Good afternoon, ladies and gentlemen, and thank you for waiting. Welcome to Magazine Luiza's conference call referring to the fourth quarter of 2016 results. At this time, all participants are connected in listen-only mode. We will have a question-and-answer session when further instructions will be given for you to participate. Should you need assistance during the call, please press star zero to reach the operator. We would like to turn the floor over to Mr. Frederico Trajano, CEO of Magazine Luiza. Mr. Trajano, you may proceed.
Good afternoon, everyone. Thank you very much for participating in our call. It's a great pleasure for me to be here and all the executive committee of Magazine Luiza to answer your questions. I would like to talk about the results of the fourth quarter, in my view, they consolidate and reaffirm the assertiveness of our initiatives.
Both the short-run ones, such as the ZBB and TFD programs, as well as our focus on market share gains, as well as the long-term ones focused on our strategy for digital transformation. We evolved quite a lot in practically all the relevant indicators that are tracked by the financial market. Sales, dilution of expenses, reduction of the net debt due to the operating cash generation, with the improvement of our working capital as well. I would like to say that we also evolved in indicators that the market doesn't track, but that are, in my view, as important as the ones that I have described. I would like to mention the evolution of our organization's climate or environment. Our own team tracks this, we classify among the best companies to work for.
Also the client satisfaction index that we track, not only this one, but also the Reclame Aqui and the Procon were indices that had an improvement in 2016. It's very good to see these indicators improving. What really brings confidence are all the moves that we did to implement our digital transformation strategy. We want to do what no other company that I know of in the whole world has achieved, which is a transition from an analog company to a truly digital company. In this project, we have 5 pillars, we evolved in practically all of them. Digitalization of brick-and-mortar stores, marketplace, multi-channel, our digital culture, and all the endeavors to include our consumers digitally. What did we do? We placed Wi-Fi in all the Magazine Luiza stores.
We made available mobile devices to the whole team, or practically the whole team, and the mobile iPay, that is a checkout device. For all our clients, with a big success in our stores in 2016, we launched our marketplace operation. We evolved the rather successful already Magalu App, we received, due to our mobile app, an award of Google as one of the 5 best apps in the market, not only retail, but the whole market, one of the best apps for Android, we were very happy with this award. That mobile was very important for our online growth. We did a lot in a very short time, we're not going to stop here in our digital transformation. E-commerce in Brazil represents only 3% of the overall sales of retail.
Regardless of economic crisis, the online growth in the Brazilian market will continue to be a major one, and you should not bet against the growth of e-commerce in Brazil. We feel at Magazine Luiza that we will benefit from this growth, but also because of our strategy of digital transformation, and we are sure that we will be one of the big players in this market. There is a lot to be done in 2016, and maybe we will be completing 60 years of our company in 2017. We feel that we are ready and very much focused to increase the most important pillar of our platform, the marketplace one, and increasing our product offerings. We are working so that our platform may be perceived by our partners as well as by our consumers as the best marketplace platform in Brazil.
We are doing it extremely carefully because of the reputation of a company that is 60 years old, that has always been focused on our consumers and the quality and the level of service that we deliver. This is another transformation amongst others that we have already carried out over our history. The only thing that has not changed in these 60 years is that we have always changed. We have the soul of a startup, and we are 20,000 people working for the company. I would like to take advantage of this moment to thank everybody in our team who worked in this tough year of 2016, our clients, our analysts, our partners, our shareholders, everybody, for the trust and the partnership. Roberto Bellissimo now will be talking in detail about the figures of this year.
Afterwards, I will come back and talk about the expectations for 2017 in a summary, in a nutshell. Once again, we will be opening for questions. Thank you. Good afternoon, everyone. Thank you for participating in our call. We start on slide number two with the main highlights of the fourth quarter. We grew our gross revenue by 14% on a year-on-year basis. This is the biggest growth in the last few quarters. In our brick-and-mortar stores, same-store sales grew 16%, accelerating vis-a-vis the third quarter that had already been positive. All that increasing our gross margin in a sustainable and consistent fashion. Retail in the quarter, according to the IBGE, dropped by 6%, and we grew by 14%. That is to say, a difference of 20 percentage points vis-a-vis the market.
The biggest highlight is in e-commerce, growing over 40%, and the participation of e-commerce went from 21% in the fourth quarter of 2023 to 26%, increasing five percentage points in our total sales and during the period. EBIT grew by 8%, our e-commerce five times the growth of our EBIT. Another highlight is our operating expenses line. We diluted more expenses than ever. The expense dilution increased over the year. We diluted 2.3 percentage points, and we reached a level of SG&A of 22% over our net revenue. Very much thanks to the work done by ZBB at the beginning of the year and the matrix management of expenses during the year. We more than doubled our EBIT to BRL 37 million, plus 28% more.
The same margin of the third quarter showing that it is consistent and recurring, one of the highest EBITDA margins of the company since our IPO. We reached 46 million in net income. In the quarter, we also had very good cash generation, over BRL 650 million in the quarter, and evolution of our working capital of BRL 570 million, a reduction of 570. We also reduced our net debt for the quarter from BRL 750 million to a little more than BRL 100 million. Net debt to EBITDA, adjusted to EBITDA, dropped to 0.2. Both the debt net and the leverage are at the lowest level since our IPO. Lastly, we talk about Luizacred. The NPL index over 90% past due dropped 3.2 percentage points in the year, reaching 9.5%, one of the lowest levels ever of delinquency, historical delinquency of Luizacred.
We had BRL 25 million in net income in Luizacred, with an ROE of 19%-20%. On the next slide. For the whole year, we grew 8% in our gross revenue. The market dropped practically 8%, which means that there is a very big share gain. In the year as a whole, the participation of e-commerce went from 20% to 24%, growing by 32% in a market that grew 7%. We diluted 1.3 percentage points in our operating expenses, over BRL 120 million in savings in our expenses for the year. We grew our EBITDA over 50%, 7.5% EBITDA margin, and BRL 87 million in net income expansion. We improved our working capital for the whole year. We reduced our leverage from one to 0.2. LuizaCred reached over BRL 100 million in net income for the year as a whole.
On page four, we show the evolution in the number of stores, 800, exactly 800. We opened 20 new stores over the year. We reduced our investment. We invested BRL 124 million in the company as a whole, highlighting IT in these investments. On the next slide five, we show the evolution of our gross revenue on a quarterly basis, and it is very clear here the acceleration of our growth in the last quarter, both in the consolidated figure as well as the internet, and also same-store sales growth. In our brick-and-mortar stores on slide number six, the performance of our gross margin show very consistent quarter-over-quarter. Operating expenses in the last quarter, we were able to reduce expenses nominally from BRL 645 million to BRL 630 million, so it was a very strong dilution.
Also nominal drop in spite of the inflation, in spite of the higher number of sales and the return of the tax on our payroll, and a very consistent work done in that. In equity income, the contribution of LuizaCred and Luizaseg, a consistent one over all the quarters, BRL 15 million-BRL 16 million. Here we have the main effects on our gross profit, including more rational prices on our website and brick-and-mortar stores, the collection of freight and assembly, and a better product mix as well. On page seven, we show the EBITDA evolution. You can see quarter-on-quarter going up and up. What really explains this evolution was the growth in our sales, the increase in our gross margin, better dilution of expenses, and positive e-commerce contribution.
Practically the whole growth of the company this year came from e-commerce, and we were able to increase all of our margins, which is evidence that our e-commerce generates results and is rather positive for our business as a whole. On page eight, we show the financial results of this quarter. We saw already an expressive dilution in financial expenses from 5.7% to 4.5%. It was already a consequence, partly, of the beginning of the drop in interest rates in Brazil, however, mainly due to the reduction in the leverage of the company and the cash generation of the company as well. For the year as a whole, we diluted financial expenses from 5.1% to 4.9%. I should also mention that our financial expenses are very much related to interest rates, the Selic rate.
With the drop in the Selic rate, they should drop in the same proportion practically. On the lower part, we show the evolution of our working capital, and it was BRL 260 million for the year. Also the importance of e-commerce has a bearing here because e-commerce has the working capital performance, which is better because the inventory turnover is better and the payment terms are the same as the brick-and-mortar stores. On the top of the reduction of our net debt and our leverage very much associated to the evolution of working capital, our gross debt was practically stable and we increased our cash position. We closed the year with a cash position of BRL 1.4 billion, and the highest of the company since the IPO. On page nine, we show the net income quarter on quarter.
On page 10, we talk about the Luizac red results, which was also a highlight for the year. The sales of Luizac red in the year grew by 19%, and for the year 10% growth, reaching BRL 12 billion practically, and highlighting the growth of Luiza Card in the stores, the Magazine Luiza stores. At the quarter, the growth was 34%, for the year 18%. The participation of the Luiza Card increased rather expressively, and this also helped the performance of our stores over the year. On page 11, our portfolio and also the delinquency indicators. They dropped very significantly over the year. The card portfolio grew, occupying the space of the CDC or direct consumer credit [but front]. Here, the performance of net income of Luizac red on the next page. In terms of operating income, Luizac red grew by 17% vis-à-vis 2015.
As the tax burden was higher, the net income was slightly lower. As a trend, the last quarter was much better than the last quarter of 2015. Some highlights here of our strategic pillars that Fred has already referred to. On page 14, we show in the multi-channel pillar the Retira Loja store pickup. We have a new rollout in January, and it was a big hit. Deliveries are increasing on a monthly basis, and we have already exceeded 100,000 products bought on the internet and with store pickup. On page 15, about our app. 4.5 million downloads of our app and the Google award as one of the best apps in Brazil. On page 16, we show you our main partners in our marketplace today and the ones that are on the pipeline.
There are already many partners, many suppliers in our marketplace today and many others already with signed contracts being connected over the next few days or weeks. On page 17, we show you that we progressed a lot in terms of our assortment. In the ML Day, we showed the slide, 80,000 SKUs marketplace with 30,000 SKUs in our own inventory, and to date has already increased to over 200,000 SKUs in the marketplace. We have over 230,000 SKUs available on our website. I would like to give the floor back to Frederico. I would like to say a few words about 2017, our outlook, and we always end the call with this kind of expectation for 2017. We said before, and Roberto said as well, we implemented many projects for digital transformation. Some of them were rolled out at the end of 2016.
We will have a year in which we will be further accelerating and implementing the projects, but we will also capture the gains of the projects that we implemented last year. Many of them we rolled out at the end of the year. We will continue to harvest and implement the projects. Our focus will be on marketplace. Most of our endeavors of our lab, our technology lab, and our e-commerce people and our back office people will have to get ready for that, because it has to do with the evolution of the marketplace platform. We will be launching new functionality. We will be increasing the precision of the search and the usability of our digital platform. Lots of things will be coming in terms of our marketplace platform, but we will not give you any figures, okay, in your question.
We will continue to gain market share in a sustainable way. We gained share last year. We believe that this year we have all the right conditions to continue to gain market share in conventional stores and online. In conventional stores, besides gaining market share, probably in the second half, we will have favorable winds. That is to say, tailwinds, because 2017 will not be worse than 2016. We will still be reaping these benefits and gaining market share, and the economy as a whole will be helping us. E-commerce doesn't feel that so much. We want to continue to control our operating expenses, and all the programs that we put in place last year will be repeated this year. Of course, with a more challenging base, because we have already done quite a lot last year.
The whole process, the culture of expense management, has stayed with us. We learned a lot, and we want to keep this learning even in years that are not as challenging as 2016. We want to intensify cash generation, continue our focus on working capital management, and working on all the issues having to do with cash generation and debt reduction. We will be intensifying the opening of new stores. We believe that the stores are extremely important as revenue generators and growth generators, but also because of our multi-channel platform. It also rolls us out to other markets. The brick-and-mortar stores are very important for the company as a whole, and they also are a very good opportunity for future revenue stream. We will continue to have a very strong discipline, paying very low cost for each square meter and no major interventions of civil works.
We have an expectation of reduction in financial expenses with the drop in the Selic rate. This is what we expect for 2017. Our whole executive team is available to answer your questions now. Ladies and gentlemen, we will have a Q&A session now. In order to ask a question, please press star one. In order to remove your question from the queue, please press star two. Fabio Monteiro, BTG Pactual. Good afternoon, everyone. My question is about the marketplace. You have already detailed the SKUs, et cetera. I would like to understand if you can give us some target for the year, for the next few years regarding the number of sellers, and also how much you believe the marketplace could represent in your GMV online and also the total for the company for the medium and the long run.
I would like to understand if this online performance, you could highlight some segments or some geographies or some product mix that is very good, or if you had across the board growth regardless of mix and geography. Fabio, good afternoon. Thank you for your question. I will answer about the marketplace. As I mentioned, Fabio, we are not going to give any guidance regarding GMV. The focus is on the platform and the construction of a robust, top-quality platform that may be liked by the seller and that the consumers might have a user-friendly experience with. For this year, I do not want to place big figures or what we call metrics of vanity for our marketplace platform, because our team has to be very much focused on building a top-quality platform.
As we launched this last year, we still have a lot to do in terms of improving functionality and user experience. We are also very much concerned with guaranteeing the way that we can have scale with the maintenance of level of service. This is something that is not very common in Brazil, and we are trying to scale without losing the level of service. Focus on product. What I can say more in the long run is that if you see around the world, marketplace has a very fast scaling power. Once you have your value proposal correct and a very good platform, scaling is very fast. It is exponential, such as we have never had in any other channel. It grows very fast. The growth is exponential after you start doing things right.
First, you have to be right, and we still have to do some streamlining here. In the future, we believe it could represent more than half of our sales in e-commerce. I know it's very daring. It's not a guidance. However, there is a possibility for this to happen. Fred, thinking about what you have just said, do you see any kind of limitation to your marketplace in terms of reaching a scale, maybe the size of your offline? What about marketing investments to show Magazine Luiza to the sellers and to the end customers as a platform? Over time, you will be adding much more than the number of SKUs that you mentioned. In your view, you're talking about maintaining the level of service and doing it very carefully. Do you see any stumbling block on the path of the marketplace?
No, not at all. The biggest challenge is to develop a robust platform that you can scale with a good level of service. This is the challenge. Once you're able to do that, scale is very fast and very organic. You don't have to make a lot of investments. You already have a queue of over 500 sellers to come on stream, everybody wants it. It's a no-brainer to make available any products on the platform. It has to do with us. It has to do with maintaining and building a robust platform that can be scaled with quality and no external limitation. There is no external limitation. The market is green field totally. 8% of the total sales of Brazil is e-commerce, a small part of that is marketplace.
You can see that there is a lot of room for growth, there is nobody yet that can say that they are the big guy. Some people have a high GMV, a lot remains to be done. The focus is the product, the platform, and quality of the platform. I will let Eduardo answer, our head of e-commerce. Hello, this is Eduardo Galanternick. The growth was very balanced in e-commerce. We were very able to do this in average ticket, in conversion, and in terms of categories and in the number of hits, telephony, IT, electronics. Regarding regions or geography, we had a slight dispersion, nothing very big, there was a deconcentration from São Paulo. São Paulo has always been very relevant.
We saw a slight dispersion to the areas that are close to our DCs, where we have operations, as we are evolving more and more the inventory and the multi-channel area. It was very balanced and sustainable. Thank you, Eduardo. Richard Cathcart, Bradesco. My first question is addressed to Beto. During the presentation, you talked about ZBB, that helped you quite a lot in terms of reducing your expenses and giving you a good bottom line. I would like to understand how you can continue to have ZBB in 2017, does it become harder and harder? Richard, it becomes harder because we have already done quite a lot last year. X-ray dilution increased over time during last year.
There are projects that matured over the year, that this year will have an effect during these 12 months because it will help us to continue diluting our expenses when we compare this to last year. It has to do with productivity gains. For instance, we say that in the last two years, we were able to reduce our headcount, in fact. We recovered the level of sales of 2014. We gained productivity in terms of sales per employee. It was very high, in fact. We have a lower headcount than 2014, selling the same as 2014. Of course, because of automation processes in our stores, the mobile sales, for instance, is one of the examples. Today, things are much faster. The salesperson can cater to more clients.
There are still projects of rollout over this year to continue to automate our stores and improve productivity at the stores. Also many other expenses, we worked on the matrix savings. For our freight package and in e-commerce, this is a main expense. Personnel, freight, electric power, credit card, many packages are under the expense matrix management. We consistently compare performance among stores, among groups of stores, and try to bring those to a lower, to a higher level. Looking for benchmarks and looking for new ideas coming from the stores that are having the best performance, and so on and so forth. This is part of the company culture, the managed expense management matrix. We will continue to focus on productivity gain, but of course, last year, we have already captured, so to say, a lot of this potential.
Now we will continue to work in order to gain more and more. Thank you very much. You talked about a more rational environment in terms of prices, e-commerce prices. I would like to understand your view for 2017. Do you believe it will continue to be like that because your competitors are having problems regarding profitability and cash generation? Do you believe that as the market improves, rationality goes down? Richard, what I see, I believe that I would place my bet on the maintenance of rationality, because even in the U.S., which is where this thing started, "Well, I'm going to grow a lot with loss." It's all the venture capitalists of the U.S. that really funded this. They reduced their aggressiveness.
They're choosing and they are reinvesting in companies that have a higher potential in the short run to grow with positive cash generation, or that have a trend of improving their margins over time. This is not a reality for the Brazilian e-commerce only. All the digital stocks are the same. There is a higher pressure so that they may have more profits in the short run. Investors will be more rational because they know how to separate the digital companies that can be profitable and those who cannot be profitable. They are no longer willing to finance neither one type or the other type of investor. There is a worldwide trend. This will happen in Brazil as well, e-commerce and startups. This is where I'm placing my bets, but you never know how the financial market will perform or behave. Thank you.
Thank you, Richard. Mamede from Santander. Good afternoon. Two questions, one about cash generation. Not only the fourth quarter, but over the whole year, it was one of the big surprises, positive surprises. You have a very comfortable leverage today. Looking ahead, in principle, with results according to the ones achieved in these last quarters, will you be working to achieve what level of leverage? What about your cash generation? Where will you be using it? How do you see the beginning of this year? You took the year very well, accelerating vis-a-vis the previous quarter. The beginning of the year, there was a very important event, which was the fantastic sales. How do you see this beginning of February? Good afternoon, João. Thank you for the question. About cash generation, we cannot give you any guidance.
What we can say is that it was a very big focus last year, that the focus will continue. Last year, we were able to generate a lot of cash, a lot coming from the evolution in our working capital situation. We will make our best endeavors to continue to improve our working capital. Last year, we improved our inventory turnover, this year with the recovery of the economy and sales, we have the possibility of further improving our inventory turnover. We do not want to. As e-commerce grows and as we have better and better inventory turnover, and as conventional stores become more and more significant as well. In the stores, you have the inventory that is really the samples at the store.
Our performance in brick-and-mortar stores was stable last year. It's difficult to improve with stable sales. As sales go up, it's easier to have a better inventory turnover. E-commerce has a better turnover because it gains participation in total sales, we improved this in the consolidated figures. Having an average term for sales, we can generate cash with this ratio between our inventory and our suppliers. We will continue to work. Our financial department works hand in hand with our commercial department to further improve our working capital situation. As financial expenses drop with the drop of the Selic rate for reasons, we have more cash left over for the company. The financial cost, the projection is a drop in the Selic rate, and it will have a big impact on our financial expenses.
The correlation is very big between the CDI and our level of financial expenses. What we can say is that we will continue with this focus. We will not give you guidance, but our target is continue to generate cash and reducing our net debt. This is our target. Beto, could you talk about this point? I understand that most of your cash liberation came from working capital, but also because of CapEx, so it was even better. For this year, do you intend to accelerate the opening of new stores that will demand more CapEx? Overall, how should we consider CapEx as a proportion of sales? João, this is Frederico. We are not going to talk about CapEx guidance, but it will be higher than last year.
Also because, but not exclusively because of a resumption of a stronger plan for the expansion of new stores. I would like to remind you that we have a lot of discipline in the investment that we make in new stores. They are not going to be extremely high investments, but we will put more CapEx, even more than proportionally in new stores and technology for the investments in platforms that we mentioned at the beginning of this talk. From the CapEx viewpoint, I don't see anything material that could change our outlook for a continuous reduction of our debt. Even with a higher CapEx, we will be able to reduce our debt. I don't believe it's comfortable. I think it's better than last year.
At the end of the year, of course, we always have a better snapshot because you have seasonality over the year regarding our suppliers, etc. In the first one, it will be different from the third and the fourth. What is important is that it improved significantly on a year-on-year basis, that we want to have this. The snapshot of the end of the year is better than during the year. Even with the drop of the Selic, it is still the highest Selic in the world, and it generates very high financial expenses. We want to reduce, and we want to improve our coverage ratio of our EBITDA over financial expenses, which is an indicator that we will be focusing on. We want to make EBITDA more net income, and we have to continue to reduce our indebtedness. About the fantastic sale, Fabrício.
[Blue Lantern]. This is Fabrício. We started the year well. We had a very great sale. It was the best sale ever in our history. Our performance was better than last year. We have been performing well in almost all the categories, and this warm weather is helping us. We had a good January, we're having a good February, and I believe that we will have a good quarter compared to 2016. Telefônica continues to perform very well, and IT as well, White line as well. In e-commerce, we had a good performance as well as we will talk. We started the year very well with the same focus on execution that we had during last year. Something very important for us are the major events. So we have very good level of merchandise, and we were able to perform very well in our fantastic sales.
February continued to go well, and the market as a whole has reacted, and it with about 13% growth in the market. So we have a better market scenario with the same focus on execution that we had last year. Thank you very much. Thank you. Thiago Macruz from Itaú BBA. Good afternoon. I would like to ask a question about Luizacred. The drop in the Selic that we will be seeing in 2017, how long does it take for it to have an impact on Luizacred? When can we imagine that this will incentivize sales in the brick-and-mortar channel? The second question, we have seen some players interested in buying an asset that is available for sale in your sector.
Do you think it's possible for an international player to be interested and make an offer, and what is your opinion about the impact that an international player could have? Thank you, Thiago, for your questions. The first one, Marcelo will answer about the impact of Selic on Luizacred. Then I will talk about the impact on the business and about the other part of your question. Thiago, thank you for the question. This is Marcelo Ferreira from Luizacred. Of course, there will be an impact in this year, certainly. You will see an increase in credit assignment as a consequence of that. We will be working from now on in a different market from the one that we have been working in the past, but that we are familiar with as well. It will be only natural.
Both Luizacred and the market as a whole will be following this reduction by reducing interest rates. Thiago, about the second question, this is a very difficult one. I wouldn't like to talk about it and build scenarios about the impact of any outcome of the acquisition process of one or other asset in Brazil. I believe that we are living a very sound moment with a lot of focus on execution, and this year has been better than last year from the viewpoint of operation of team and knowledge and projects in order to operate very well, and we will be very much focused on execution. What I can tell you is that I'm not afraid of anything that might come from an acquisition process. I think it really depends on us to continue in this virtuous cycle of expansion.
I see no major threat from the microeconomic viewpoint. Thank you. We saw that Amazon went to Mexico organically. When could this come to Brazil? Your results in e-commerce are very impressive, and they might be drawing attention. What is preventing them from coming to Brazil? I'm just curious about that. Well, I respect the company very much. They have a very good execution and retailer with the highest market value in the world, the highest market cap, with a very good level of service, mainly in the U.S. for their clients. We have to track the company, and for many years, I have been answering this kind of question to analysts and to journalists of when will Amazon come. I think they have a very strong focus on India. They are investing BRL billions and BRL billions in India.
This is a very big market, consuming a lot of their energy. You talked about Mexico, but they are not as aggressive in Mexico as they are in India because the Indian market is even more promising. What I see in Brazil, more specifically, if I could suppose something, I see that Amazon has a model that grew with cash generation. It doesn't have very high margins. The margins are low, rather, and they work with a positive working capital. They have more suppliers than inventory, 45 to 30. This is very positive. In the U.S., all the credit card sales are cash, that is to say. Here in Brazil, you have 10 times non-interest bearing, and this consumes cash. This is a Brazilian invention. We have to discount receivables.
They are not used to this kind of thing, and in Brazil, they would have to deal with that. Besides, we have a country that is very complex in terms of delivery, and Amazon has a lot of discipline regarding the service level and delivery. I believe that one day in the future, we will have some evolution there. Our carrier system is not so automated, and we still have to evolve quite a lot. We depend on the postal service, and they will not be able to replicate the very high level of service in Magazine Luiza. We are growing very much because of the support from our brick-and-mortar store transportation. We have over 900 providers, and they have a very good level of service. For a new player who does not have what we have, maintaining a high service level is very tough.
The Amazon here has entities that are not very good. They are not close to the ones that they have abroad, and they are very much focused on clients. They have a very strong principle of customer obsession, and they will only be able to scale here should they be able to replicate this model here. Thank you, Fred.
I would like to remind you that in order to ask a question, you should press star one. Irma Sgarz from Goldman Sachs .
Good afternoon, Fred, Beto. Thank you for the questions. Could we talk about the competitive environment? We see that the market is difficult. This year, the interest rate could improve the situation. When we look at the data, the PMC, we don't see anything really materializing in the market yet, especially for companies like yours.
In spite of that, you're able to deliver good results with positive same-store sales of 5% in brick-and-mortar, and also very major growth, much higher than the market in e-commerce. During 2016 and this year, we see that the competitive environment is difficult. In the fourth quarter, for instance, with the competition gaining some tax benefits and being similar to you in some senses. How do you see competition, or how did you see competition in the fourth quarter? You continue to gain market share. I would like to know the behavior of your competitors price-wise, and how do you see this from now on, as your margins have not been very much impacted by any changes. How do you see this in your analysis regarding the pricing policy of your competitors? Irma Sgarz, thank you for your question.
Well, I have already been repeating this ever since the first call last year, when we said that our expectation was for a more rational market. As incredible as it may seem, the crisis generates a less competitive market, and I will explain this because I know that it sounds very strange. The market is less competitive because in crisis, you have less liquidity in the market. Banks do not lend quite a lot, less capital markets financing proposals of low profitability and high growth. What happened was that many competitors that were less well-structured had less access to capital because of the risk aversion of the financial market and also of suppliers who also work with credit insurance.
Many companies that were not very disciplined, they exited the market, reducing their operation because they didn't have access to liquidity or to credit or to the equity markets. As you said yourself, the market continues to be selective. Banks are very selective now, and investors are more rational, and suppliers are more disciplined in terms of credit assignment to retail. I continue to see a rational market for this year. I don't see big changes because this year starts with some accelerations with the Selic drop. For this year, I don't see major changes in the competitive scenario. How should we see our gross margins? I understand what you said, that some players continue to compete as usual, and some are weaker. Competition is not so fierce.
Looking ahead, as the outlook for recovery is still more in the medium run, how should we see the visual of gross margin that has been sustained at reasonable levels in spite of the difficult market? How should we look at that? Well, I cannot talk about guidance, as I said, but I will talk in general. I'll give you a scenario of maintenance of the figures of last year. This is not a guidance, I repeat, but we believe that this is the most probable vis-a-vis the market situation. For a long time, we have been saying this. If you look at the gross margin of Magazine Luiza for the last four years, you will see a high degree of stability. We're working with a gross margin very close to our IPO with all the quarters with a strong maintenance.
Our whole team is focused on delivering sales and margin, not only sales. We say that all of us have to think about long-term growth. The salesperson of Magazine, his commission over the gross profit, both e-commerce and brick-and-mortar store, it has to do with cash margin, sales times gross margin. We have a very strong discipline, and the best way to show this is to show you our history of a lot of stability in gross margin. With high growth or low growth, we have always had this stability. I'm not saying about this year, but the next years, this tends to help gross margin, and by that I mean growth of marketplace. As I said in the previous question, it's not for this year, but for the next two years. As it scales, it will improve gross margin and the health of our gross margin.
Thank you. Now we close our Q&A session, and we would like to give the floor back to Frederico Trajano for his closing remarks. Mr. Trajano, you may proceed. Once again, I would like to take the opportunity to thank all of you, maybe our team, who worked very hard this year. Again, a very challenging year, macroeconomically speaking. I don't want to minimize the work that was done by all of you. You have worked very hard in a very assertive manner. Many of them are with us in the call. I would like to thank our shareholders, our investors who participated in this process and placed their confidence in us, and our clients who have maintained their loyalty to our business. We hope to be able to further improve our level of service and the enhancements and the good services delivered by all of us.
I would like to mention that we are grateful to all of you. We have a moderate optimism regarding 2017. The company is going very well. We're very prepared for this year. It's not going to be as tough as last year. I would like to say that we close this call with moderate optimism. We will be celebrating 60 years of life, and only a handful of companies are able to survive in such an uncertain environment such as we have in Brazil. We say that we are a startup of 60 years of age, and we want to continue changing and improving. Thank you very much to all of you. Magazine Luiza's conference call is closed. We thank you for participating and wish you all a very good afternoon. Thank you for using Chorus Call.