they very often even cry during their testimonials because of the happiness that this brings them. And one thing that is important and we started to do this year was to place printers in the stores in box in real time online. So the client exits the line the store already with a card printed with his name or her name with the password and already active, that is to say, unblocked. And we are doing the rollout of these printers. And by the end of the year, we will have this in almost 600 stores.
So this is part of our strategy of increasing our active card base. One additional question. What are the cities involved? And what is the percentage of sales in these markets for you? And what about the delivery?
The express delivery is D +2 up to 48 hours after the purchase. And the indicator for the long term objective that we convey to you by the end of next year, we have already said to the market that half of the sales we expect to have in this modality. In how many cities? Well, we do not disclose this information, Bob. Thank you.
Congratulations. Frabrio Montero BTG Pactual. Good morning, everyone. I have two questions. 1 has to do with online.
You talked about the clients that have already bought items from the marketplace, 19% in the Q2. And I would like to know about the new clients. Could you give us an idea first of how much online is growing in terms of number of items and the percentage of new clients that are coming on board on your base and how many are buying items from the marketplace? And maybe you could give us an idea of categories as well. Net of the TV effect that was very specific because of the World Cup, you doubled the share and you carried out campaigns related to the World Cup and so on and so forth.
I would like to understand net of that, which categories were the highlights in the quarter and including in the marketplace. This is Eduardo. Thank you for the question. We have been saying all last calls that we have been growing in terms of conversion. And in this quarter, there was a drop in the ticket, average ticket.
But this was totally caused by the frequency of purchases. Although we grew 66% in our sales in terms of items, we grew over 100%. In terms of marketplace, as we said, although it represents 10% of our GMV, of everybody that brought from Magazini, 19% brought or bought products from the marketplace in terms of categories. Marketplace takes all the categories that we have but also represents an additional assortment, which is important and also in number of clients in the toiletry, cosmetics, automotive category and the market category, they are very good to bring onboard new clients. And this has to do with the drop in the average ticket and the impact that we have been achieving in our business as a whole and by the marketplace or from marketplace and our client base.
Okay. One last question. You had BRL 980,000,000 in operating cash flow in the last 12 months. And what we see on your part is a very major focus on strategy and maybe a clear lack of interest on M and As or relevant M and As. And we see this very positively.
That is to say you're turning your eyes to organic growth and you're advancing a lot in terms of market share without any additional acquisitions. So my question has to do with the use of your cash. You talked about the opening of new stores and you even accelerated that. You had 27 new stores opened in the last quarter and 71 in the last 12 months. And we see this one of the major fronts of you consider as adequate or comfortable to be maintained?
And do you see any other use for the cash that you are generating considering that you might not have an M and A or at least any relevant M and As in terms of size? Fabio, we have been very successful in the management of our working capital and having growth and even a certain stability of margins now. And we were able to reduce our debt, and we have now a very comfortable financial position with net cash. And when you look at our capital structure, you have considered the number of receivables of cards, that is to say. And when we consider our indebtedness, we have to take into account the prepayment of the cards, which is different from a classic debt because it generates a financial expense.
And this financial expense, we want it to be up to 20% of the EBITDA tops. We have a lower interest rate now, but the international perspective could generate higher interest rates next year. I remember the World Cup of 2014 and afterwards 2015. This was a very complicated year for Brazilian retailers and for us especially because we had very low interest rates in 2014. And in 2015, the interest rate doubled.
And then the financial expense consumed practically the whole EBITDA of the year. So it's very prudent on the part of the company. Even if we have a very good moment now, we have a good revenue, we have low interest rate, we must be careful because in Brazil, there is a huge volatility in interest rates. And as we must discount receivables to maintain our capital structure, we have to consider this. So I think I have already said this that in some of our calls, we need to keep this conservative policy because of the volatility of interest rates in the market.
In terms of investments, we are accelerating a lot vis a vis last year, new stores that you mentioned and we have already reported. And we will continue to follow even a more intense pace in the 3rd and the 4th quarters and most probably for 2019 as well. We also have remodeling of our stores or some stores to become mini DCs, and we have already started the project, and we are accelerating. We have about 100 stores for this to be rolled out to, and we will be doing this in additional stores in other years as well. And we are investing also in DCs, extending, increasing and changing the location.
For instance, in Bahia, we launched a new distribution center in Goias. And in Fortaleza, we extended it, and we are also investing in equipment and in software automation for that investment in technology, both in OpEx and CapEx. We are investing a lot, increasing the number of people in the lab, which is the area that is going the most in terms of our payroll, in terms of our team. And all this consumes cash, and it requires our cash. So this is the focus of the company in terms of investment technology, logistics, increase in number of clients and improvement in the service level that I mentioned.
I have already mentioned that part of the investments are in OpEx and part in CapEx. So this is the line that we wish to continue. We did have an M and A. We acquired Logbee this year. And solutions like Logbee that might complement our ecosystem.
We continue to look for alternatives in the market, and we have been mentioning this consistently since our follow on last year. But we have a lot of discipline involved, and we are following our strategy with a lot of discipline. Thank you. Excellent. Thank you.
Richard Capcutt, Bradesco. I have two questions. The first one has to do with your app. And could you give us an update of the penetration of the app in e commerce? You maybe you can give us a figure also of the previous quarters and the gross margin, there was a decrease because of the channels as you described.
And there was a slight decrease also because of the mix, as you said in the release. So as you sold 1,000,000 TVs, how were you able to deliver a gross margin that only dropped a little bit in this quarter? Richard, this is Eduardo. I will start and then Fabrice will talk about the TVs. In terms of the app, we placed this bet on 2015 at the end of 2015.
And we were very happy to see that in this quarter. We became really an upbeat company. This is the channel that represents the most traffic in our business, reaching almost 30%, three-zero percent of the B2C. Not only investing a lot in terms of download, but one of the most important targets is the multi active users. And we want them to download, but also we want them to interact with the app.
And push is very important in the sale of the app. Well, we believe that we are on the right track, and we will continue to invest so that the app becomes more and more important because the experience, the user experience is very good there. As I said before, I think what helped us in terms of our margin was the categories. We did a very professional work on TV, as we said. But the growth in white line, for instance, we grew 6th of the market in smartphones also and furniture as well at a higher 2 digit and 3 times more than the market in high margin products.
And we grew very much in all categories and not only in TVs. We had an excellent performance in all categories, and this was the reason why our margin was not very much hindered. And about margin, I would like to mention our services sale. We have been doing an outstanding work in the sale of insurance and warranty. We launched digital services.
And both the control plan as well as the installation and maintenance and they increase their share even more than sales and they bring about a very big contribution. It is not just the price increase. We are talking about the penetration of our sale of services that helps a lot in terms of maintaining our margins? Thank you. Philippe Casanillo, HSBC.
Good morning, everyone, and thank you for taking our questions. Still about the strong performance in the quarter in the brick and mortar stores, Fred talked about that in the answer to the first question, but we would like to understand how much the e channel initiatives personalized by means of the app, of the app, DKK 16,000,000 in the first half, how much this helped increase client traffic in the brick and mortar stores beside the marketing campaign, of course? And the second question is the following. Could you give us an update about the timing of the rollout logistics for marketplace? So these are my questions.
Thank you for the questions, Felipe. About the first question. As we said in the release, The app today well, the focus of the app is to generate sales for the e commerce, although it does have features of multichannel and with one click, you can buy and you can do the click and collect. The sale gets into the digital channel. So the growth in the download of apps and the marketplace strategy contributes a lot to the growth of the e commerce growth and not so much the brick and mortar stores, although we have already approved we have already approved that there is no cannibalization because the channels grow in specific contexts.
But the ones that you mentioned specifically give a contribution to the growth of the digital channel. And the brick and mortar stores were mostly impacted by the promotions that we carried out with focus on the brick and mortar stores. For instance, the exchange of merchandise and the client comes to the store to exchange the OTV for a new one. So because of that, we attracted a lot of consumers to the brick and mortar stores. Beside that, you have the use of the Luisa card, the better terms for the use of the Luisa card.
And all that ends up helping all the other channels. But At this level, of course, this helps for channel. But we are investing a lot in marketing campaigns, in Facebook and digital platforms in general in order to attract clients to the stores, to the brick and mortar stores with growing results? And the second question? Oh, the Makalu delivery.
We are extending well, in the modality that we have today, we already have over or almost 20% of the sellers adhering to this modality. And in relation to the click and collect model. We have a pilot for the Q3, and we believe that over half of the sellers will be included in the first modality that we mentioned. A follow-up to the last question. Given the growth of GMV and looking on annualized terms, it should be close to BRL 1,000,000,000.
Do you already have the structure in place for that by the end of the year? Well, we will be launching the pilot by the end of this year. So of course, we are going to change whatever is needed in the structure visavis the adherence of the sellers. We are not building capacity much before a good assessment of the pilot and how much the area will do. And we can do this very quickly.
So we would rather do this just in time than building a lot of capacity before because this will have an impact on profitability. So we are going to look at the pilot and see how it performs and what area it requires, what infrastructure. And based on that, we will be increasing our DCs. And our focus is always to have a very quick turnover because having merchandise in the distillates is not good for us, and it's not good for the sellers. Oliver Petronello, JPMorgan.
Good morning. Thank you for the question. I have three questions. The first ones are about the brick and mortar stores. When you look at the categories net of TV, could you give us an idea of what you have been seeing at the beginning of the second half and what you expect from now on and what we saw in the Q1 could be considered as more normalized.
Secondly, the productivity of the new stores. It seems to me that this is very strong as the expansion in the area was 6%. So is the profile of these stores different? What about the maturation of these new stores? Is this maturation in line with what you expected?
And in terms of e commerce, the new distribution centers, you already have some pilots, and I would like to know the results in terms of productivity for e commerce, in terms of the delivery terms, etcetera. Thank you. I will start and maybe somebody will add to that. About your first question, as I said at the beginning of the call, we do not have a World Cup every quarter. And I believe that we will be seeing figures more similar to a quarter without the World Cup such as the Q1.
And you can see that the comparison base is much stronger, and you have to take this into account. This is a major challenge from the viewpoint of generating growth post World Cup because we do not have any external factors coming into play such as the World Cup in order to generate more. So this is what I can give you as guidance, so to say. The second question about the new stores. We are totally, satisfied with the maturation curve of the new stores in Sao Luis and Goyas, in Maranhao, Goyas in these two states and also all the other stores in the other states.
I would say that in over 95% of the new units, we have our original estimates being exceeded and the IRR of the stores is being exceeded and also the payback. So we are super satisfied with the performance of the new stores, and we will continue to accelerate the opening of stores because the initial figures are rather encouraging. I would like to add some. Well, the strategy was very good. We chose the right locations.
We got into 2 new locations. And the main point is the discipline that we are having. We are being very rigid in terms of the occupancy cost and the choice of the location, and this all helps the store to reach breakeven. So our discipline is our major difference, and they have very good performance. And the third point, as I said, we have the perspective by the end of 'nineteen, having all our deliveries in 48 hours.
And of course, we will have to continue to all out our investments in technology and in distribution because this is very important to reach this indicator. So we have to have a lot of discipline and a lot of competence in the execution. And of course, this is not easy because if you talk about remodeling a store and making it a mini VC, this is not very easy. This is Andre talking. Freddie, could you talk about the increase of account receivables?
Because it's slightly higher than your historical levels. Is this related to online sales or other specific factors? And could we expect with the growth of online the increase in your receivables as well? Good morning, Andre. Thank you for the question.
This is totally related to the growth in sales, And we do not want to discount as much card receivables as we did in the past because of the better capital structure. If you talk about mix, the participation of Visa card is increasing. And the participation of Visa card, Most of it, we discount with Visa credit, that is to say it's not in the balance sheet. The 3rd party cards tend to grow with the growth in sales and mainly with the growth of e commerce because the participation of 3rd party cards in the brick and mortar stores is very low comparatively because LuisaCart is very high. And the e commerce is very high, and it tends to go down as we increase the participation of Luisa Credge in e commerce.
This is one of our major objectives in Brazil. But sales in 3rd party credit cards will continue, and they will more or less accompany the growth of the company. And the decision of discounting or not discounting is tactical. It is whether we want to transform this into cash or not. And we have to consider the fact that there is a daily settlement possibility, and this is a very cheap way of us financing ourselves, so to say.
But the trend is very similar to what we see today. As we continue to generate cash, we do not have to discount all the receivables such as was the case in the past. Okay, understood. Thank you. Good afternoon.
Congratulations for the results. I have two questions. The first one has to do with selling expenses. Can you quantify or at least qualify the level of investments in terms of services in the quarter? Of the 35% increase in selling expenses, how much came from growth in sales and logistics?
And how much has to do with the acquisition of clients and the improvement in services? And what was the penetration of free delivery in the total online sales in this quarter? Because you had the campaign that was called it's worth waiting for it to minimize the impact of the strike. And what about this pre delivery? And how should we see this penetration in the second half of the year?
Thank you for the question. We do not give this level of disclosure about variable expenses. We do not disclose this. But the fact is that a major part of the increase in variable expenses came from our investment in express delivery, which involves having more people in the DCs, handling the items and the merchandises and having more shifts in the DCs and also increase the frequency of routes. So this involves quite a lot of investment in logistics.
And we I believe we have added about 1,000 people in the overall logistics operations of the company over these quarters. So this is very significant. And once again, this shows that we were talking very seriously when we said that we had the commitment of having the fastest delivery in Brazil and having high indicators. So and other investments as well, more call center operators in order to reduce the time and other investments as well, more investments, for instance, in the Luiza card and marketing to activate the Luiza card. So there is a major part that was offset by a higher contribution margin due to the World Cup.
And I really cannot get into details, but your reasoning is correct. If it were not for these investments, the company well, this would be much higher in the quarter. So I think it's important to add this. It will be higher in the quarter, not a lot higher, okay? So this is all I can say.
Well, the delivery, the free delivery was 1 week in 'twelve. This is Eduardo. It had to do with the free delivery for all the purchases made through the app higher than BRL 99. And the promotional free deliver has been decreased and the campaign that we carried out, it is worthwhile to work, was practically 5 days or 7 days after the strike, and it had no relevant impact on the consolidated results for the quarter. But the click and collect comes now.
Very clear. Congratulations once again for the results. Maria Paula, Guentuzi DB Investment. Good morning and thank you and congratulations. Thank you for the question.
How do you see your competition? Do you think most of the competitors are a little bit fragile because of the market situation? Do you see any recovery on the part of your competitors? And how do you see competition for the second half because of the promotional event that will be carried out? We have been talking about competition in the last calls, and I do not see a material change in the competitive scenario from the first to the second half of the year.
I think it's more related to the macro situation. And I say that our biggest competitor is Magazeni of the previous year. So our major difficulty is surpassing our own achievement. So I still see the market in a rational position because Brazil is still in a crisis. We still see a slowdown in the economy, and investors are very cautious in terms of investing in companies via equity or debt.
So nobody has money a lot of money to invest without caution. So I do not see significant changes in the market for the second half, and I imagine that it will continue as such. The challenge that we will have, in my opinion, are more well, they will come more from the macro situation than the micro situation online and offline. So I do not see major changes for the next half or this present half year. In microeconomy, I don't see any major changes, maybe for 2019.
And what about your second question? What about the performance of the marketplace products in your brick and mortar stores? It was still too incipient. We had some situations in which in the pilot, we had worse results than we expected. And we are correcting.
We are fine tuning these issues. So we still see no impact on same store sales in brick and mortar stores. We believe that there is a big opportunity there to increase sales in brick and mortar stores, but we still have to fine tune the technology involved and the whole process involved in order to deliver a better experience and be more successful with the sale in this channel. Thank you, Fred, and congratulations again. Now we close the Q and A session, and we would like to give the floor back to Mr.
Federico Caragano. You may proceed. I would like to reinforce my happiness with the results delivered, and I would like to congratulate the over 20,000 employees of Magazine Luiza for the outstanding result. In spite of all the difficulties that we faced over this period. And I would like to reiterate my confidence in the long run and the strategy of the company and the measures that we are taking and reinforce the fact that we would we're facing a more challenging macro situation in the second half or compared to last year.
And I would like to thank all the investors that have played their best on the company and that have supported the company in the last few months. Thank you very much, and good afternoon. Magazine de Ruiz's conference call is closed. We thank you for participating and wish you all a good afternoon. Thank you.