Good morning, and thank you for waiting. Welcome to Magazena Luisa's conference call to discuss results of the Q4 of 2015. We would like to inform you that this conference call is being recorded and all participants will be in listen only mode during the company's presentation. Afterwards, we will have a question and answer session when further instructions for you to participate will be given. The replay of this event will be available for 1 week after the end of the conference.
We would like to mention that forward looking statement that might be made during this call relating to the business perspectives of McCarthy and Luisa, operating and financial projections and targets, our beliefs and assumptions on the part of the company's management as well as information currently available. Overtoking statements are not guarantees of performance. They involve risks, uncertainties and assumptions because they refer to future events, and therefore, they depend on circumstances that may or may not occur. Investors should understand that general economic conditions, industry conditions and other operating factors may affect the future performance of Pagarzyna Luisa and may lead to results that differ materially from those expressed in such forward looking statements. We would like to give the floor to Mr.
Marcelo Silva, who will make the presentation. Mr. Silva, you may begin. Good morning, everyone. It's a great pleasure for me to make my last presentation as the company's CEO up to December 31, 2015, when I completed my 6th cycle in the Executive Board of Madrasen Luisa.
I would like to thank you all who have been with me in all the last quarters and take the opportunity To mention, when I was invited by Ris Helena in order to set up a more professional executive committee when Louis Elena invited me in 2009, we published a relevant or material fact, which was a joint venture with the bank, renewed for an additional 20 years. This is this was an important act showing the partnership and how healthy this partnership between Itau, Luiza, Crete Magazine and Luiza is. In 2010, we established a strategic plan for the next 5 years, and the main strategy was sustainable growth. We needed to have a much higher share of the Brazilian market. And we decided that we should go after that, but with sustainable growth.
And for that, we needed to consolidate our business in the regions where we already operate in the Southeast and the South of Brazil. And we also had to penetrate other regions, namely the Brazilian Northeast, which has a lot of a lot to do with Matasena Luisa because of the predominance of the C class. And then we brought our headquarters from Seneca to Sao Paulo because of our big footprint in the Greater Sao Paulo area and also because of the fact that Sao Paulo is the economic capital of Brazil. And we acquired on the same year the Maya stores, 140. And in 2011, continuing with our strategic plan, we did our IPO.
And afterwards, we acquired the Mau stores in order to consolidate our presence in the South and the Southeast. In the 2 subsequent years, 2012 and 'thirteen, we integrated these chains. And in 2 years, in 2 years, which was something really incredible, a big success because you all know how difficult it is to integrate stores. And history shows this in many different situations, but we were very successful in our endeavors. And in 2014, we had the highest growth in the market, the best result in our whole history, very important for us.
We saw the evolution of our e commerce more and more sustainable and growing more than the market and higher than the market. And we started our multichannel strategy, and we will be talking about that during the presentation in 2015. But we will comment in detail because it's the object of our conference today. We renewed our contract with parties. And once again, evidenced our joint governance with Cartif and Brandy, and we evolved even more in e commerce.
And Federico will be talking about this in detail in a few minutes. And the last subject that I would like to mention in this cycle of 7 years is our corporate governance. Beside the successful joint ventures and the Itau Uniban Banco BNP Paribas. For many years, we have already had a board with independent board members. And up to 2015, we had the presence Mr.
Casaneta, as the Chairman of the Board. And we thought we should review our corporate governance, and this is what we did with a specialized consultancy company. And we decided to have 2 additional committees in finance, audit and risk. And now we have a compliance one with experts from the market. And in this review, Luis Elena became the Chairman of the Board.
I was invited and I accepted, of course, the position of Vice President or Vice Chairman of the Board. We have 2 independent board members. Ben Federico Tresano is now the CEO. He was already our COO, so he was appointed CEO in the succession process. And we think it was very good and very well done.
So he took this position now in 2016 together with Fabrizio, Executive VP. But we have Isabel and other friends that came on board and joined this team in order to reinforce our position and to maintain consistency, which is the major driver of our business. This is a big characteristic of Magasin el Luisa, not only in the operation but also in terms of the culture and the values of the company. So people, both individuals and corporations, have cycles. So I have just ended my cycle in this executive position.
And I am very confident, that this is why I continue to participate in the life of Mazeprazania Luisa because now the CEO is currently somebody who knows retail in-depth. And ever since we started our first steps in e commerce and multichannel as well, he has been ahead of these initiatives. So we are totally confident that we are on the right track, preserving the future of the company, which is the most important thing for all shareholders for us. So I would like to end my opening remarks thanking you very much for all your participation, all your interest in the company. And now I would like to give the floor to Federico Traziano, who is the CEO of the company.
Good morning, everyone. Thank you for participating in our conference call. Before talking about 2015, I would like to make a tribute to Marcelo Silva, not only because of the great cooperation that he gave us, but because his personal legacy, his example in terms of ethics, consistency, and he has always been a guiding light to all of us to work for the company. Now going to the results of 2015, I would like to summarize the year. I think it's necessary to say that we had very challenging macroeconomic conditions.
And as our sector is cyclical, such as the durables, this is why we feel more or less this economic movement, and the whole sector felt the effect of the deceleration that we had in 2015. And as Marcelo said, the comparison base is very high because in 2014, we grew by 18.7% and the best year of growth in the history of Magasin Luisa. And we were able, in spite of all that, preserve our margin. We have the drop of 8.7%, but the drop was offset by an additional percentage point in our gross margin. And I would like to mention that we had the best gross margin in the last 4 years.
I would like to mention that we do not believe it's necessary to waive margin to gain share online or offline. We have a lot of discipline in this sense that we will continue in 2016. Our focus this year will continue to be market share gain with preservation of our profitability. And I believe that probably, we will have better conditions for this market. And I can go in details afterwards during the Q and A.
I would like to mention the performance of e commerce, mainly in the second half of the year. For a long time, we have been saying that at some point in time, economic rationality would go back to e Commerce. And when this happened, we would benefit from that because of our multichannel strategy. And finally, this has been happening. We grew 19.1% in e commerce.
Even with the higher participation of e commerce, we had an increase in gross margin. And this shows that we have a rational operation there. In an economy of index cost, such as ours and the scenario of high inflation and higher interest rate, in spite of our effort in reduction of expenses, we had a drop in September last year. We hired a company to further focus our expense reduction, and we are already implementing many projects that were the focus of that. Cash is king, as Maria can say.
And in a moment of economic difficulty, companies have to focus on cash generation, and this is what we did last year. We had a sound cash generation, and we reported a significant improvement in our cash in the last quarter of 2015. Our net debt dropped from $1,200,000,000 in September of 2015 to $489,000,000 at the end of the year, at close of the year. Net debt to EBITDA ratio dropped from 2.3 to 1.1 in the same period. And with that, we believe that we are prepared to face any challenges that we might face in 2016.
All these figures will be detailed during the presentation, and I will come back to talk about our strategy not only for 20 16 but also for the next few years. Roberto has the floor now. Good morning, everyone. Let's start our presentation on Slide number 2. Once again, we highlight the sales performance, dollars 3,000,000,000, a reduction of 8.6% on a basis of 10% increase year on year.
The Q4 of 2014 was very high. E commerce, once again, growing by 19%, representing already 21% of our sales. Increase in the gross margin and expansion in this quarter due to the improvement in the mix and the collection of freight and their charging for shipping and assembly, etcetera, EBITDA with a higher gross margin but a lower dilution of expenses due to the sales performance and the market performance but reaching BRL100 1,000,000 with a 4% margin on net revenues. We had a reduction of over $700,000,000 in our net debt, dollars 1,200,000,000 to less than $500,000,000 and from 2.3x net debt to EBITDA to 1.1 percent net debt to EBITDA. And then operating cash generation, the quarter of BRL614,000,000 impacted by the improvement in working capital that we have been working on during the whole year.
For the year as a whole, dollars 10,500,000,000 decrease of 8.7 percent. And the basis the comparison basis was 18.7% in 2014, e commerce growing approximately 10% with 20% of our sales, an increase of more than 3 points in the or 3.40 bps higher than 2014 gross margin, 120 bps due to the same factors and EBITDA dropping by 100 bps year on year from 6.2 percent to 5.2 percent of net revenue, reaching BRL 465 1,000,000. For the year as a whole. Net debt going from 651,000,000 dollars to $489,000,000 dropped in the quarter and in the year as well. Net debt to EBITDA adjusted EBITDA of 1.1x.
Cash position, practically BRL300 million going up from BRL 863,000,000 to BRL 1,160,000,000, which is far superior than its short term. And so we increased liquidity in the company. And on the next slide, we show the number of stores we opened in the year as a whole, 13 new stores. We still have onefour of the stores still maturing the payoff curve. And in the year, we invested £158,000,000 dollars highlighting a higher investment in new stores and technology.
We invested 54,000,000 dollars in IT to support the whole company and the whole e commerce and our stores. And we invested less in remodeling because we remodeled practically all stores in the previous years. On the next slide, we show the quarterly evolution of the gross revenue first. As you can see, the performance was better than the second and the third quarters with the evolution of e commerce growing 19% based on 20% growth on a year on year comparison and exceeding 2 Vision reals the total sales of e commerce. On the next slide, we show you the evolution of our gross profit.
Gross margin better in all the quarters than the previous year. In general, gross profit had a reduction of only 4%. In the operating expenses line, we can see that selling expenses in this quarter, for instance, were lower than in the previous year, administrative as well. So overall, these expenses dropped in nominal terms in spite of the expenses in marketing that were higher due because of our sponsorship of soccer. But you can see the sales performance and nominally dropping due to the equity in line.
We see that in the year as a whole, we have $6,000,000 a little bit less than the previous year. That was €176,000,000 The result of Luisa Credit was impacted by higher provisions for delinquency for nonperforming loans, of course. And in the quarter, dollars 8,000,000 and the year, dollars 123,000,000 Luisa Caregi, dollars 5,000,000 in the quarter, dollars 28,000,000 in the year, growing more than 50%, the net income or the gross profit of the insurance company. Here on the next slide, the quarterly evolution of the EBITDA, once again impacted by the increase in gross margin and lower dilution of operating expenses and a slightly lower result from Luisa Cret for the year as a whole. We had a variation of 6.2% to 5.2% in EBITDA margin.
On Page 8, we show the financial results. We have a payment of receivables prepayment of receivables impacted by the increase in the CDI of over 20 percent considering the quarter and the full year. And it does not reflect yet the improvement of the cash situation of the company and the renewal of Cardiff happened at the end of December. So we increased quite a lot our cash position at the end of the year. We show the reduction of our net debt here.
In the last quarter, you can see a reduction of over BRL 700,000,000. And based on the improvement of our operating cash flow, cash generation and also the renewal of the insurance contract. The improvement in working capital happened in all sites, all accounts. You can see receivables, discounted receivables, inventories. And you can see that the main accounts of working capital were addressed over the year.
And on the next slide, we show details of the cash flow of the operations. For the year, as a whole, the cash flow of the operations was 428,000,000 and we received from Capri Feluiza Credit,000,000. We invested EUR 158,000,000 and with a total €299,000,000 cash generation, €300,000,000 practically. That increased our cash dollars In the next slide, we show the evolution of our net income. In 2014, we had €29,000,000 and this year, we closed with £66,000,000 of negative result, net margin of minus 0.7%, impacted by the sales performance, higher marketing expenses that I mentioned and the higher CDI in the period that also impacted the side of the account.
On the next slide, we show the Luisa Credit revenues. Here, we can see lower in the DCC. In the quarter, DCC dropped 52% DCC of Luisa Creggi plus the card, but the card grew by 3%, showing how important our Luiza card base is. And for the year as a whole, the same. DCC, for instance, dropped from $1,200,000,000 or $700,000,000 So our reduction over $500,000,000 come from this conservative position in terms of our DCC operations that has been partially offset in the last couple of months about the Los Ango project by the Los Ango project for the year.
As a whole, we show you the highlights. Sales with Luisa Card increased inside Magadine Luiza and so the participation of this card and our mix increased. Now we show you the portfolio of Visa Creggi. It's lower sales in PCC, going from $1,000,000,000 to $600,000,000 and card $3,600,000,000 to $3,800,000,000 So an increase because of the change in our sales mix and the profile of the Luisa Crede portfolio and the performance over the last few years. And finally, we show you the overdue payments.
We see an increase in past dues higher than 90 days, in line with the indicators of the market and a reduction in the short term delinquency, mainly in the last quarter, dropping by 3.4% to 3.4%. The coverage ratio is maintained 118%, 120%, increasing our provisions, of course, and maintaining a conservative position in the approval rates for DCC and cards, credit as a whole. Now I would like to give the floor back to Federico. Now talking about our strategy for 2016. I have a very clear mandate for my position vis a vis the Board, which is to accelerate the digital transformation of our business.
We are a traditional retail company with an important digital operation, but we want to be a digital company with physical or points of sales and human warmth. Many projects are going to be followed in this digital transformation. The first pillar is digital inclusion. The purpose of the company is to bring the access of many to what is the privilege of a few. This is the objective raison d'etre of the company.
The current focus of the proposal is to make products and services more democratic so that people can not only own but really master the technology. We have a big 70% of Brazilians do not have a smartphone, 90% do not have a smart TV. Many business opportunities exist in these areas, and we want to be the top in these categories. The second pillar is the digitalization of stores, of the brick and mortar stores. We want to revolutionize and bring digital technology to all our points of sale.
The best example of this pillar is our mobile sales initiative. We have already trained 2,000 people. We want to reduce from 45 minutes to 2 minutes, improving the shopping experience on for our clients. By the end of the year, we want to roll out those out to all our brick and mortar stores. The 3rd pillar is multichannel.
Today, we are the only retailer that are really multichannel, and we want to bring this integration to the next level. In 2015, more than half of the online sales at the South and Southeast were catered to by this logistics network. And we reduced the time and the cost for by over 70% for these regions. And we trained all the salespeople of Magazin de Luiza about the over 40,000 items of our website. So they have a commission.
This is all fully integrated. And so the stores have to be distribution centers of our e commerce. The 4th is transforming EcoSight into a digital platform. We already have our 1st desk to sell via marketplace, and we will be launching our marketplace initiative also to other online stores still within the first half of this year. We want to increase the categories and the items for over 15,000,000 consumers that hit on our website.
And we acquired a subsidiary 2 years ago. And you have this information. And this is a new category for us, in fact, which is health and beauty, growing 70% last year with net income of BRL8 1,000,000, another sales operation that can get into e commerce and evidence of being able to do this with a profit. And the 5th is digital culture. It's not enough to want to be digital.
You have to have the technical capabilities. And we created Luisa Lab for our transformation, and we innovated. And we have all the projects that are described in our pillars. And this is fundamental for the digital transformation. And I would like to say that we have many challenges that have to be tackled very seriously.
But I believe that these challenges are much, much smaller than the opportunities that we have in the future. I finish my presentation now, and I open for questions from you. Thank you very much. Now we will start our Q and A session for investors and analysts. Questions asked on the Internet will be answered afterwards by e mail.
And of course, we will stay at your disposal if you still have any doubts. Mr. Fabio Monteiro from BTG Pactual. Good morning, everyone. I would like to hear from you your projections about market growth for 2016 in your segment, both in e commerce and in brick and mortar stores.
Whether you gained share or not this year, I would like to know what are your projections for the sector as a whole? Good morning, Fabio. Thank you very much for your question. This is Federico. I have already given an interview about this.
Our view is that the market represent the same figures in terms of downward curve as 2015. I believe that macroeconomic scenario in 2016 will be very similar to 20 15. I think the opportunities will be microeconomic in terms of gaining market share, etcetera. So our focus is gaining share online and offline, but not to the detriment of our margins. We believe that there is the opportunity and the possibility of gaining share this year once again, and you know our history.
We can gain share still in a profitable fashion, generating value to our shareholders. In e commerce, last month, it was like 1 digit, but the top of 1 digit. And with an increase in the average ticket. So I think we can grow more than this for the year with the increase of our online operation. Another question about Luisa Credi.
This year, you have the effect of the increase of the PIS and COFINS taxes and probably higher provisions are part of the scenario. I would like to understand what kind of scenario should we consider for Luisa Credge considering all that? Do you believe there will be a relevant drop in your net income? Or what level of ROE do you Creggi for us? This is Marcelo Ferreira, We don't give the guidance.
As you know, we cannot give a guidance. But what I can tell you is that the scenario, the same way we have for retail, is very challenging for credit as well. And at Riza Creggi, we are focusing on lower risk assets. If you look at the balance sheet of this year, you will see that we are focusing on lower risk assets this year. And you see that revenues didn't go down.
We were able to increase our revenues because of our focus on Luisa card. There is a lot of loyalty on the part of our client for this card, and we can sell credit based on this card. And what I see for 2016 is a continuation of the strategy. But in a deteriorated environment, vis a vis credit, as we saw in the last year, so it's more towards the 4th quarter than the 1st quarters of the year because we still had a slightly better scenario for credit in the 3 first quarters of 2015. Lisa Esa from Voutorrentine Brokers.
Good morning. Thank you for the question. I would like to ask a question about e commerce. This growth of 19% is really flabbergasting. So could you describe how you were able to achieve this growth rate?
Was it via organic growth? Or did you buy any clicks? Or was it the app that is improving the performance for mobile access. So could you explain how you were able to get this growth? And what about the marketplace project?
Is there anything new that you could share with us? We thank you for your question. And I will answer. And if Eduardo wants to add, then please feel at ease. If you look at the last 4 years, we grow more than the market every year in e commerce.
You can see that we achieved very consistent results regarding growth in e commerce, always very rationally. As you know, this is one of our characteristics in the Q1. We had a comparison basis of over 40% growth in 20 14. And you can see that the economic slowdown reached e commerce in 2015 and some moves of rationality in the first quarter of last year. But in the Q2, we had normal growth rates again.
We resumed our growth, which is our history in the last few years. And if you have an operation with a rational management and a good competence regarding client acquisition, this gives you an advantage. And also due to the fact that we have multichannel operations and very good logistics delivery, Southeast and the Northeast, which have different needs, in fact, and there is no silver bullet there. It's just a whole array of competences, rationalization of the e commerce. At some point in time, the cash ends for those who sell below their cost.
And I think all this movement towards rationality is very healthy for the whole market. And we already benefited from that last year, and we will continue to benefit this year. And I now give the floor to Eduardo. Just adding to what was said in terms of conversion, We made a bet in October in terms of platform, and what we saw was a higher conversion. And this contributed to this result that we achieved at the end of the year in relation to market year marketplace.
We are already having a test with Efuca doing our operational and production tests. And in the Q2, we expect to expand in preserving our whole operations and our relationship with our clients. Good morning, everyone. Thank you for taking my questions. I would like to understand how you see the competitive environment.
In your message, I understood that you recognize that this will be or this is a challenging year and that you intend to gain market share. And I would like to know how do you see the competitive environment in the strategy? And how can you really preserve your margin with such a drop an environment of a drop in sales, which is the estimate for this year, how can you preserve your margin? And are there any players, either regional or national, that will allow you to gain more market share because of their poor performance? Thank you very much, Guilherme, for your question.
Yes, we believe there is room, both online and offline, to gain share, preserving our profitability. We do not believe it's necessary to waive your margin in order to gain market share. So you have to have a performance that is better than the market. And I believe that for two reasons. We believe in e commerce that there will be a trend.
There is a trend. There is a higher rationality of prices, and this is necessary for the financial balance of the companies. And we benefit from that, such as already happened in the Q3. And in the brick and mortar stores, I think the same economy, of course, impacts companies as a whole to all players in the market. You know that we are BRL140,000,000,000 market.
Even if it drops 10%, or BRL 530,000,000,000, we still have a lot of share to gain. This is not a monopoly. This is a market that has many players. And I believe that the better structured and better capitalized structures, and our company is one of them, well structured and well capitalized, these companies have the opportunity to gain market share because some suppliers may have a problem regarding shrinkage or a reduction in the number of stores. And we intend to continue to expand our base.
And we have to tap into this opportunity in this macroeconomic scenario that we mentioned during the presentation, opportunities do exist. However, you have to be careful. You have to do this cautiously and doing this very well and with a very good execution of all the processes. There is no silver bullet. Gaining share is difficult.
So you have to be very focused in order to do well what you have to do. And if you look at our history, we have been achieving this over the years. We have grown more than the market, and we have been preserving our gross margin. Fred? Looking at the promotions of the year end and January, have you noticed any change in the strategy of your competitors in terms of pricing?
Be it because they are more aggressive or because problems So how do you see the beginning in the beginning of the year, the pricing strategy on the products of competitors, do you believe you said that the market is going back to a more rational approach, but you talked about that in e commerce. But what about the brick and mortar stores looking at January and your radar regarding competitor prices? What can you say about that? Let me I would like to talk about January in February. But to be about the market, what I have been saying here regarding what I believe will happen in the market, I think will materialize this year.
Nothing in January or February goes in the opposite direction. So I believe there is room for us to execute our plan for the year. And with a lot of discipline, regardless of what one or other competitor might do, the competitive environment is being like I described to you. I would like to remind you that in order to ask a question, you should press star 1. As there are no more questions, I would like to give the floor back to Mr.
Fredericotaro for his closing remarks. I would like to thank everybody for participating in this call and summarizing our message. We will have a challenging year ahead of us, but we are very confident in our company, in our team and in our plan regarding cost and long term And just to take tap into the opportunities that we have ahead of us. Good afternoon. Thank you.
Thank you very much. Magazini Luiza's conference call is closed. You may disconnect your lines. Have a very good afternoon.