Good morning, and thank you for waiting. Welcome to Magazione Luisa's Third Quarter of 2015 Earnings Conference Call. We would like to inform you that this call is being recorded and that 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 soon after it ends for a week.
We would like to mention that forward looking statements that might be made during this call related to Magazino Luiza's business perspectives, operating and financial targets and projections, our beliefs and assumptions of the company's management as well as information currently available. Forward looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions as they refer to future events and therefore 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 Magazena Luiza and may lead to results that differ materially from those expressed in such forward looking statements. In order to open this call, we would like to give the floor to Mr.
Marcelo Silva, CEO, who will make the presentation. Mr. Silva, you may begin. Good morning, everyone. Thank you for participating in this call, during which we will be talking about the results of Magazena Luisa during the Q3 of 2015.
We have all the officers of the company with me, and they will be available to participate in the Q and A session so that they may answer specifically questions that have to do with their specific department. I would like to start with the highlights of 3Q 'fifteen, starting with sales. In spite of the consolidated net revenue being lower 13% quarter on quarter year on year, we continue to gain market share and also increasing our gross margin. This year on year comparison has 2 strong components. 1 of the comparison basis, we grew 15.7% in 3Q 'fourteen, a very strong comparison basis.
And this year, the economic scenario is quite challenging for retail and for the economy as a whole. And the main indicator is a drop in consumer confidence, which is at an all time low. In spite of that, we saw our e commerce growing steadily, increasing its participation in our total sales. We grew by 9.2% on a year on year basis in e commerce. And today, e commerce sales already represent 22% of total sales.
Last year, it was 17.5%, so almost 5 percentage points more. What is happening every quarter year on year are 5% gain, 7% gain visavis the previous years when we compare the last 12 months, which means a growing participation of our e commerce in our total sales. Brick and mortar store with 4,000 items, for instance, we already have in our e commerce. In spite of the drop in sales, we were able to maintain and even improve our gross margin, 29.5 percent of net sales. And this is because of the mix.
We have a better sales mix. Last year, we still had the effect of margin and now the mix is normalized. And we have started to charge for shipping and assembly and greater participation of service revenues growing. Our financial services more than the sale of products physical products, and we have been trying to negotiate the best terms possible with our suppliers in spite of knowing about the difficulty because of many products that suffer price increases because of dollar. And we have been working with our suppliers in order to improve the terms.
And in spite of the improvement in gross margin, sales is a significant factor. And up to last year, we had been doing this very well. However, now we were not able to dilute operating expenses, and we had a 1% lower on year nominal terms. As a consequence, our EBITDA margin dropped year on year, being 5.3 percent with a total of BRL 110,000,000 in 3Q. Equity income of Luisa Credit and Luisa Sergi continued to have a good result, and we will be able to go into more details about these 2 companies momentarily, representing BRL 55,100,000 in 3Q and representing 1% of our net revenue already.
And another very important point that deserves to be highlighted is the improvement in our operating cash flow, BRL 93,500,000 this quarter. And this certainly was due to a very hard work done by operations and commercial in order to balance our inventories. And you can see that we have a gradual decrease in inventories with a better and better and more streamlined inventory management working with our suppliers. And if we look at the curve, we see a reduction quarter on quarter. And one way or another, we have been improving our average buying time.
Overall, net of the negative result, when we look at the net revenue as we compare the Q3 of 2015 to 2014, we say that although the result is negative, we consider this as reasonable given the circumstances of the current market. And in order to get into the details of the company's performance, I would like to give the floor to Roberto Bellissimo, our CFO, who will get into details about the performance of the company in 3Q. Good morning, everyone. On Page number 3, we show the evolution in the number of stores. In this quarter, we opened 18 stores with the highest number of inaugurations in the year.
For the year, we already have 24 and an additional 6 planned for the year end. And we see here in terms of investment that most of them are being made in new stores more than last year, 12 to 29,000,000 in new stores and the number of remodelings went down BRL 29,000,000 in remodeling of stores. We increased a little bit our investment in IT and BRL 10,000,000 in logistics for the year as a whole, investing practically the same as we invested last year around BRL 100,000,000. We have 7 80 stores, and we still consider that 25% of our stores are still maturing. So increasing sales quarter on quarter.
On the next page, we show the gross revenue for the year. We are dropping BRL 1,800,000,000, BRL 22.4 billion, growth last year. Same store sales in the quarter. In physical brick and mortar stores, a reduction of 21%. And just to give you an example, not considering DCC that dropped 50% because of our conservative position, the other means of payment dropped by 16%.
So if it had stayed at the same level, our performance for brick and mortar stores would have been around 16%, and the performance including e commerce, 11% and not 15%. So this was the effect of reduction in the approval bracket of our conservative stand in terms of approving direct consumer credit. And here, we have the growth of our gross revenue over BRL 1,400,000,000 in the 1st 9 months of the year. And if it continues at this pace, it will exceed BRL 2,000,000,000 this year. On the next page, on Page number 5, we show the evolution of the gross profit, gross margin, operating expenses breakdown, reduction in expenses of sales, a slight increase in SG and A.
Overall, a reduction of 1% nominally year on year due to lower sales performance, but nominally dropping just 1% because of a very hard work being done. And equity income continues to be productive and representing 1.1% of our gross revenue. And I would like to mention the performance of RizaCare and Rizaasegi with over 30% return on equity. On the next page, we see the evolution of EBITDA, BRL 364,000,000 in the year, BRL 25.7 million here and the reduction margin EBITDA BRL5.3 million. And we have a bigger weight of expenses here.
But it was not enough to offset the weight of expenses in the Q3 of last year. We had our best quarter ever in terms of margin. So we had achieved 7.4 percent and this year 5.3 percent of EBITDA margin. Financial results, a breakdown of financial results, prepayment and debt service. Prepayment, most part of the financial expenses, as you can see on the chart, BRL 47,000,000 are basically the debt service, the net debt service, both going in line with the increase of over 25% of the CDI in the period on a year on year basis.
On the lower part, we show you the working capital evolution. We had an improvement in the net working capital, very much impacted by the improvement, as Marcelo said, of inventory turnover and the average purchasing term. Given the circumstances, we have a good inventory turnover. It's already better than last year, and the average purchasing term is growing. And when we compare this to December last year, we still see an increase in this need of almost BRL 315,000,000 in this line of suppliers and inventory.
This is not a projection. It's just a statement that whatever we if we are able to go back to last year's position by the end of this year, we will get a reduction of BRL 350,000,000 in our net debt. So EUR 1,000,000,000 level and some other factors involved. So in this quarter, we maintained the net debt at the same level, thanks to an operating cash generation of almost BRL100 1,000,000. On Page number 8, we show the evolution of the net income, practically breakeven over the year, very much impacted by the increase of the CDI and also financial expenses.
On Page 9, we have the performance of Luisa Crede. Sales of Luisa Crede grew almost 1%. Highlighting the use of card debt, the Magazine de Luiza that grew as well and also grew outside the Magazine de Luiza even more. DCC, a 50% reduction from EUR 300,000,000 to EUR 150,000,000 and personal loans as well, which shows a very conservative stand by Luisa Credit over the year as a whole in terms of credit assignment. And with the lower approval rate, in spite of that, we were able to increase our card base and loyalty from our clients by 5% from 3.5000000 to 3.4000000 to 3.6000000 in spite of a more conservative stand in terms of credit assignment, not only at the DCC, but also cards.
And we show that the past due short term past due portfolio had a slight improvement this quarter compared to June. And the long term increased a little bit basically due to economic factors such as rise in unemployment rate, etcetera. On the next page, we talk about a new partnership that we signed with Losango, Luzacrege and Losango. At the end of October, we started with the first stores. And by the end of October, all the stores were working with Los Ango as well.
And from now on, all the stores will continue to work with Los Ango. And Los Ango is approving the clients that Luisa Credge did not approve and that Luisa Gol wishes to approve. So I think it's really a win win situation, a win win partnership because Magasin del Luisa increases sales and Los Ango is already representing between 3% to 5% of sales at brick and mortar stores and it preserves the strategy of Luiza crede and preserves Los Angos as well because everybody tends to win with this partnership. Now I would like to give the floor to Federico, who will talk about our digital transformation. Good morning, everyone.
I would like to talk a little bit about our strategy in spite of this moment of crisis and mainly because of this moment of crisis. The company was faithful to its long term strategy And our plan has a vision, which is to transform the company, which is a traditional brick and mortar retailer into a digital company with points of sale and human warmth. This is already being implemented and now more intensive with this plan and with the changes that we carried out last year. And we have a whole series of projects that are based on 5 main pillars. The first one is multichannel.
We are today the only company that is really multichannel in the market. We have a unique operating platform catering to many different channels, the same administrative structure, the same brand, but one single platform catering to many different channels. We are talking about virtual stores, telesales, B2B and brick and mortar stores. And because of that, we have a major increase in our e commerce, and we are the only company having a positive result in e commerce due to all the advantages that we offer, one single operating platform. And I would like to remind you that all our competitors have different platforms.
And for instance, you can buy at our e commerce and you can return it at the physical store. So with an integration of our distribution centers and we cater to physical stores, brick and mortar stores, traditional stores and those who buy at the website and with the same delivery and the cost, that is to say reduction of 70% to 80% in these expenses, reducing our selling expenses. And the second point is the digitalization of our brick and mortar stores. In order to survive in the future, we have to carry out a deep transformation in our traditional stores. Any retailer in the world and in Brazil, we have significant projects to increase automation at the store with 2 objectives: to improve the buying experience, the shopping experience and reducing the operating expenses of the brick and mortar stores, reducing the support costs of the stores.
And the major project for this objective is mobile sales to improve the shopping experience of the client, reducing the term and the need for support on the part of the company. I will get into details later on. And another one is a training project that we have with store managers to activate their POS. The third point of our strategy is the digital inclusion. 50% of what we sell today is smartphones, tablets and smart TVs, etcetera, computers, our IT products.
And we know that we are living in Brazil and Brazil still has a low level of digital inclusion, although half of the population is already connected. Today, the degree of use or mastery of the technology is very low. So the retailer has to include digitally these consumers. We were the 1st retailers to invest in technology and the digital assistance that we call Lou, not only for smartphones, but also for all the other devices. And Lou, our digital assistant, helps our consumers to make a better use of technology that they are buying 80% of consumers that buy cellular phones only use 2 apps of a total of 3,000,000 apps that are available through App Store or Google Store.
So we want them to use more. And we were the 1st retailers to invest heavily in the improvement of the IT devices. We already have at the store in the stores products that are available to consumers. They can interact with the devices. And I think we were the 1st and the most consistent retailers to let our consumers really experiment with the devices.
And afterwards, I can get into details during the Q and A. Another important point has to do with our website strategy. We want to transform our website into a mobile digital platform. And this involves our endeavors in terms of launching the marketplace and selling the products that are not only in the portfolio of the company as well as Magazine Nivoce, which is a platform, a sales platform via social networks and growing in our business model and a very successful platform is the wedding platform or wedding gift. So going from an e commerce platform to a sales platform is very important and creating a digital culture in the company.
We have 20,000 people, 500 are digital become experts in IT as well. So we have to train them, we have to raise awareness, we have to give them the necessary skills because part of our team is still analogical. We are carrying out training for our managers and for salespeople to how to sell mobile phones, for instance, so that 100% of our people can be digital. We want to in order to make our clients more digital, we have to make our team more digital. On the page, we see 3 projects recently implemented, showing the consistency of our execution.
One was a new app we launched last month, a new sales app in which the consumer can buy the whole product line of Vagazen el Luisa. This app was launched at the App Store and Google stores as well. And I think it's the best in the market. It is totally personalized. It's all custom made.
So one client is unique. So it's different from what you see is different from what the others see because it's based on your purchasing habits. And I would like to remind you that many consumers are buying through their mobile phones and very often the screen is very small. So we made a big endeavor to reduce all our stumbling blocks in the purchasing steps, reducing the necessary steps the consumer can buy with one touch. And we have done quite a lot of work in order to facilitate the life of our consumers because some of them have a very small screen and their mobile phones.
And integrating this to our multichannel strategy, when the client is looking for a specific product such as a TV set, he knows exactly where the TV set is available. So the app is already integrated with the brick and mortar stores and we launched this in that pillar, the multichannel. And up to the end of the year, we have a promotion. All the clients that buy through the app will not be charged for freight for delivery. So we have about 1,000,000 clients with the new app, very important landmark, and that shows that we are on the right track and another important project.
Still talking about the digitalization of brick and mortar stores is the investment that we are making to automate the sales process. We have already done the conversion, the mobile conversion in 80 stores, and it will be 180 by the end of the year. It will be region by region. We are giving each salesperson one mobile phone, And the salesperson has a system, which is similar to Apple Store to sell to the client at the store. This reduced the time from 45 minutes to up to 5 minutes, improving the client's shopping experience at the mobile vendor.
Our mobile sales already has all the client files and the product files and payment terms and credit terms, everything integrated, reducing the red tape in the selling process and reducing the number of people that we need for support at the store because the model is more multifunctional, meeting the needs of digitalization of the brick and mortar store, improving the shopping experience and at the same time reducing the operating cost of the store so that the store can be competitive vis a vis the Internet. By the end of 2016, 100% of the stores, 100% of sales people of Magazin de Luiza will be working with the system because we will be including checkout. We will include the possibility of the client paying with the credit card, the mobile, this depends on specific negotiations due to the tax legislation, but we will have big gains in the shopping experience and the reduction of administrative stores administrative costs of stores. And mobile assembly helps assembly and disassembly. 15% of our sales are furniture, and we sell the assembly together with the sale of the furniture.
And we have our own people doing the assembly. And in order to improve this experience, we have implemented this mobile assembly system and the whole process becomes faster and more optimized, guaranteeing a better service to our clients. So we maintain discipline in the implementation of our vision in spite of the crisis that we are going through. And part of the good result of our e commerce is already because of the projects that we are implementing. And I would like to give the floor back to Marcelo Silva.
Now I would like to conclude by talking about our expectations for 2015 as a whole. So we have already gone through 3 quarters of this year. We are already in November. But these are the main points that we are working on. We are strengthening our multichannel strategy, which is the strategy of the company, the digital transformation that Fred has gone into detail about, the number of stores that we will have implemented with these apps.
We are also working and we continue to grow more than the average of the market. We have a growth above the market, growing the Northeast, the number of stores, our footprint, our sales, and we will continue to consolidate the Northeast. We have been opening many stores in the Northeast this year. We We will be opening a new source in Chiara now, and we intend to further consolidate our position in the Northeast. And in order to grow and consolidate, we continue to maintain our commercial competitiveness and our visibility in the media with promotion, with events and TV commercials.
And this is a strength of Magazini. We continue to work to reduce our operating expenses to a certain extent. This is why we review our structure, the company's overhead and the store headcount and rental in order to make them compatible with the sales volume in the specific source. So we are detailing everything and our teams are doing a very detailed work in this regard so that we may further rationalize our expenses and costs with the objective of making the operation more and more profitable, such as we did in 2013, 2014, 2015 with the drop in sales that we haven't seen both in our company and the other retail companies, it's difficult to deliver positive results. But our expectation is that the last quarter should be month by month what we have been saying to our people.
Well, the next month has to be better than the previous month. So we have a communication program with our people in our offices and our stores, and this is a mode to increase sales month by month. This is a crisis such as many others that we have had in the past, but we must look ahead. But if you do not grow in retail, you just end up dying. So now we would like to answer any questions that you might have.
Thank you very much. Now we will start the Q and A session for investors and analysts. Questions asked over the Internet will be answered by e mail after the end of the call. Our first question comes from Mr. Fabio Montero from BTG Pactual.
Good morning, everyone. I have two questions. The first has to do with e commerce. You achieved a 9% growth and the consolidated margin improved. There are two points I would like you to clarify regarding e commerce.
In e commerce, are you being able to keep a small difference in the margin visavis your brick and mortar stores? And what is your expectation? Now that you have Luisa Labs, could you talk about your expectation for the year end and with the new apps that you have launched and sales for Christmas? So can you give us an estimate for that? And then I will ask my second question.
This is Federico, Fabio. Thank you for your question. As we have been saying for a long time already, we reiterate the fact that our model is a model of profitability for e commerce. Both in traditional stores and e commerce, we have a very major margin control, so to say. So the margin of e commerce visavis the traditional stores is much smaller than the one that we see from other companies that have this kind of operation.
We do not disclose the specific margin, but the difference is much smaller between e commerce and brick and mortar stores. So of course, the margin is slightly lower than the brick and mortar stores, but you have the flip side of the coin as well. All the projects that we implemented, the new app for the client, mobile Vintas or mobile sales the store salesperson and mobile for the assembly person. We are launching our marketplace platform by the end of the year. So all these projects are being fully developed by Luisa Labs.
We have 75 software engineers that are doing a very productive work. It's a top level team. It's not a very big team, but a top level team that has been meeting all the needs that we have in this digital transformation endeavor. I would say that we will have a good year end for e commerce such as we had in the last quarter. Cool, Fred.
And do you think that e commerce can reach 40%, 50% of your sales? And what would be the time frame for that? Fabio, it's very difficult to estimate that because we continue to open new brick and mortar stores. And I think the participation shouldn't be a target. We have to think about growing all channels.
We have to think about the global profitability, the overall profitability of the company. But if you extrapolate based on what have been happening in the last years, It's not impossible to have something around 40% to 50% in 4, 5 years' time, but we're not seeking that. It's only because this is a market reality and there is a trend or growing trend in e commerce. E commerce is growing in spite of all the problems that we face in the Brazilian economy. So this is a characteristic of retail.
This is not a target, I reiterate that. But in This is not a target, I reiterate that. But in 4, 5 years' time, that could be possible. And what will determine that or who will determine that will be the client. As the client becomes multi channel, the client will demand whatever he prefers.
So it depends really on the evolution of society as a whole in terms of ITUs, what the client prefers, because many people still want to see the product physically, they want to touch, they have to have the product in their hands. So this is why our strategy has to be followed, a multichannel strategy. And I agree with Fred, the percentage of e commerce will be a consequence. Another question, if you allow me, about Luisa Crede. The result of the operation itself.
I want to try to understand for next year what we should think about it before taxes. Before taxes, you had a worsening in the funding costs because of the CDI increase in provisions, because of the increase in NPL. And in administrative expenses in Luisa Cres, you saw a big increase as well. Ultimately, the result of the Luisa Cres operation before taxes was worse than we estimated before. So I would like to have your input.
More than the Q4, but going beyond, thinking about next year, delinquency is deteriorating for everybody and CDI, which is a proxy for funding cost, will probably not drop in the next few quarters. So I would like to understand what you expect for the results of Luisa Grande for next year. This is Marcelo Ferreira, Fabio. Thank you for the question. What we have as our vision for the future is that the picture that you have just described will be maintained.
Funding cost doesn't seem to go down in the future. In the segment where we operate, the main element that makes us look to the future and not see a decrease in NPL is the issue of unemployment. The segment in which we operate is closely linked to that. And you can see that we are also reducing new credits. You see the reduction that we had in direct consumer credit.
And the equation that we try to work with is expenses. And this is what we are doing for the whole year and also for 2016, proportionally reducing our expenses because these two elements that I mentioned are elements that lie outside our control. They are market elements. Thank you, Marcelo. Thank you, everybody.
Mr. Guilherme Assis from Brasil Plural. Good morning, everyone. Thank you for the question. I have a few questions, in fact.
I would like to start with the commercial strategy on your part. As far as I can see, in the last couple of years, you had a very correct strategy, multichannel and also investments that you made in marketing and promotions and the partnerships with suppliers and marketing in general. And it started with your investments in the World Cup and this year with soccer. And I would like to well, having said all that, I would like to understand your strategy for the future. The situation is rather complicated.
And mainly regarding your biggest competitor, it seems to me that they are trying to adopt a more aggressive commercial position. And they have already announced that for 2016, they will be making an investment in soccer on TV. So what about your own strategy in this regard? And what is the outlook for sales and the continuity of gaining market share with a more competitive situation in the market and with a very complicated macro situation. So your growth expectation may be comparing to the market?
Do you intend or believe that you will continue to gain market share? What is the impact of that on your gross margin regarding your commercial policy and pricing policy and marketing expenses? This is the first question. Afterwards, I would like to ask a second question. Guilherme, good morning.
This is Federico again. Thank you for the question. We're not going to change our strategy. We're going to maintain our strategy Because even if you're very good in cost reduction and even if you're very aggressive in cost reduction, any retailer in Brazil and in the world needs growth to dilute costs and expenses. Either you shut down your stores I think it's a wrong strategy just to cut costs.
We gain share at the same time. And this is what we will continue to do regardless of isolated decisions regarding, well, let's sponsor this or that. Marketing mix decisions are more complex than changing our strategy. We will continue with our strategy of gaining market share. What we gained in market share this year is similar to what we gained last year.
What happened is that the market as a whole dropped, which means that the cake is smaller than last year. So this impacted our results. We do our share, but the market has to do its share in terms of increasing consumer confidence and having the necessary positive policies in place in the market. So based on everything that we are doing and the consistency of our planning, all the investments that we are making both on our website and traditional stores, we will continue to gain market share, increasing our service level and increasing our profitability. The decision of sponsoring soccer or the World Cup depends on the company's plans as we have this very wide ranging program in place regarding the digital transformation.
We believe that next year, we will have more adequate opportunities to make investments in offline media and with more freedom to be able to disclose our multichannel platform. So this was a decision made based on the strategy of digital transformation, but this is not a change in our strategy of continuing to gain market share and carrying out promotions because we have been rather successful doing this in the last few years. So no change there. What we have is one decision having to do with our strategy of digital transformation strategy. I would like to add to what he said.
It seems to me that a major competitor of yours that was less aggressive has become more and more aggressive. If you have the situation, the scenario, what should we expect from you? I understand that you are keeping your market share gain policy. But do you think you will be sacrificing your gross margin? You had a few factors that helped your gross margin such as charging for freight, shipping, assembly.
What I mean is, could we expect, let's say, your competitor becomes more and more aggressive, would you be defending your market share to the detriment of the gross margin? Guilherme, we're already 10 days into November, October is over and the market is more aggressive since the beginning of the year, not only one single competitor. And the price levels in the online market, they are really below the cost of the items. So it's totally rational. And we see in the balance sheets that are being published that it makes no sense whatsoever.
So in this year and the other years as well, I think aggressiveness on the part of the market will continue. And if we do our homework, we will continue to gain market share preserving our margins. We intend to preserve our margins. If you look at our historical margins, they are rather stable the last 5, 6 years. And we try to be very careful with that because a reduction of 1 or 2 points has a huge impact on the bottom line.
And we are very careful not to grow to the detriment of our margin, but it's very difficult to say what will happen in the future or every month. But the business model adopted by the company is not going to change as the commercial strategy will not change what is happening. Well, I cannot talk about the market. This is Marcelo Guilherme. We do not like to talk about competitors, but our main competitor has always been the champion of the media.
So it's not changing. I mean, this has been the same for many, many years. We will continue with a lot of visibility in the media. Only details will change in 2016, whether this is a championship or what. But retail has always been very aggressive in media.
You have mainly on television. This is one aspect of market share preservation, but the relationship with consumers and a whole series of actions that we carry out and all the promotions that we carry out over the year and the relationship of the company with the headcount and the headcount with the clients, this is really a strength of Magasin de Luiza, and we will preserve that. We believe that we will continue to gain market share. Thank you. One last question.
Could you talk about your agreement with Los Ango? How does it work? I understand that you already have an agreement with Luisa Creggi, which is a JV of the group and that they have the right of first refusal. And as of the moment, Luisa Credi denies credit and Los Ango assigns credit, this becomes an agreement between Los Ango and the consumer. So Magasin Luisa doesn't run any credit risk.
Is that correct? And the agreement, does it involve any payment besides the fee or the financing fee? Does Oksengo pay Magazini something to have access to the portfolio? This is Roberto Guillermo. The agreement involves 3 parties, Magazena, Luisa, Creggi and Los Angos.
The process at the store is automatic. It's almost seamless. The client data. Go first to Luisa Credge. Automatically, Luisa Caregi processes the credit score.
If it is approved, it will be a Luisa Caregi client. Otherwise, the data are processed by Losango credit score and in less than 5 seconds, we have the answer and the direct consumer credit is either approved or not approved. It's a very automatic and very fast and integrated process. Luisa Credi continues to have the right of first refusal and following its strategy. The agreement with Los Ango provides for commercial conditions.
There was no prepayment of any amount. Otherwise, we would have communicated this as we have deferred revenues. But our main objective is to preserve our sales and preserve the client and preserve the funding mix. Of course, there are conditions involved, but the focus as far as Magazine Deluize is concerned is not a focus only on profitability. We do not participate in the credit risk.
This is a decision made by Los Ango based on the same interest rates that we practice, the same commercial conditions that we practice with Ruizakreji. And simply, Los Ango approves or not on a transaction by transaction basis, And we have a profit sharing agreement, but we do not share any risk, any credit risk. And Los Ango, they are experts in the product. They are the biggest company in this segment with over 20,000,000 clients in direct consumer credit, and they have the possibility of increasing their businesses as well and making money. So we believe this is really a win win situation for all the parties involved.
Thank you. Thank you, Berto. Our next question comes from Mr. Tomi Etsinge from Credit Suisse. Good morning, everyone.
Marcelo, you were saying that you're implementing initiatives and month by month, you are getting improvements. Can you tell us about over the Q3, how much sales have increased month by month? And also if you could talk about October November? And how do you see Black Friday as well? What we say to our people every single week by means of Sidoti Luisa, we have a very intensive communication with our people, is that when we close 1 month, the next month has to be better than the previous one.
October was better than September. I'm not giving you a bullish or overly optimistic message here. Given the market circumstances, we have to make our people continue to be motivated and believing because we have been in existence for 58 years. We have been through so many crisis already, 2,008, 2009 and more recently in the macro prudential measures. So we have 20,000 people working for Magasin in Luiz and they have to be motivated.
October was slightly better than September, and November will be much better than October because Black Friday It will be slightly before the previous one, that was November 29. And many products in the DC are this year, November will be very good because there is a positive expectation regarding Black Friday. Many clients of ours are already waiting for it. We see already moves on the part of retailers talking about the Black Friday. So this is an event that is becoming the major event in Brazil.
And I believe that the volume of sales for Black Friday will be even higher than Christmas Eve. That has always been the biggest selling day of the year in Brazil. I'm not being bullish in the sense, well, we are going to be better than last year. This is not what I'm saying. I'm saying that we are making a big endeavor.
We are doing our share. And Abilu yesterday was saying that we should look inside, would look in the mirror and see and say what can we do. And this is what we are doing at all levels of the organization. We know that crisis come and go. One day, the consumer will start to perceive that there is a lot of noise, so to say, in the market and that things are becoming better and we'll start having more a better awareness.
And November will be much better because of Black Friday. December, we do not estimate a spectacular December because we have the effect of Black Friday and there is a conservative expectation regarding December. But the Q4 will be the Q4, that is to say the best quarter in the year. We have no doubt whatsoever about that. So net sales, for instance, if you look at the 1st 9 months of last year and you compare it to this year, of course, this cannot continue, but it will gradually change.
And at some moment in time, nobody knows the time frame for that. Things will change. And consumer confidence will return. We are still at an all time low in terms of consumer confidence. Those who still hold a job, they see their friends unemployed, losing their jobs.
So people are very careful. They are very prudent, and we see no news, good news whatsoever. We only see bad news in the media. Now we have gone through similar situations, I don't know how many times already. And here at the company, we believe that we will be exiting this crisis in a much better situation than we entered it because we will have a learning curve and we will be learning quite a lot in terms of our relationship with suppliers, operating expenses, suppliers visavis inventory.
I have never seen anybody doing this kind of hard work in the good times. In the good times, you only think about selling, selling, selling. And as you can see in yearly comparisons and our people continue to believe if you go to a Magazine de Luiza store and you talk with a manager or a salesperson, you will see that they are very positive. I'm not saying that they are excessively optimistic. This is not what I mean.
What I mean is that we have a positive agenda that we must have in retail because you can imagine, it's a whole army of 20,000 people saying, well, we have lost this battle. No, this is not a situation or a kind of thinking that we accept. So our Q4 will be better than the Q3 because of all the efforts that we made and because of Black Friday, 4th will be better than 3rd and better than the second. Could you quantify this, Marcelo? Nobody knows when things will stabilize or recover.
Could you say, well, 21%, if this is the average for the company, What about every month? Could you quantify for October 1st? I cannot talk about October. I cannot talk about October. I cannot talk about November or December.
The only thing I can tell you is that October was better than September and that November will be better than October. This is all I can say, okay? For next year, there will be a cost inflation. What about negotiations for 2016? Will this be done in January or February?
I know that you do not want to transfer that. But if you talk about technology, you're talking about dollars. How do you see that? Everybody trying to sell what we can, but do you have any indication of any negotiations for next year? Because this will be one additional difficulty on top of all the others for next year.
This is Fabrizio. Regarding negotiations, we had a very tough year due to the dollar variation. Over the year, We transferred this as well as all the other suppliers, all these increases. And for the end of the year, nothing will change because we have already negotiated from September to the end of this year. And for next year, we do not estimate anything because our suppliers also feel that they're they know that they are selling less.
So you cannot afford to increase prices. I believe it will be stable, but it will depend on the exchange rate, of course, because no one can predict that. If there is any negotiation, it will be for the second half of 2015. Your last negotiation, well, over the year, we had negotiations with suppliers individually. So this is a positive factor.
Over the year, we had some isolated negotiations quarter on quarter, And we ended up paying less than the dollar appreciation. This is very important. I know it's difficult for you to answer. But over this year, do you have anything adjusted with the dollar over $3,000,000? Or are you still working with your suppliers below $3,000,000 It's between $3,000,000 $3,500,000 already.
Okay. Thank you very much. As there are no more questions, I would like to give the floor back to Mr. Marcelo Silva for his closing remarks. I think I have already made the closing remarks when I talked about how we see the current situation and how Magazine Luiza and all the management of Magazine Luiza sees that we are working very hard.
This is a tough year indeed. But we continue to believe we are present in 16 states. We are a retail company. 30,000,000, 40,000,000 people go to our stores every single year. And we know that this country has 204,000,000, 205,000,000 inhabitants.
So the market does exist. All we need is to see a recovery of consumer trust, consumer confidence, and then things will go back to normal. And we at Magazine Luiza, we are prepared to face these difficult days and also for the good days that will come in the near future. So I would like to thank you all for your attention and see you during our next call. Thank you.
Thank you very much. Magazine Iluisa's Q3 of 2015 earnings conference call is closed. You may disconnect your lines now. Have a very good day.