Good morning, ladies and gentlemen, and thank you for waiting. Welcome to Magazine Luiza's conference call related to results of the third quarter of 2017. Currently, all participants are connected on listen-only mode. Later on, we will initiate the Q&A session when further instructions will be provided. In case you need any assistance during this conference call, please ask the operator for assistance by pressing star zero. I would like to give the floor to Mr. Frederico Trajano, CEO of Magazine Luiza. You may proceed, sir.
Good morning, everyone. Thank you very much for participating in this conference call for the third quarter results of Magazine Luiza. Here with me are all of the executive officers of the company who will also be available to take your questions at the end of the presentation.
I will start with a brief presentation with the highlights of the company during the quarter. Then Roberto Bellissimo, our CFO, will give you more details on the financial figures. After that, we will open for questions. We said before in our last call, we were still very excited with the macroeconomic landscape for this quarter. We already anticipated a possible pickup of the economy of Brazil. There was a rebound. We are very excited because we see the end of the recession after 2 years of a downturn because the industry had a decrease of almost 20% during the past 2 years in terms of revenues. Finally, we see positive economic signs saying that recession is over.
Looking at the current results, we are very optimistic because what we found in the third quarter of 2017 is something that we will probably see in the next 3 quarters. I will elaborate more on that at the end. I can certainly say that recession is over. We see that consumption is picking up, the landscape is more favorable, lower interest rates. We see the fact that loans and credit is resuming. The limits are increasing. We are very confident with all of it. All in all, I believe that giving the current exceptional moment of the company with a very winning and successful business model, we can say that in this quarter, in the third quarter of 2017, it was just natural that we would add up to our growth, adding up to the growth of the last 5 years.
There are many highlights to be mentioned in this quarter. It's certainly a good reason for us to celebrate our 27% growth vis-à-vis the previous quarter. We already had a very strong base in the third quarter of last year. So we had to grow based on that very strong basis. In this very competitive landscape with a positive macroeconomic landscape, this is very important to our results. This will certainly be the case in the next following quarters. The macro will be more relevant to the quarters going forward rather than competition or growth in this competitive landscape. That's why I'm very confident of our successful position going forward. I will just mention some of the highlights of our results.
It is important to say that as of last year, we are very disciplined in our view to transform a traditional retail company into an e-platform based on some pillars: physical stores, multi-channel Marketplace, and the digital platform. Every quarter, we present new and significant performances when it comes to the execution of this strategy. I would like to refer to our e-commerce. We grew for the 3rd quarter in a row more than 50%. This quarter, we grew 55% without even considering the results from Marketplace, which are not reported yet. We grew in comparison to a very strong base. Now 30% of total sales. I may highlight our application, 7.7 million downloads in our digital platform in all mobile devices, accounting for 70% of all traffic and 40% of total e-commerce sales.
When we invested in mobile devices, that proved to pay off, and this has been one of our growth driving forces. I would also like to say that we also grew the Magalu Market. These are consumer goods that were launched in this last quarter as well as, for instance, personal hygiene products, home cleaning products, baby products, and coffee and chocolate products that had a significant growth in this category. I think they will grow more in the future. These are the long-tail products or categories which are different from the categories we used to carry in Magalu. Magalu is 1P and 3P, we are already making that available in our stores and e-commerce. That's another important highlight because it has posted significant growth. Our Marketplace, from all of the numbers that we disclosed, we had more than 500 sellers.
There was 1 million products available, going from 40,000 items last year to the current figures, showing significant growth. We have many partners, [Alisah Looks], Farfar, [inaudible], [Chico City], among so many others, new partners that joined us in this approach. Even though we grew the number of sellers and the number of products, we still remain the most selective Marketplace in the market when it comes to including new sellers. We had almost 30% of rejection rate of sellers that wanted to join our platform. We have a very severe credit score process, and we conduct a very thorough analysis. It's important that the companies are willing to abide by our standards, not only ethical standards, but standards of services. Our Marketplace is also an opportunity for us to grow. We are very optimistic, and this has been very successful.
We are not going to do that in detriment to our service level and quality standards. We will not grow in detriment of anything else because we do have great respect for our consumers. That's why we are following a very responsible approach, but we are still growing very much, and we are still outperforming and over-performing. I would also like to talk about the growth of our physical stores. Same-store sales were 15% when compared to 6% growth last year. There was a total performance of 19%. We are already benefiting from the opening of new stores. Not only we count on same-store sales, but we have to look at brick-and-mortar stores and total sales, almost 20% growth, 19% growth in the quarter, and we will continue to see good figures because we are opening more stores.
These stores will certainly be incorporated in our total numbers in the next quarter. This quarter alone, we inaugurated 16 stores with a total of 39 stores in the last nine months. As we said before, we should open 30 more stores this year, 60 in total. We still have to open 30 more stores until the end of the year. We believe that we will hit that number, which we already disclosed to the market. We are being very aggressive in terms of our follow-on, which I'll elaborate more later on. When we talk about digital inclusion, our service sales increased significantly, and the highlight goes to marketplace commission. Also the sales of digital services and digital inclusion, like Lu Conecta.
This includes installation and other services to customers. We are selling that very successfully in all the stores of the company and the controlling plan and buyback as well. All of these services have posted good performance, as well as other financial services like insurance in general that are presenting spectacular growth. In terms of digitalization of the physical stores process, we initiated the pilot program of the digital platform that has to do with the check-in and checkout process in the store, which is very quick today. This digital tool allows the salesperson to approve the credit in only a few minutes. We also have partial biometric system. This is another analog system that is made available by Magazine Luiza. Every quarter we make new announcements. That proves that our team, both business team and Luizacred, is performing quite well.
We saw another dilution of expenses despite the e-commerce growth, showing that the multi-channel Magalu model is a winning model. Certainly this will continue going forward. In two working days, we had a good offer that increased the number of buy online and pick up at the store is something that also grew and proved to be very successful. We are also strengthening our multi-channel pillar with the introduction of the possibility of store salespeople selling online. We have more than 30 sellers already eligible to sell that way. All of the 3P categories will be available to all the stores and through all of the 10,000 individual sales reps from Magazine Luiza.
The seller that places their products in Magazine Luiza, not only they will sell their products through our digital channels, but they will also be able to sell it in the stores through our mobile sales channel. I already talked about the store pickup system, but we are also evolving in other areas. 98% delivery ratio. Our delivery term on average, which has been promised to customers, is even better. It's 25% lower than the delivery term provided by other competitors in terms of the courier mix. We also almost have 30% of the deliveries to São Paulo and Belo Horizonte done in one day or less than one day.
We still have a lot of room for improvement, and we know that we will be able to improve the delivery term to be able to deliver in a very short period of time. I would also like to talk about the rollout of another app. It's called Mobile Entrega, Mobile Delivery. It's already in Magazine Luiza's channel, and there are more functionalities being added to the platform. We already added the routing functionality to our drivers. We already track all the orders, and with that, the information that we provide to customers is much better. It's easier to track the product, and we already have the automatic email system, and that has allowed us to drop by 56% the rate of contact per order in relation to the year before.
With all of the new additions to our logistics system, we have a very good rating by customers, and we are already maintaining a good score at Reclame Aqui. I would also like to talk about the um toque purchase, a one-touch purchase. With the application, you can purchase with one touch and pick up at the store. We are facilitating the entire purchasing process. We already have automatic pricing for 10,000 products. We were the only Brazilian company to launch Google Shopping this quarter, and we made many improvements in terms of the wedding list. Magazine Você is another direct channel through social media. Now, the Magazine Você sales rep can also. It's still in a pilot phase, but he can sell it immediately through cell phone using a credit card machine. That's part of our initiative called Magazine Você.
I'm sure that through this channel, we will be able to grow sales even further. There are many innovations in all five pillars of our strategy. I would also like to highlight that we were elected once again, this is the 20th year in a row, as one of the best companies to work for, and we are the best retail company to work for. We're very proud of that. Maybe that is one of the reasons why we celebrated so much this quarter. At the end of September, we finished our follow-on, and we were able to capture BRL 1.5 billion that will now be part of the company's cash. I can elaborate more on that during the Q&A. We put that in our perspectives, and that's for long-term investment.
We want to continue deploying our digital transformation strategy to add that to our physical stores. We want to take that view to more geographies in Brazil. We view that we are way ahead when it comes to deploying the view of a digital platform attached to the physical stores. We just want to enhance this advantage, making investments in technology, logistics to grow our physical stores, because this is very important if we want to pursue further our concept of store pickup. We have PLSs that also work as distribution centers. In summary, all of these investments will be done in the near future. With the new stock offering, we will be able to enter a new market, MSCI, IBrX 50. Therefore, we are very confident because of the daily trading volumes that we see happening today.
At the end, I would like to reinstate what I said at the beginning, that I'm very optimistic vis-a-vis at least the next 3 quarters. The end of the year is usually very strong because we had a contained or a limited consumption. Now, with low inflation and lower interest rates, we have to be very optimistic vis-a-vis the macro landscape for the next quarters. Next year, there is the World Cup. Repeating what happened in previous years with the World Cup, the year as a whole, and particularly the first half of the year, we anticipate further growth. Therefore, we are optimistic vis-a-vis the next quarters. In terms of the competition, I think the biggest competitor is Magazine Luiza from the previous quarter. It's not an easy competitor because we compete against ourselves, competing against quarter on quarter.
When you look at the comparison from last quarter and this quarter, we see that we're competing against the numbers from the previous quarter. With a favorable macro landscape that was not so favorable in the first half of this year, not even in the last half of 2016, I think that we would continue to post positive figures in the quarters going forward, which is very positive. I know that we are going through a very positive operating moment of the company. With that, I conclude my initial presentation. I'll be available to take your questions at the end, but now I'll give the floor to Roberto to speak about our financial highlights. Thank you very much. Good morning, everyone, and thank you very much for joining us this morning. I will start on page three. Here, we show the performance of our stores.
We inaugurated 16 stores this quarter, we should open 30 more stores until the end of the year, so as to complete the 60 stores that were in the pipeline. We show here increase in CapEx. We are growing our total CapEx by over 60% when compared to last year. With the new offering, we tend to increase our investments even further. Most of the investments have been geared towards technology and also strategic planning. On slide four, I show the performance of our quarterly revenue. It's clear here that we are growing steadily in the last 4 quarters. This, I think, was the highest growth in the last 5 years, over 27%. We grew based on a larger base. When compared to the previous quarter, we had a very positive sales performance, both on brick-and-mortar stores as well as e-commerce.
Physical stores grew 19% in total, 15% same-store sales. E-commerce also, we grew over 50%, 3 quarters in a row, growing market share as well. E-commerce as a whole in Brazil only grew 9%, whereas we grew over 50%. Retail figures, according to IBGE, grew around 11% this quarter, whereas we grew 27%, that means that we had a substantial market share growth in both channels. On slide five, we show the performance of our gross profit. Gross profit is performing very well. Gross margin, 0.8% lower when compared to the figures of last year in keeping with the figures of the last quarter due to our significant growth on the e-commerce side. As you know, e-commerce has a lower gross margin, this is offset by a lower expense level.
At the end, we diluted about 1.6% on our operating expenses, I mean, a reduction of 160 basis points. This division in operating expenses had a lot to do, again, with the growth of e-commerce, but also growth on the brick-and-mortar store side. This was due to the tight management of expenses and ZBB. We were able to reduce personnel expenses and rental expenses. Our rental expenses grew very little, and we were able to dilute our net expenses because we grew 27%. Equity income, once again, has been very consistent, BRL 21 million. Growing in net revenue, growing also vis-à-vis last year, both Luizacred and Luizaseg. Luizacred grew 33%, Luizaseg grew 10%. This also contributed to our total result. On slide six, I show the performance of EBITDA. This was the highest quarterly EBITDA in our history.
The EBITDA margin grew 8.8%, almost also influenced by sales growth in e-commerce, and dilution of operating expenses and the results from Luizacred and Luizaseg. We went from 8% of EBITDA margin to 8.8% this quarter. On slide seven, we show a significant growth of financial expenses. We were able to dilution more than two percentage points our financial expenses, going from more than 5% to less than 3% of net revenue. Without any effects coming from the follow-on, which were settled in October. This was due mainly to reduction in the debt position of the company in the last two years, in particular due to this quarter, and reduction of CDI.
That also helped as we were able to reduce both interest in repayment of receivables and other expenses that are more related to the company's debt position, which dropped only accounting for BRL 30 million this quarter. That also tends to be even lower going further with the proceeds from the offer. We also announced yesterday during our board meeting, we approved the prepayment for debenture issue. There is a trend that we will be able to reduce our short-term debt position and our financial position also. In the quarter, we had a lot of cash. Even before the offering, we had BRL 1.2 billion plus BRL 1.1 billion coming from the primary offering. With that, we will be able to reduce our debt level and to keep liquidity. Now, speaking about working capital, once again, we made improvements in working capital KPIs. We improved inventory turnover.
We were able to reduce inventory turnover by nine days. This has to do with growth in e-commerce, and once again, we have very well integrated multichannel approach, and this tends to optimize inventory turnover. Especially with e-commerce, the inventory turnover is very quick. In a year, the adjusted working capital had an improvement of over BRL 500 million. Putting together the profitability of the operation and improvements in working capital, we were able, all in all, to reduce our net debt by over BRL 700 million in the last 12 months, and in the quarter, more than BRL 200 million. Therefore, operating cash has been very positive. Cash of all of the operations is almost BRL 1 billion in 12 months.
In the quarter, the figure was also quite positive, meaning that we are in a very good moment, both in terms of results and also in terms of cash generation. On slide eight, we show the performance of our net income. Here, once again, we increased net income. This was not impacted by the offer. We reached ROE of 43% and ROIC of 33% in the quarter due to all of these operating and financial improvements. Now talking a bit more about Luizacred, I think it's worth mentioning that it grew 27%. It grew at the same pace of Magazine Luiza. The highlight goes to Cartão Luiza inside Magazine Luiza. They grew almost 50%. This is a very significant KPI showing the improvement in loyalty from customers. We also grew sales of new cards.
We grew our activated base. That is the base that buys on a monthly basis. We grew frequency, average ticket. All of that had an impact on the total and overall growth of the Luizacred, costing an increase of almost 27%. Better yet is that we are growing and at the same time reducing delinquency levels. NPL 90 days reached the lowest level in the last five years, reaching 8.3% of total portfolio. Short-term NPL also dropped substantially to 3.1%, whereas at the same time, we increased coverage ratio. All of that shows the quality of Luizacred's credit results. On page 10, I show the performance of Luizacred net income on a quarterly basis, showing improvements in the third quarter vis-à-vis the second quarter when we reduced the main interest rates.
We also grew our portfolio of Luizacred. DCC was down. The portfolio growth was over 20% growth, more than 20 million cards with all of these improvements. Also, return on equity was over 20% in Luizacred ROE. Now I'll give the floor back to Frederico for his final remarks. After that, we will be available to take your questions. Thank you very much.
Brothers and gentlemen, we will now initiate our Q&A session. For questions, please press star one. To remove yourself from the queue, please press star two. Our first question is from Luiz Felipe Guanais from BTG Pactual. Good morning, Beto. Good morning, Fred. I would like you to elaborate a bit on the favorable environment that you mentioned regarding the economy.
I would also like to hear from you about the competitive environment, not only in terms of service level, because this will certainly be an important driver, particularly when we talk about Magalu Marketplace growth. If you could elaborate a little bit more on take rate and pricing.
Well, Luiz Felipe, good morning. Thank you for your question. My point is that I think that the favorable macroeconomic environment will be more relevant to the company's figures than any changes in the competitive scenario. I haven't seen yet any major changes. We do not anticipate any major competitive change in the months going forward in the next quarters. I believe that the landscape will be very similar to what we've seen, particularly in this last quarter.
I think it will be correct to say that we should incorporate the very significant macro elements. Especially considering the restrained consumption, especially considering the first half of next year because of the World Cup, this has traditionally been very relevant. I don't see anything else significant in terms of pricing. Our EBITDA margin performance, which is relevant to this debate, was once again positive in the quarter. What we had in terms of gross margin reduction was mainly due to changes in channels, but it's been very much in keeping with the previous quarters, proving that there is no significant changes due to competitiveness. There hasn't been any impacts due to changes in pricing. We are able to grow at very comfortable levels.
In terms of EBITDA margins with our multi-channel models, which is above the market, we grew EBITDA, and we have the lowest SG&A levels in the whole history of the company. It's a very low number, showing that our model is very robust to face any competition or any competitive landscape. Once again, we are always very much alert about the competition. I reinstate my optimism with the macro landscape and with the company's business model, which in my view is a winning model, both for the brick-and-mortar stores as well as e-commerce growth. Today, we have models that can capture online growth with good results. This is very significant, and I reinstate once again my optimism, especially going forward in the next quarters. Our biggest competitor, as I said, this quarter will be the previous results from our own company.
I have another question vis-a-vis the pilot project of store pickup involving marketplace. Thinking about the growth going forward, this would also involve the entire marketplace, or at first, this will be geared towards some specific SKUs?
I would like to clarify one thing with Felipe, and thank you for your question. What we launched now was sales of marketplace products in the stores. 10 Magazine stores are selling products from 20 sellers, and then we will expand that to 100% of our stores. They're selling the 3P products in the stores, but delivery is still being done by the sellers themselves. As of next year, we will have a pilot for Magalu, and that pilot means that the seller will deliver the product using our distribution line. We will pilot that as of next year.
The final rollout will take place throughout the year of 2019. This is our view. Magalu will run a pilot product next year and the total full rollout will be 2019.
Thank you very much. Our next question is from Robert Ford from Merrill Lynch.
Thank you, and good morning, and congratulations for your results, Fred and Roberto. In your press release, we see an improvement in all channels. Let's elaborate a little bit about this performance and operating improvements, please. Bob, good morning, and thank you for your question. I think in terms of conversion, I would like to say that particularly speaking about the online channel, I must highlight our application, our app. We invested a lot in our mobile app in the last few years.
We bet on the fact that people would migrate to using the app on mobile devices. The conversion is traditionally lower. Through this very well-orchestrated app, lower conversion and a lot of personalization using big data, et cetera. Our mobile app was able to post higher figures, higher than expected, which is very rare when you consider mobile apps. That's why we were able to grow all of our digital channels. In terms of physical stores, we still have issues related to supply rupture, et cetera. Even on the website, we were able to reduce rupture, reducing inventory levels. We improved our inventory management, reducing rupture. In the internal areas that are working with supply, they are doing an exceptional work, both brick-and-mortar stores and online and e-commerce. Also there is better distribution of inventory.
All of that is leading to improvements in our conversions. I would like to highlight one additional point about brick-and-mortar stores, and that is the store pickup mode. Our offer in terms of store pickup is very appealing to consumers because this means that we will deliver in 24 hours with no freight costs, and this applies to all stores in Brazil. Store pickup is helping the website conversion because they do not pay for freight, and they can pick up their products within 48 hours. In Brazil, sometimes we have delivery issues. The store pickup is really helping channel conversion. I don't know whether you have anything else to add about this. This is Eduardo. I would like to also say that this conversion growth is happening in many devices and also because of the mix and the conversion on device.
On the operating point of view, we have the lowest rupture level. This was probably due to a new system that we deployed and in this new version of multi-channels that we have. Because of that, we were able to improve inventory turnover. The other issue is the delivery terms. With the store pickup, we were able to make substantial improvements. We reduced the delivery term in that last mile part of it. That also helped us improve conversion. Our figures are better vis-a-vis the year before. There is nothing substantially different. Seasonality in the market is something that is being picked up. In terms of conversion level, this does not consider the conversion increase that is coming to the sale through Magalu Marketplace. When we include that figure, conversion is even higher.
My last question.
Competition is more rational. My question is, what about the impact of Amazon entering Brazil? Do you think that there will be an impact in terms of the value proposition?
Bob, I think our view in terms of the business model and the pillars of our strategy remains unchanged. We believe that the best way to take advantage of that platform is through our multi-channel approach. Given structural issues in Brazil, the brick-and-mortar store is what leverages our e-commerce market share, the possibility of store pickup, of store returns. We use the same distribution mode of the store helps us. Vis-a-vis any other competitor, we have a competitive advantage, which is very sound. We want to take that to new markets when we grow into other geographies.
We talked about the offer and our prospectus, which is very clear, is that we want to improve that approach. In Brazil, both e-commerce and retail, the best model and the best way to grow with profitable margins is through our multi-channel model. We want to enhance it further and also add the marketplace element. That is very important, and we want to do that successfully. Another important thing is also reverse logistics. I think that in the long run, you will have free returns to marketplace.
Could you talk a little bit about the timeline for reverse logistics for the marketplace in Brazil?
Reverse logistics is a big issue here. Approximately 20% of e-commerce purchases are returned to the store for free. The customer goes to the store. It is shoppable distribution centers.
These are our e-commerce distribution centers, and this reinstates our multi-channel model that we have been developing for over 17 years. We did not start it just last year. We have been perfecting that model for 17 years. The thing is that now we have a larger coverage, and therefore we think it is important to expedite growth and expansion because we focus a lot on the digital market, but we are opening more stores because our differential is our physical presence, both in terms of reverse logistic and store pickup. As we expand the number of our stores, we will have an even greater competitive advantage to have larger coverage. With the fulfillment by reverse logistics, we will also have more availability on 3P. We will put a lot of our efforts towards rolling out this possibility.
We want our sellers to use the same distribution grid both ways, and we are already using that very successfully. Everything we do for our 1P, we want also to put that available to 3P, and this is one of our top priorities of our strategic planning, and that refers to the marketplace pillar. Thank you, Fred, and congratulations once again. Our next question is from Tobias Stingelin from Credit Suisse. Good morning and congratulations to all of you. My first question is that I know you give no guidance about margins, but do you think that the margins should also give you more room to grow more? Or maybe in keeping with what you already said in previous calls, you are not looking to maximize margins above a certain level, but you are focusing more on competitiveness to make the market grow further.
I think this is my first question. The second question, still talking about Marketplace, could you give me an update about the initiatives of this quarter? You talked a little bit about that in your press release and in the call. If you could give me maybe a summary of these initiatives, it will help me out. Thank you.
Thank you very much for your question. I would like to start by answering the question about the margin. The company's main focus is growth. What is happening in terms of the margin is that as we are growing a lot, we are able to dilute our expenses. Our fixed spend base is still very significant vis-a-vis our total expenses. It is almost half of the total expenses. When you grow significantly above inflation and above market, you have a large power to dilute expenses.
I think that we are very optimistic because we think that we can have substantial gains in this regard. What we have announced is that we want to invest part of this margin, and I cannot even anticipate anything, but we want to grow our services. We want to invest more in our distribution centers and invest more in logistics to be able to shorten terms. We are already ahead of competition, but we want to make further improvements, and we want to make improvements in IT, both Magalu Marketplace and LuizaLabs. We want to invest more in this digital channel, which tends to grow further in the future. If we do not reinvest in service levels, maybe the margins could grow more, but as we are investing now, we shouldn't expect large increases in margin. What we expect is higher growth and also improvements in service level.
The focus of the company and the driver is increased sales and increased service levels, but at the same time preserving profit margins. I wouldn't see large investments in growth, which would impact our margins, because I think that we are now going through a positive moment in Brazil, but in a few quarters from now, we will have elections coming. I think it will be better to keep margins, because today things are good, but tomorrow, we don't know, they may be bad. We have to ensure our margins for the future rather than reducing margins following that U.S. model to increase margin at the expense of other losses. About Magalu Marketplace, maybe Eduardo could elaborate more on that.
Throughout this year, we are delivering everything that we hoped for, in terms of the platform, we made some incremental improvements with Integra Commerce, we are growing in areas where we needed to grow, one important thing is the deployment of credit sc ore to accommodate new sellers. We not only gather all of the documentation, but we are growing the business. We are trying to preserve the quality of our portfolio. In general, we have more than 1 million SKUs with the addition of new sellers. We don't need to have 10,000 new sellers to increase SKUs. We have to just have the best sellers that are not selling online yet, but they could sell it through us, but they have to be reliable companies. Another highlight was the launch of our Magalu Ads platform. Our sellers can buy directly through Integra Commerce.
They can buy advertising space. This was introduced at the end of August. We have more than 30,000 advertisers, sellers in the industry that are making use of our platform. I think the best piece of news was the launch of Magalu Marketplace in the physical stores, this has good growth potential.
Thank you very much. My last question, Fredi. This quarter you had fantastic results, and I think that you posted strong numbers. Now, in terms of bonus payment, you were doing that quarter-on-quarter. Are you taking that into account?
Yes. There will be no surprises in the next quarter. fourth quarter, no surprises.
Thank you. Next question is from Rubens Couto from Itaú BBA. Good morning.
I think you already answered most of my questions. If you could probably elaborate on working capital a little bit. This level, the current level that you posted this quarter, was there any specific line that could probably have a non-recurring effect, or could we just assume more stability of your working capital vis-a-vis the last 12 months?
Good morning, Rubens, and thank you very much for the question. It is totally recurring. In every quarter, we post it, an evolution in a very consistent fashion. It's a trend. In fact, we've been saying that this is also related to e-commerce growth. We have a much better turnover with e-commerce when compared to the rest of the market, and we are still maintaining the same purchasing terms when compared to what we have in the brick-and-mortar stores, because we are a totally integrated company.
As all channels can sell, we potentialize inventory turnover, and e-commerce benefits from purchases on the brick-and-mortar stores and vice versa. This optimizes inventory turnover. As e-commerce grows faster than brick-and-mortar stores in the future, we have also to improve working capital and improve inventory turnover. In addition to these two important things, we also managed to reduce the tax line. Taxes, to collect, we have a special regime so that we will no longer pay taxes ind duplicity or pay taxes twice. We were able to get more than BRL 100 million a year in the last 12 months. In the main lines of our working capital, we've been very consistent. In terms of accounts receivable, we have credit card receivables, basically. This quarter, we were able to post a reduction in the discounts, this is a manageable line.
What's more important is that the supplier funds our inventory. As we improve that in the fourth quarter, seasonality will help us further. We will see an improvement in this difference and we will generate more cash. We intend to do that from now on. With marketplace, we can make further improvements because a working capital marketplace tends to be negative as well. Our working capital management position is quite positive, and it tends to improve looking forward. Hi, this is Fabrício Rubens. Our inventory management improved substantially. We decided to roll out the two old categories. The integrated inventory management helps us a lot, and it helps us also because we grew sales in all the other channels. We improve our assertiveness in terms of distribution to the stores. Our assortment is well-defined per store.
We have a store-defined inventory, and we also manage the quality of our inventory. We have a tight management on a store-by-store basis. All of these three pillars helped us have a positive inventory management, and we overperformed. That 24-store pickup helped us also in the assortment management. This helped our management approach.
That was very clear. Thank you.
Thank you, Rubens. Next question is from Guilherme Assis from Brasil Plural. Good morning.
Good morning, Fredi and Beto, and thank you for taking my question. I have two questions. We already talked about the issue of working capital and inventory. I just want to talk about that short-term view.
We saw a significant reduction in inventory turnover, and we are now getting ready for the fourth quarter because we will have two very important events in the retail industry, because we have Black Friday and Christmas in the next quarter. This inventory reduction, is that aligned with any expectation vis-a-vis the fourth quarter and the sales potential to these events? It only reflects this efficiency gain coming from the models that you talked about before? My second question is about CapEx. You said that you will deliver a total of 60 stores and you're spending part of your CapEx in IT. Looking forward, what should we expect in terms of IT CapEx and also at the level of store growth?
Good morning, Guilherme. Thank you. Let me first speak about working capital.
We were able to make improvements due to operating efficiencies in all the processes that we talked about. In nominal terms, we've been growing, if you look at a sequence of things. Inventory in September was higher than that of June and higher than that of September of last year, but we were able to grow our revenues much more, more than the growth of inventory. Therefore, that was due to efficiency gains and improvements in the overall process. We are fully supplied. The quality of our inventory is better when compared to the levels of last year, and this is the best quarter in the retail industry, for sure. We don't have to worry about that because certainly we are well-stocked and well-prepared for next quarter.
In terms of CapEx in the future, we don't give CapEx guidance, but what I can say is that we have the proceeds from the follow-on, and in that offer, we explained that 60% of the primary offer will be used to increase investments, including investments in IT, logistics, new stores, and the refurbishing of the stores, and the remaining 40% will be used to reduce the debt position of the company. We just announced the reduction of approximately BRL 600 million in the deb entures that should take place this quarter, and this will reduce the debt. Speaking about CapEx, we will invest in the next three years. We already said that we increased the pace of inaugurations. This year is proof of that. We should open 60 stores when compared to an average of 20 to 25 stores that were opened in the last five years.
We will cover half of the population, but we still have room to open new stores. Most of our CapEx, as we saw in previous years, CapEx will be geared towards IT and logistics, because as we open more stores, we should also open more distribution centers that should be closer to our consumers, and because of e-commerce as well. Almost half of CapEx is being spent with IT to support the growth from e-commerce, growth for marketplace, and to support all of the new projects in our multi-channels that are part of our digital transformation process.
Thank you. Just about the growth in the stores. You increased the pace of opening, and now you're opening 60 stores. Is this a sustainable pace in your view for the next three to five years, this level of store opening?
Guilherme, when you talked about 60, is that because we said that we cannot comment, but we got additional funding to expedite investment, and that also includes the opening of new stores. We want to expedite the opening stores. I cannot give you any specific guidance about that at the moment. Thank you.
Next question from Maria Paula Cantusio from BB Investimentos.
Good morning. Congratulations for your results. Thank you for taking my question. I would like to get a little bit more detail about the digital platform in the stores. You said that the sales rep can issue the installment card. How are you proceeding in terms of credit analysis, whether that can also be done by the sales rep, and how will that impact competition? My second question is about growth in same-store sales, growth of 15% in the quarter.
Could you elaborate more on that? We also noticed that the virtual stores are growing above average vis-a-vis regular stores. Could you tell me in what regions this growth was more significant? Good morning, Maria Paula. Here is Marcelo Ferreira from Luizacred. I will elaborate a little bit about the digitalization and the store and credit. Credit is something very important when it comes to sales at Magazine Luiza. Customer experience will be highly improved. We have a CDC Digital, as Fred said, and we were able to get great improvements in approval time. Most importantly, we have an integration between the credit system and the sales system of the store. Next step is the card.
Today, we already have a process that we call where the sales rep already identifies what customers have pre-approved credit, and therefore there is more assertiveness when it comes to approving credit. We have to have a separate approach to approve the credit cards. Next year, this process will be totally integrated with the sale, and it will be seamless and much better than the process we have today. We're very excited with this new approach that will bring more customers on board with a much better customer experience. For next year, this new approach will be available in all of our stores. Let me add one more point. We already launched a pilot process. As I said, next year we will have the rollout of the product.
We have already a pilot for that installment book, and we are about to launch the pilot for the Cartão Luiza. The strategy remains the same, using the credit score. What is easier now is the fact that the sales rep can do that himself. The process is run really quickly. The feeling for the customer is not of a denial, saying that I tried, but I didn't get it. He will get a much quicker answer, and the customer experience is much better. We hope to assist all customers with that customer approval. Good morning, Maria Paula. This is Fabrício. To answer your question about growth, our store growth was very robust, and we grew very well in all regions. We grew above two digits. In the Northeast, the performance was slightly better.
The highlight in the quarter came from the virtual stores, which posted significant growth. We grew well in all regions and in all types of stores. Could you tell us what kind of stores you will be opening, or there will be just virtual stores? In what regions? This is Frederico. Our priority. We still have 17 states that out of the 27 states of the country that we are not yet present. We are not going to announce where we will enter now, but we already mapped several cities and potential districts in current cities where we are present. We open up many virtual stores in cities up to 50,000 people. It will depend on our criteria. We have to look at rental versus revenue, the investment amount, the type of municipality.
I can't say right now whether it will be 50% virtual and 50% conventional, because it will depend on our modeling, but we already mapped several potential geographies for both virtual and conventional stores. As soon as we can solve the financial equation, looking at the rental amount vis-a-vis the size of the municipality, then we will have a better idea. We open a lot of virtual and conventional stores, and we will continue to open those without any particular thing in mind. Congratulations again, and thank you for your answer. Next question from Irma Sgarz from Goldman Sachs. Good morning. Most of my questions have been already answered, but could you tell me how much of your sale is being picked up at the store?
I didn't find any numbers, I thought your initiatives were quite interesting, especially because now you want to expand that to marketplace. Along the lines of the same question, what is your idea, and I understand that's another project that you will pilot in 2018 and roll out in 2019. Where, in your mind, where you would keep the inventory in your 3P platform? Will that be in your DCs, or maybe part of that will be more ad hoc once the order is placed? Irma, could you please repeat the second part of your question because it wasn't very clear? The second part of my question is where in your fulfillment model by Magalu, where would you keep the inventory for the marketplace seller?
Do you intend to have the marketplace seller inventory in your own distribution center, or maybe part of the inventory will be there, which would incur in a higher inventory turnover? Okay, now it's clear. On your last point. We believe that the seller inventory could be in any distribution center of the company. Today we have 10, then tomorrow we'll have more. Certainly, there is a plan to open new DCs going forward. The seller will choose a distribution center that makes more sense to them. In the future, it may even be out of the store. We are converting 30% of store space into storage area to accommodate e-commerce, in the future for 3P as well, and that's why we are calling our stores shoppable distribution centers.
We will invest in refurbishing of our stores to use 30% of the stores, both virtual and conventional stores, and this 30% space will operate as cross-docking points to also accommodate high-turnover products. It only makes sense to accommodate high-turnover products. The rest of the products will be accommodated in the other 10 DCs. Also in the 800 stores that will probably accommodate in the future as well. This is our view, but we still have a lot of room to grow and to accommodate things in the future. As of next year, we will already use that option. I would like to remind you that it only makes sense to be in the store, those products that have a high turnover and not the less relevant products.
About the store pickup system, we are still discussing the most adequate methodology to come up with that number. From everything we sell online, 20% is picked up at the store. This is our current KPI for all products. I am saying that from 100% of our revenue of our sales, 20% is store pickup. This number will grow substantially because it already grew 250% this year alone from the first quarter to the third quarter, and this, in our view, is one of our major differentials. It is still difficult to detect the KPIs. From everything we sell online, 20% is picked up at the store. Thank you. It is very clear. Thank you very much. We now conclude our Q&A session. I would like to give the floor back to Mr. Frederico Trajano for his final remarks. You may proceed, sir.
Once again, I would like to thank you very much for participating, and I would like to thank our investors, old investors and new investors that joined us after the follow-on. Thank you very much for being with us. I once again reinstate my optimism vis-à-vis the next quarters, given a more favorable macro landscape and an excellent execution phase of the company. I know that there are some difficult comparisons looking forward, but I am very optimistic in terms of our macro landscape. I would like to thank everyone from our team for producing a seventh positive quarter. I hope that we will continue performing well. Good morning, everyone, and once again, thank you. Magazine Luiza's conference call is now concluded. Thank you very much for participating, and have a good day.