On the interpretation button, using the globe icon at the bottom of the screen, choose your preferred language: Portuguese or English. For those that are listening to the conference call in English, please mute the original audio in Portuguese. This video conference call is being recorded, and it's going to be available on the company's RI website, where you can find the complete earnings release available. You can also download the presentation from the chat icon. During the company's presentation, all participants will have their microphone muted. Then we are going to start the Q&A session when further questions are going to be answered. To ask questions, click on the Q&A icon at the bottom of the screen and enter your questions to join the queue. When you are announced, a prompt to activate your mic will appear on the screen, and you must then unmute to ask questions.
We recommend that you ask all your questions at once. We emphasize the information contained in these presentations, and any statements made during this conference call regarding GPA's business outlooks, projections, operating, and financial goals are based on the beliefs and assumptions of the company's management and rely on information currently available to the company. Forward-looking statements are not guarantees of performance; they involve risks, uncertainties, and assumptions because they refer to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions, and other operating factors may affect GPA's future performance and lead to results that will be materially different from those in the forward-looking statements. Today with us, we have GPA CEO Marcelo Pimentel and CFO and Investor Relations Officer Rafael Russowsky. I'm going to hand the call to Marcelo Pimentel to start the presentation.
Good morning, everyone. Thank you so much for attending our first quarter 2024 earnings call. I am very excited about the numbers that we are going to present here today, the result of very solid and consistent work which shows the continuous improvements and important operational and financial indicators for the completion of the last year of our turnaround project. I have mentioned to you on different occasions that 2024 will be the year of acceleration of the gains of what we have built over the last two years to consolidate the value proposition of our brands and accelerate the gains of the strategy that we designed. On slide four, you will find a summary of the main highlights of the first quarter.
As I said, it was a very positive period for GPA in which we presented a sequence of results with advances in margins, revenue, market share gains, and a very significant reduction in the company's net debt. This has been a quarter in which we achieved an adjusted EBITDA margin of 8.1%, which is the best ever in nine quarters. We also recorded again operating cash generation. There were BRL 428 million in the last 12 months that ended this quarter, an improvement of BRL 736 million compared to the first quarter of 2023, excellent news that indicates the potential of our business.
This slide also shows other important highlights of the quarter, such as the evolution in all the indicators, net revenue, and in total stores with growth of 8.2% in the quarter, with emphasis on Pão de Açúcar brand with a growth of 10.3% to 2.8% in proximity stores, both compared to the same period in 2023, and a strong growth of 25.1% in our e-commerce, always remembering that this is profitable growth. Rafael will go into detail with you about the financial indicators shortly, including the most recent initiatives to reduce our net debt, but I would like to comment briefly on the last two announcements that we have made to the market last week.
The first was the addition to the ICMS debt settlement program of the Government of the State of São Paulo called Acordo Paulista, which allowed a reduction of about 80% for the settlement of contingencies that totaled BRL 3.6 billion according to the discounts resulting from the agreement. We should congratulate the Government of the State, together with the Attorney General's Office of the State of São Paulo, for the initiative that was made available to all interested taxpayers in an unprecedented and very positive action for both sides. We also had the announcement last week of the sale of properties that made up our administrative headquarters in a transaction of BRL 218 million, also as part of the initiatives to sell non-core assets focused on debt reduction. Rafael will comment later on about the details of the transactions.
Following the presentation, we go to the top line pillar, in which it is worth mentioning the double-digit growth of Pão de Açúcar, 10.3% in the quarter, driven by the result of same-store sales, which recorded an increase of 9.3%, a significant evolution compared to the fourth quarter of 2023. This result was generated both by the increase in sales and by the increase in the average price and the flow of customers in the stores. As to Extra, we also had an important advance in the same-store sales segment, 7.2% in the first quarter, which is the highest growth in this indicator since Q2 2022 for this brand. In proximity stores, we delivered a strong growth in total stores of 22.8% leveraged by the accelerated ramp-up of new stores.
In same-store sales, we had an increase of 4.9% with a highlight of the store that opened after 2021, which already have a double-digit same-store sales growth with sales per square meter 8% higher than older stores. From this quarter on, we will also show in a segregated way the results of our direct sales in the proximity stores in the Aliados format, which we created in 2017. Today, we have more than 2,200 small business partners and a sales volume around BRL 219 million in the last quarter. The low-investment model, since we take advantage of the strong commercial and logistics synergies with the rest of the operation, and this year it's going through a process of readjustment involving the review of assortment mix, promotional efficiency, logistic costs, with a focus on greater profitability. It's also worth mentioning that we recorded another period of evolution in the market share.
Despite the strong comparable base of the first quarter of 2023, we had 0.2 percentage points compared to the self-service market and 0.9 percentage points for proximity formats compared to small supermarkets in Greater São Paulo. This is the sixth consecutive quarters of share gains according to Nielsen data. Our rupture continues to fall with an improvement of 1.7 percentage points in relation to the same period of 2023. In the customers pillar, the indicator that measures satisfaction of our customers, NPS, continues to evolve, reaching 77 points with a growth of 13 points in the last 12 months of the year, with an evolution in all brands. We also had an increase in premium and valuable customer base by 5.9% compared to last year, an important point in a strategy of loyalty and consequently adding value to the business.
We also recorded a 12% growth and achieved a 21% penetration as compared to total sales in private label products. Customers who consume our private label products are highly loyal and have a 2.4 times higher frequency compared to others. Now, going to our digital pillar, this quarter we had a growth of 25.1% in e-commerce sales with 2% penetration in total sales, an increase of 1.0% as compared to the year before. Both channels, 1P and 3P, have showed a strong growth in sales. It's worth mentioning the increase in sales in the 1P channel, getting to 34% of total sales. On the next slide, we'll talk about our expansion.
We opened nine stores, seven Minuto Pão de Açúcar and two Mini Extra, so we have opened 64 stores in the last 12 months, keeping focus on the proximity format with the Minuto Pão de Açúcar brand in the capital of São Paulo. Rafael will comment with you the details of the profitability pillar. I just would like to emphasize the important expansion of the Gross Margin, which reached 27.2%, an increase of 1.5 percentage points compared to Q1 2023 and 0.2% versus the previous quarter, demonstrating the acceleration and gradual and continuous improvement. The Adjusted EBITDA margin got to 8.1%, the best margin in the last nine quarters. On slide seven, I will talk about the agenda of social, environmental, and cultural initiatives.
In the pillar of promoting diversity and inclusion, we started the third class of the internship program dedicated to Black and Brown people, which had 30 new participants who started their journey with us in February. As to the permanent agenda to fight climate change, we reduced by 8% emissions 1 and 2% as compared to Q1 2023. This is a result of the gas replacement projects and retrofitting of the engine rooms of our stores. As to transformation and impact actions in our value chain, we continue to advance in the commitment of animal welfare, and we closed the period with 44.5% of cage-free egg sales. In the social impact, we have a new partnership with the NGO Gerando Falcões, which launched a new social product, and the total sales are reverted to the entity's projects, which fully meets our purpose of feeding dreams and lives.
It is important to mention that next week we are going to publish GPA's annual sustainability report for 2023 fiscal year, a complete report that will shed more light and visibility to each one of the pillars that I have mentioned before, in addition to the business strategies and the transformations that the company has been going through with regard to corporate governance and the publication of sustainability indicators. The document can be accessed in the GPA and Investor Relations website. Before giving the floor to Rafael for the financial performance, I would like to highlight on slide eight two important events that happened in the beginning of this year.
The first was the completion of the company's follow-on with the completion of the public offering of primary distribution of shares on March 13, in which we issued 220 million new shares, totaling a volume of BRL 704 million, which had 100% of the proceeds used for the payment of debts as part of the process of accelerating the reduction of the company's financial leverage level. Between 2Q 2023 and 1Q 2024, we totaled BRL 1.5 billion with a sale of non-core assets, thereby reducing GPA's net financial debt from a leverage of 9.8x to 3x the Adjusted EBITDA before IFRS 16. Also, as a result of the follow-on, Casino Group announced on April 2nd the reduction of its stake in the company to 22.5% as a result of their leaving the control of GPA.
Then a new board of directors was established in April with nine members, of which six are independent, two members from Casino, and one member from the management, a chair that I occupy. The new chairman of the board, Renan Bergmann, an independent member. We also have two women in the board, Márcia Mello, with all her experience in financial technology services, and Rachel Maia, who will add a lot with her background in issues of diversity and inclusion, in addition to her trajectory in premium companies. This new board of directors is a very important step forward in the governance of the new company that we have designed as of the follow-on. I now end my participation and give the floor to Rafael for his comments on the financial performance of Q1. Thank you, Marcelo. Good morning to everyone following us at the conference.
Before I begin my presentation, I'd like to inform you that as of the first quarter of 2024, the gas station business has been accounted for as a discontinued operation according to the rules described in IFRS 5 and CPC 31. As a result, the income statement for the year and the explanatory notes have been adjusted retroactively. This accounting initiative is due to the fact that in February we announced to the market our intention to sell the gas station operation as part of the sale of non-core assets with the aim of reducing the company's financial leverage. Therefore, the figures presented below represent continuing operations unless otherwise indicated. I'm going to start on slide 10, where we show GPA's total turnover, which reached BRL 4.9 billion in the first quarter of 2024, a growth of 8.2% over the first quarter of 2023.
The increase was driven by a same-store increase of 8.1% or 5.4%, excluding the calendar effect, and the progress of the expansion plan with the opening of 64 new stores in the last 12 months, including nine in the first quarter this year. As I have just mentioned, we had the significant calendar impact in the first quarter 2024, which also impacted the same-store sales analysis. The effect was positive by 2.7 percentage points in the quarter and is mainly due to the Easter holiday, which last year took place in the second quarter, and we had an additional days of sales in February due to the fact that 2024 is a leap year. Pão de Açúcar grew 9.3% in same-store sales or 6.7% ex-calendar effect, showing growth in volume and average sales prices.
Highlights for FLV, fishmonger, and complementary groceries overall performing strongly in the face of the quarter's seasonal effect. The proximity format showed growth of 4.9% in same-store sales or 2.3% ex-calendar effect and a strong increase of 22.8%, including expansions. The highlight of the performance is in the new stores opened after 2021, which showed double-digit same-store sales growth and already have sales per square meter on average 8% higher than those of older stores. The performance is explained by the adjustment made to the expansion process in recent years, with better demographic positioning of stores, a focus on the premium Minuto Pão de Açúcar banner in the more upper-end neighborhoods in the city of São Paulo, better positioning of perishable categories, among others.
It's also worth mentioning that in 1Q24, as in previous quarters, we gained a 0.9 percentage point of market share compared to small supermarkets in the Greater São Paulo area. In Mercado Extra, same-store sales growth reached 7.2% or 4.5% ex-calendar year, which was the best same-store sales performance since the second quarter 2022. In 1Q24, we continued to advance the customer experience with improved NPS and implementation of the category management project and assortment and price review, whose positive impact on the banner sales is expected in the coming quarters this year. Finally, we had significant 25.1% increase in e-commerce sales, reaching BRL 503 million in the quarter, with both sales channels 1P and 3P showing double-digit growth.
Among the highlights of the quarter is the increase in the penetration of perishables in the 1P channel, up 6.3 percentage points versus 1Q23 to 34% of channel sales, which is a crucial pillar for the differentiation of our value proposition. In addition, we have managed to make digital channels increasingly profitable, reaching a high single-digit contribution margin this quarter. On slide 11, we show profitability measured by gross profit Adjusted EBITDA ratio. With the discontinuity of the service stations' activities, which are classified as assets available for sale, we will show, for comparison, the gross margins and Adjusted EBITDA metrics without and with the inclusion of service stations. Gross profit and Adjusted EBITDA reflect the operation excluding service stations.
In the first quarter 2024, we showed the effectiveness and consistency of initiatives implemented throughout 2023, as well as the strong execution of operations and commercial teams to deliver the main projects in the turnaround plan context. As can be seen in the top chart, gross profit reached BRL 1.2 billion with a margin of 27.2% or 25.8%, including service stations, an increase of 1.5 percentage points compared to 1Q23 and 0.2 percentage points compared to the fourth quarter of 2023, which was favored by the seasonality of the end of the year. I would also like to highlight the 16.6% growth in gross profit compared to the first quarter 2023, adjusted EBITDA totaled BRL 372 million with a margin of 8.1% or 7.7%, including service stations, reflecting a strong increase of 1.8 percentage points versus the first quarter 2023. Also, the growth in adjusted EBITDA year-on-year, which amounted to 41.4%.
Slide 12 shows our consolidated financial performance. In view of the one-off and non-operational effects that took place in the first quarter 2024, we'll show the adjusted result for net income from continuing activities. As can be seen in the chart on the right, the first quarter 2024 had three non-operational, non-recurring effects that impacted negatively the result: BRL 86 million related to the provision for the ICMS debt settlement agreement with the state of São Paulo, BRL 25 million related to the write-off of fixed assets related to the company's administrative headquarters following the sale of those assets as part of the initiative to reduce financial leverage, and BRL 99 million related to the non-activation of income tax and social contribution credits related to the loss for the period, which we adjusted for comparison with the same period last year when these credits were activated.
Adjusting for these effects, the continuing net loss would go from BRL 407 million to BRL 197 million, thus showing an improvement of BRL 107 million in comparison with the adjusted continuing net loss for the first quarter 2023. Finally, in the first quarter 2024, net loss from discontinued operation was BRL 253 million, mainly impacted by BRL 175 million in the discontinued part of the provision for the ICMS debt settlement agreement with the state of São Paulo. Slide three shows the management cash flow for the last 12 months, which generated free operating cash flow of BRL 428 million, an improvement of BRL 736 million compared to the last 12 months 1Q2023. As you can see, the better result is mainly due to the growth in operating income and lower CapEx.
Cash flow after the sale of assets reached BRL 2 billion in the 12-month period, mainly impacted by the sale of non-core assets, which amounted to BRL 1.5 billion and the follow-on, which reached BRL 704 million. Finally, we had the BRL 183 million improvement in net financial costs, mainly as a result of the reduction in the net debt along the quarter. Slide 14 shows more color on the reduction of our debt. As you can see in the chart, we had the reduction of BRL 1.3 billion in net debt between the first quarter 2023 and 2024. This is the result of the positive effects I mentioned on the previous slide, with a positive variation of BRL 428 million in operating free cash flow and a strong execution connected to the sale of non-core assets and the funds raised in the follow-on.
The lower financial leverage was also very significant. We went from leverage, considering pre-IFRS 16 Adjusted EBITDA of 9.8x , to 3x in first Q 2024. The result puts the company on the path to an increasingly healthy leverage since we have equalized the capital structure with the sale of assets and follow-on, and continue to show an evolution in our operating results. It's important to remember that the sale of headquarters for BRL 218 million took place after the closing of this quarter and therefore does not contribute to the cash in the first quarter 2024.
I would like to draw your attention to the fact that, in addition to the successes achieved in the context of the plan to sell non-core assets, the better financial performance is the result of our discipline that we are implementing in the turnaround project, the progress of which was once again confirmed this quarter. I close our presentation of financial results, and now we should open for the Q&A session.
We are now going to start our questions and answers session. As a reminder, if you want to ask a question, please click on the Q&A icon at the bottom of your screen and type your question to join the line. When you're announced, a prompt to activate your microphone will appear on the screen, and then you must activate your microphone to ask questions. We kindly request you to ask all your questions at once.
Let's go to our first question from Gustavo Frattini, sell-side analyst of Goldman Sachs. Gustavo, we are going to open your audio for you to ask your question. Gustavo, you may ask your question, please. Good morning, everyone. Thank you for the opportunity to ask a question. I have a question about your proximity business. You have had a good performance in same-store sales, but especially because of the stores that you opened in 2021. Now, looking in terms of legacy, it was probably much lower, both with and without the calendar effect. Could you tell us what happened there and how you were thinking of mitigating it, and which are the main initiatives in the legacy part for your proximity business? Thank you. Thank you, Gustavo.
Well, what we've been doing, we started with a proximity model in 2016 or slightly before, and at first, we wanted expansion, and the strategy was to pulverize stores outside the state of São Paulo so that we could have stores in other states too. And since 2022, we changed our strategy. It is a strategy to concentrate our geographical footprint of stores in São Paulo, not just to improve logistic costs, delivery costs, and everything else, but especially to take advantage of a region where the brand is already very strong due to the main brand, Pão de Açúcar supermarkets. So yes, and then we are seeing some significant improvements. So what are we doing about that?
We are looking especially at the project that worked for Pão de Açúcar, as I said before in our last call, in terms of category management, and then we are doing the same work for proximity business and for Extra markets. This is underway, and we are rolling it out now. We are starting to see the first indications that we got it right and improvements in gross margin. We are going to continue monitoring store performance, especially those outside São Paulo, so that we can gain the confidence to recover the stores that we are sure that will recover, especially the stores where we have Pão de Açúcar brand already consolidated in the states where Pão de Açúcar is a strong consolidated brand. We also want to be fast if necessary if these stores do not respond.
The important thing for us is that the main volume of expansion is coming from these stores since 2021, very much concentrated, as we are saying openly in the state of São Paulo, and not just the maturation of these stores. It is going on very fast, but they're also becoming profitable very fast. So we are very much focused, looking into the future in the stores that we have in São Paulo, always with the premium brand. There are some mini stores, so we opened two stores in the first quarter, but the strategic focus is on the growth of the premium brand. Thank you so much. This is very clear, Pimentel.
Our next question comes from Nicolas Larrain, sell-side analyst from JP Morgan. [foreign language] .
Thanks, Rafael, Marcelo, for taking my question. I would like to talk a bit about your gross margins.
I'd like to have a bit of color. We had the guidance of 650. I know that you're having the rollout, and this probably has been helping you along the quarters, but I would like to understand the growth of your gross margin in other brands. So a bit of color there, and how much you intend to get to when your assortment strategy is completed.
Thank you, Nicolas. I remember two or three conference calls ago, I was asked the question, and we said that we were going to get to 27. We did get to 27, and we are going to continue to move on. Originally, our view was that a stable gross margin at 27 would be quite appropriate to offer on the average of all channels that we have, that is e-commerce, Extra markets, or proximity.
Together, we would contribute to a result that would be suitable and healthy. I don't want to give you guideline or make promises in terms of gains of Gross Margin, but I think there are still opportunities, especially because of the last point of your question. We completed last year the whole project of assortments with Pão de Açúcar brand, and that was extremely important for us to be able to operate at better margins. We are now completing Minuto. We have just finished now, and now we are going to Mercado Extra, the extramarket. So we should see some gains coming from these two brands. But I would say the following. Another very relevant point with regards to Gross Margin comes from other structuring actions developed by our commercial team. The first is revisiting contracts with the industry.
Last year, we signed more than 400 contracts and renewals and projections of deals with predictable deliveries. So everything that is going on with the improvement in gross margin is based on pre-signed contracts with gains in market share, sales, and volumes. And when we get to those goals, we deliver the contracts. That is, you no longer have the close of the month and close of the quarter and negotiations in which you are not sure what's going to happen. So more and more, we are confident about the structure of our gross margin for the company. Second is the reduction of inventory levels that we conducted throughout the year 2023, more than eight days, and now we are replicating that to the Extra markets specifically. Because when we have better inventory levels, we have also better results.
It's important to say that the reduction in inventory happens when we have more sales and decreased rupture. The connection between supply chains, commercial operations teams working in synergy is really working out, and we are doing our best there. Finally, this is work that is consistent and has to accompany market movements. We have been loyal to our premium value proposition, and therefore, we want to more and more increase our position in terms of additional premium assortment, strengthening our value proposition in terms of our own labels. We have been adding to our own label also premium assortments, which enables us also to have an improvement in gross margin. Remember that our own label has a penetration in the group of a whole above 25%, which is quite relevant. So as we increase premium assortments in the own label, we increase our commercial margins.
Well, what I want to say is that the positive note is that we are working in a very structured manner. We do not see peaks and valleys. Quite the opposite. We see stable growth. I believe, again, without giving you any guidance, that we are going to continue to show improvements in this line. Just to add some points to the answer, we have been discussing that with the market as a whole, evolution in two items, that is the reduction of breakage that we are working to match, and also the work of the intermediate, that is the work that is being developed by the commercial team, which is already showing more relevant results as of the first quarter of the year. We hope it continues so along the year and onwards. Thank you very much.[foreign language] Felipe Reboredo.
Our next question comes from Felipe Reboredo, sell-side analyst of Citi. Felipe, we are going to open your microphone. You may ask your question.
Good morning, everyone. Pimentel, Rafael, everyone. Thank you very much for taking my question. We would like to understand more about the rollout of the categories and assortment in Extra. I know that there were some challenges in Pão de Açúcar. How do you expect this to be reflected in same-store sales in this format? And number two, we think that the results were impacted by non-recurring expenses related to the structuring and labor contingencies related to Extra Hiper. How should we see these costs looking into the future? Thank you.
Well, Felipe, I'm going to answer the first one, and Rafael will answer number two. So as to Extra, in terms of assortment, obviously, it's different from Pão de Açúcar.
Extra, in a clear way, we will be serving a population that cannot afford so much, with lower income, more price-sensitive, but with assortment. This is one of the differentials of Extra, especially against the movements of the so-called atacarejo or the wholesales that are similar to retail. This is going to be closer to customers in the neighborhood where they live, favoring community for being close, and getting to an assortment that is better and an offer of butcher and bakery and produce that is very robust with very good cost-effectiveness, good value for your money. This is what we've been seeing. This will have the benefit of the transitions from Compre Bem to Extra, and we made a decision of changing it, especially considering the gross margin and changing the strategy in terms of assortment and volume, sales volume.
So we are focusing on end customers, local ones now, and the basis are going to become annualized in Mercado Extra, thereby showing a growth in numbers that we had been seeing for Extra market before. So this year for Extra is a very important year and much better. With the Category Management project, one of the things that we are working on, which is very significant for Extra market, so we want to bring this category to the front of checkouts, and this is a category that is going to be complemented with very healthy margins. Also, cleaning and hygiene is very important. So we are bringing this to the front, to storefronts, and then we banish the perishables, as I mentioned.
As to the gross margin, so it is marginally smaller than Pão de Açúcar because when we put the final result of this operation, as it has lower cost than Pão de Açúcar, the cost to service is lower, CapEx to put those stores up and to maintain them is lower. So at the end, we are able to deliver a very similar EBITDA margin, not yet at the levels of Pão de Açúcar, but very closer to high figures, and that's what we've been trying to do. Now, when we talk about the composition in EBITDA projection for this year between eight and nine, we are also counting on the Extra market now with a significant contribution margin overall. So here we are talking about high singles level.
Well, as to costs associated to discontinued items, so we are talking especially about the legacy of Extra hypermarket stores, even though this quarter we have an exceptional item, which was the agreement in São Paulo with BRL 175 million that were allocated for that. Part of the agreement was located there, especially because these claims and contingencies that were settled, two-thirds more or less of them were related to the Extra operation in the past. So taking out this one-off effect in this quarter, what we see is labor contingency mainly. As a reminder, when we had the transaction at the end of 2021, in early 2022, in selling Extra hypermarket stores to Assaí, we sold an asset and we retained practically all liabilities associated to that store and operation. So for this reason, today, we need to support those liabilities.
Once again, talking about labor liabilities, so what is our vision looking into the future? As I said, this transaction was conducted and completed in the beginning of 2022. There were many employees who were dismissed or who left the company because they worked in the hypermarkets. Then we had a significant growth of those employees going to court against the company. This happens over two years. The time for the prescription of new filings is two years. Meaning, as the transaction took place two years ago, now two years have gone by. Now we are running off those amounts. Last year, in 2023, we had a significant amount related to those contingencies.
We spent about BRL 450 million, and now starting this year, we are going to see a quite significant reduction in those amounts, and we believe it will be closer to BRL 250-BRL 300 million this year. Then marginally, or better saying, this is going to go down over the next few years with a lower and lower impact. This is how we see the line of discontinued items or assets.
Our next question comes from Gustavo Senday, sell-side analyst from XP. [foreign language] .
Hello, good morning, everyone. Thanks for taking my questions. I have one more question. Thinking of the competitive scenario, we see a foreign competitor with some difficulty in the country, closing some stores, especially out of the state of São Paulo.
Could you make some comments if we expect you to take advantage, especially with the Extra markets? Perhaps that is where the competition is more comparable. So if you could elaborate on the scenario, and can we think of a stronger expansion of this format from now onwards, giving a lesser competitive scenario?
Okay, Gustavo, thanks for your question. Well, the competitor you mentioned closed 300 stores in mid-April. Since then, we have been seeing two movements, one resulting from the sellout of products that were in the stores. So sales, promotions, which is the final closing of a store that had a marginal impact. But that was followed by a movement of capturing this income in stores in the surroundings. And we saw the impact in Extra market, in proximity stores, and even Pão de Açúcar.
So it has a lot more connection with the geolocation and area of the store than the format, per se. So we do see some benefits in all formats that were close to the shutdown stores. As for expansion, we are very focused on our strategy to grow in the premium format, especially because of movements in the market. We see a more fierce competition based on prices. And at the same time, when we do that, you differentiate the level of services and quality of products, specifically perishables and in assortments to customers. So we believe in this has been confirmed by numbers. You see a higher growth in Pão de Açúcar. That our strategy is right. And it is this strategy that sets us apart from the market.
We do not see, at least not in this point in time, the option of expanding to the lower-end market. This is something that we are always going to look into, but it is going to be an expansion by opportunity. You have this fantastic location. You're able to close the deal, but it's not something that we are seeking proactively. Our focus is really the premium brands, Pão de Açúcar, a bit less, and mostly Minuto Pão de Açúcar that we are going to be focusing on from now on.
Thank you very much. [foreign language] . Our next question comes from Vinícius Strano, sell-side analyst of UBS. Vinícius, you may ask your question. Please, Vinícius. [foreign language] , Marcelo.
Good morning, everyone. Good morning, Marcelo. Thank you for taking my question.
Now that you have a slightly more robust cash status, are you thinking of investing in inventory in a specific area? I think that the whole direction was to reduce and optimize inventory. But could you tell us a little bit about this trade-off in terms of inventory, SKU complexity as compared to sales, and the need to remodel stores? And what do you see in terms of additional needs for sales in terms of services and SG&A? And what do you expect in terms of leverage looking into the future?
Well, investments. We have three investment fronts that we are focusing very much on. One, expansion of Pão de Açúcar, and this has been our focus. Number two, store remodeling. And here, this is a point that is proving to be not just important but also effective. We are doing work.
It's not a new store model or store design, but we are upgrading existing stores. Once we invest on the façade, floor, lighting, air conditioning, we see a return in those stores that is quite fast, and we want to continue investing in upgrading the stores, both Pão de Açúcar, Pão de Stores, and Mercado Extra. Now we have a strong project in the state of Rio de Janeiro, upgrading these two models and these two brands in Rio de Janeiro, and we are seeing opportunities of delivering a better experience to customers and, as a consequence, a better return on this investment. Number three, we are investing in technology.
So when we have expansion, remodeling, and technology, we are working on two fronts, both internally, which does not directly touch on customers, but having better technologies, both in office work and also for our e-commerce, thereby facilitating the processes in stores to expedite the process. We are seeing a significant improvement since we have implemented these upgrades in the level or the number of perfect and on-time orders. So we have lots of improvements in points of sale, self-checkout in stores, and we have significant better customer experience, and we'll continue investing and improving as our online sales grows, and the growth has been relevant. So we have a significant growth quarter on quarter in digital sales, and people going after this experience, especially now that we have introduced the sale of perishables in that channel, and this demands speed, which will demand more investments in technology.
Last year, we invested heavily in the process, and now we are going to go into a second phase in this process to align legacy structures, especially with APIs for new online initiatives. So here in talking about investment, now as to leverage. Well, maybe the investment in inventory. Well, yes. Well, good point that you raised, Rafael. Well, as to that, Vinícius, well, it's much the opposite. We want to work with a lean inventory. So what we are seeing, and this is the thermometer for us, to be able to lower inventory, improving product availability on the shelves. So as soon as we see that this is being affected, we will rethink it. But we are getting record numbers in terms of inventories on the shelves for perishables, and this is products for sale effectively.
This is not just for the state of São Paulo, which is the easiest thing, and this is where we have the best inventory levels. The challenge here is to offer the same experience outside São Paulo. Just this week, we've been celebrating our numbers in Rio de Janeiro, which are at the same levels as São Paulo. We were able to lower significantly the stockouts in the North and Northeast and in the Center-West. We are making really great efforts, even with our own logistics, in order to assure the right logistics for our customers in the Center-West and Northeast.
So it's important for us to consider the positive impact that we have had in closing the distribution center for e-commerce. It has enabled us to lower by one day and a half without affecting our overall inventory levels for customers. We have much closer levels to stores, facilitating both assortment and logistic costs. We are obsessed about that inventory. Once we work on the ideal assortment, we monitor this absolutely every single week with a critical success goal. As to leverage, and as a reminder, so leverage this quarter does not yet contemplate the sales of the headquarters. We have about BRL 200 million that are going to be used to reduce the company's net debt.
As you already knew, and it became even clearer this quarter, we have an ongoing sale of our gas stations, and this is also going to help to reduce our leverage. And finally, you asked the question about which would be the ideal leverage level. Of course, I can't give you guidance in terms of what we intend to do, but philosophically, I would say that considering the volatility that we have in interest rates in Brazil and the profile of our business with smaller margins, philosophically, I do not think that our business should the highest leverage level should be 1-1.5 times without us getting into problems whenever something happens. This is not a guidance. This is just in philosophy, in principle. Reality might be different.
It might be smaller, higher, but this depends on the future and everything that we'll be developing for the rest of this year and the future years too. The Q&A session is now closed. We are going to turn the call to Marcelo Pimentel for the company's final remarks.
Well, thank you. Well, everyone, thanks you all very much for joining our conference call today. We started 2024 at an accelerated pace with important advances in both operational performance and capital structure with very consistent deliveries. We have a leaner, healthier company, 100% focused on its core, and we continue to move forward with clarity, discipline, and focus to bring it back to its position as a leader and benchmark in food retail in Brazil.
We have a lot of work ahead of us, but I'm quite encouraged that we'll close this first three-year period successfully, starting from a new level and with a new company heading into a period of new gains and sustainable growth. I'd like to take this opportunity to thank the whole team for their commitment, dedication for us to deliver improvements to our customers. We remain firm and focused without distractions for the remainder of the year. Thank you all, and have a good day. GPA's conference call is now closed. The IR team is available to answer any questions you might have. We thank all participants very much and wish you all a good day.