Now I'll give the floor to Alexandre Santoro to start the presentation.
Good morning, everyone. Thank you so much for attending the announcement of the results of the fourth quarter and full year of 2025 for GPA. I took over the leadership of the company with enthusiasm, due to the relevance and strength of the company's history, but also fully aware of the responsibility of the moment. I arrived here, less than two months ago, and from day one, I have been very close to the operation, deepening the understanding of the business and interacting directly with teams, suppliers, customers, creditors, and shareholders. GPA holds relevant assets, consolidated brands, and a loyal customer base, supported by a team of more than 37,000 employees, the basis of our business.
We have a strategic position in Brazilian food retail and competitive attributes that are significant. More than 60% of our revenue is concentrated in the premium segment. We have more than 5 million active customers in our loyalty program. We recorded a gross margin of 27.6% in 2025, the highest in the segment. This margin shows the strength of our position. Still, we see room for evolution and to increase the profitability of our brands. There are clear opportunities to improve efficiencies, assortment, loss reduction, overall, to improve the operational execution. Part of this potential lies on the fundamental equation of our business.
Our expense structure, proportion is still very high and offers significant room for additional gains in efficiency that are significant as we adjust processes and adapt costs to the operational reality of the company. Our work here is focused on three very clear fronts: generating operating cash, financial discipline, and improving the customer experience. As of the end of last year, the company announced an efficiency plan to improve efficiency, as we have deepened the analysis in recent weeks, we have identified several additional opportunities, both in SG&A, as in CapEx. As this manner, we are going to expand even further the scope of the initiatives already announced. We also have reinforced internal governance and, expense discipline by creating a specific committee for the approval and prioritization of expenses and investments.
We are reviewing all of the company's expenses, all relevant expenses of our day-to-day operations, such as service provision, technology, rental. Sometimes canceling contracts that make no sense, reducing, changing their scope to make them more adherent to the reality of our businesses. We also reinforce our focus on profitability, both to generate margin, both in brick-and-mortar stores and in commerce, prioritizing growth that is healthy with good margins. This is one of the reasons that the whole company decided to discontinue a program such as the Aliados program that brought sales, but the bottom line did not provide any good results, and it was operating at a loss, and we are not interested in that.
That agenda has been conducted with discipline and responsibility, preserving the experience of our customers and maintaining a constructive relationship with our suppliers, who are fundamental partners for deploying our value proposition. Financially speaking, as it has been broadly announced, we have significant upcoming maturities along the next few months. We are addressing this issue as a priority. This action is in progress. In November, we announced we are going to defer a significant portion of our debt. This is not something that started when I took office. Something that had started before. We are directly monitoring it, of course, always in compliance with governance processes. On the next slide, we are going to talk specifically about the results of the fourth quarter.
Looking at the highlights, the fourth quarter showed an improvement in many relevant operating indicators. We recorded an Adjusted EBITDA margin of 10%, a significant reduction in net loss, with consistent progress in operating cash generation. This is related to the business seasonality that helped us. We grew 2.7% in same-store sales, advancing in all formats, despite the challenging macroeconomic environment. Pão de Açúcar grew 1.8% in same-store sales, with a market share gain in the premium segment. Extra market advanced 4%, reflecting the maturity of the activities implemented. The proximity format also showed relevant growth in total sales. In digital, we reached almost BRL 700 million in sales, up 6.6%, almost 7%, over 4Q 2024.
The focus here, as I said before, remains on improving the profitability. These results reflect the first impacts of our efficiency agenda that we started to implement. This is the beginning. There is still a significant way for us to improve our operational and financial aspects. I would like to give the floor to Rodrigo Manso, my partner in IR, that is now going to give you more details about our operation.
Good morning, Santoro. Good morning to everyone. Slide 5, we highlight the evolution of gross profit and Adjusted EBITDA. We continue to make consistent progress in gradual improvement on profitability. Gross margin reached 27.7%, 50 basis points year-over-year. This movement continues to be supported by greater efficiency and assertiveness of our commercial strategy by the improvement of store operations, highlighting, for example, retail loss and out-of-stock loss, and by the evolution of retail media, which shows higher margins. Nominal SG&A decreased by 2.5% and now amounts 18.3% of net revenues. This is an important highlight, especially in view of the inflation pressures faced over the last 12 months. The result highlights our ability to capture efficiencies in this line and reflects the initiatives implemented over the last year.
Within the context of operating costs and expenses, it's worth mentioning that we are executing an efficiency plan for 2026. It includes reduction of at least BRL 415 million in our operating costs and expenses. The plan is at an advanced stage of mapping and execution, already capturing benefits since the first quarter of 2026, which reinforces our confidence in the continuity and profitability improvement. In addition, we continue to evaluate additional efficiency opportunities with the potential for incremental captures throughout the process. As a result, the Adjusted EBITDA margin reached 10%, an expansion of 40 basis points. This consistent performance reinforce the robustness of our operation and gives us the necessary flexibility to calibrate, when necessary, the promotional levers, balancing profitability and competitiveness.
The next slide six, I would like to present the details on the net loss from continuing activity amounting to BRL 523 million in the quarter. As shown in the chart, most of the loss is related to a non-recurring effect with no impact on cash. Referring to the net effect of the impairment, accounted for the sales of GPA stake in FIC, our financial service partnership with Itaú. The impairment amount was BRL 527 million, due to the difference between the sale value and book value. In addition, we recognized deferred tax asset related to this transaction in the income tax and social contribution line, amounting to BRL 179 million. Excluding these non-recurring effects, continued net loss for the quarter would be BRL 175 million.
On slide 7, we present the cash flow from the managerial perspective of the past 12 months, a period in which we generated BRL 699 million in operating free cash flow after CapEx. It represents a result six times higher than what was accounted to in the previous period. This performance reflects a combination of three main factors: improvement of pre-IFRS 16 Adjusted EBITDA, which reached BRL 848 million or BRL 36 million growth; efficiency in working capital management, especially in suppliers and the variation of assets and liabilities; and the reduction in CapEx. In working capital from goods, we achieved generation of BRL 230 million in the period as a result of an improvement of six days in the working capital cycle compared to the previous period.
This result is mainly due to one-off negotiations with suppliers, in addition to efficient management of in-store inventories. In CapEx line, we invested BRL 612 million in the past 12 months. It's already possible to see a turning point, reduction of BRL 62 million in the accumulated amount. It all began in the fourth quarter of 2025, with the review of the company's investment plan, and is expected to intensify throughout 2026. Let me take a step back and provide more details about CapEx within our efficiency plan. We have defined a budget of BRL 300 million-BRL 350 million to this line, with reduction investments in expansion, renovation, and technology, preserving the investments necessary to sustain the operation and initiatives directly related to customer experience. Moving on to other operating expenses, we continue to observe a reduction compared to the previous year.
This line totaled BRL 549 million in the period, down BRL 153 million. Out of the total, BRL 151 million refer to recurring facts, and BRL 398 million correspond to extraordinary items, mainly related to tax agreements, labor lawsuits, and restructuring. The net financial income totaled BRL 920 million, an increase of BRL 325 million over the same period last year. This variation reflects the concentration of surety bond renewals linked to tax issues, in addition to new issuance... The increase in Selic interest rate, which impact the cost of that, and the reduction in average cash in the period of the last 12 months. On slide 8, I present the details of our financial leverage.
As we've shown on the previous chart, net debt increased by BRL 686.25 million, also impacted by extraordinary facts already mentioned in the other operating expenses and the net financial cost lines. As a result, pre-IFRS 16 financial leverage ended the quarter at 2.4 times, compared to 1.six times in the same period last year. It should be noted that in 2026, we'll continue to employ initiatives that can contribute positively to the company, together with the operational improvements already mentioned throughout the presentation. Among these events, I highlight the sale of FIC, already announced, which should generate amount of approximately BRL 260 million after the closing of the transaction. In addition, we have been negotiating a new contract for the operational financial services at GPA branches.
It is going to generate short-term additional value and recurring revenue with higher potential than the structure we used to have. I now hand it back to Santoro, who will make his final remarks.
Thank you, Rodrigo. Before we open for questions and answers, I would like to emphasize some important topics. Despite, I've been leading this company, running the company for less than two months, it's absolutely clear to me how important the time is. This is a moment of change, and more than that, it's a moment of transformation. GPA has gone through many changes over the last few years: different priorities, different guidelines, but the fact is that we need a structural and cultural change here. A company with the operations, brand, and market positioning that GPA has cannot spend for many years without generating cash, whether it is because of inherited partners, investment decisions that are disconnected from the company's operational reality, or a mismatch between the businesses and the reality.
What we have here, there is a mismatch, and it's not related to the size and reality of the company. There are many different fronts that needs to be addressed herein, and this is the time for us to solve the problems. This is my homework. This is my mission. This is what I have to do that's supported by a very representative board of directors that holding more than 70% of the company's capital, aligned with priorities, with the need to solve the structural problems of the company, and also bringing stability and focus, for us to move forward. I say that fully aware of the structural liabilities that we have. We have the tax liability, labor liabilities, and everything is being addressed in a very responsible way.
As I said in the first part of my address, we have longer debt profile is part of our mission. We are fully aware of how important it is for us to continue working on this, to have conversations with our creditors within the formal limits of governance of our company. To reinforce this, my term in office is to address the structural issues of the company with discipline and responsibility, aligning operation, profitability, and cash generation. I am fully aware of the challenges lying ahead of me, and but I trust our strategies, the strength of our brands, the strength of our team, and the support of our partners and suppliers. We are going to move forward consistently. In this manner, I give the floor back to our operator for us to start our questions and answer session.
We are now going to start our questions and answer 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 your name is called, a prompt to activate your microphone will pop up on your screen, and then you open your microphone and ask your question. We kindly request that you ask all your questions at once. Let's move to our first question, comes from Lucca Biasi, a analyst of UBS. Lucca, we are going to open your microphone for you to ask your question, please. Please, you can continue.
Good morning, everyone. Thank you very much for taking my question. I have two. The first one is about suppliers.
What was the driver for the increase in suppliers, and how sustainable is that, looking into the future? How do you expect it to behave in the future? My second question is, in the release, you say that you performed well for both brands, both Pão de Açúcar and Extra. Do you think this is related to the use of GLP-1? How do you see the use or the impact of GLP-1 in your basket?
Luca, thank you for the question. Good morning. About suppliers, if you look at the increase in suppliers, it's very much in line with what we had last year, a revenue that is also very similar in the movements, especially discontinuing allies. This average term for suppliers comes from specific negotiations related to Q4.
The expectation of the company for Q1, also looking into the company's history, is to have times that are more in line with a Q1 or Q2. In Q1, you are expecting a more significant effect in terms of consumption of cash in the line of suppliers with the payment of a significant part of seasonality at the end of the year. This is related to specific negotiations that take place at the end of the year. Your second question about GLP-1, well, I'm going to address part of it, which is the variation in revenue and what we saw in perishables. Yes, it is clear that there is, both in Pão de Açúcar and Extra, reminding that Pão de Açúcar has a concentration of 50% of the revenues in the suppliers.
Considering the scenario that we have been mentioning since last year, with a slowdown in demand in the overall market, we see that the categories related to perishables had a performance that was superior to Q3. It's an improvement, so we can clearly see that in our numbers. As to GLP-1, and I will give the floor to Santoro, it's important to emphasize that we have a platform that is very much focused on health and wellbeing. The trend of... With the new medication, and this has been something that had been going on, is that people want to buy healthier products. Undoubtedly, once they walk in Pão de Açúcar, even Extra, we can clearly see that we have a positioning and a value proposition that is focused on the public that seeks wellbeing, and wellness, and health.
The GLP, that might expedite or increase it over in the short term. Thank you very much, Luca, for your question. I don't have much to add, but just going into a little bit more detail, we really see a change in some categories that have some connection with the GLP issue, or the pursuit for a diet with fewer carbs and more protein, so slightly more premium customers. There are some trends that we've been seeing, that we've been monitoring, and as Rodrigo said, I think that we are well-positioned to accommodate this kind of change. 50% of our sales, as they said in Pão de Açúcar, is related to perishables.
The next question comes from Danniela Eiger, an analyst with XP. Please unmute your microphone.
Good morning. Thank you for taking my question. Thank you, Santoro and Rodrigo. I have two questions. First, the efficiency plan, which is already in place in the first quarter 2026. Tell us more about how we can think about how fast you are going to capture new efficiencies. Are they quick things, adjustments of headcount, maybe termination of some contracts, or should we expect something more long-term? This would be good if we could have some more clarity about that. Secondly, concerning the situation of liquidity, Santoro, you made it very clear that this is your main priority, and in your release, you also listed a number of initiatives to deal with it. I would like to know, how much is really in your hands? What do we see in terms of appetite, of creditors, in terms of renegotiation?
Just for us to understand how this is going to evolve. In terms of tax liabilities, you used to be very active in renegotiating them in the past, but do you think this is going to be put aside because of limited liquidity and the fact that you have more urgent matters to address?
Thank you for your question. Well, first of all, efficiency plan. This is a combination of actions, and I'm going to give you some examples. A number of things that have already been executed, and we are capturing the benefits, such as adjustment of infrastructure. Some decisions that are made in terms of CapEx, we are not going to expand that. This is a decision that has been made, and quarter-over-quarter, you are going to see that compared to last year. Last year, it was BRL 700 million. This year, it's probably going to be half of it. These are decisions that have been made already. As I said in my speech, there is co-responsibility.
... In other words, CapEx is not going to be zero for obvious reasons. Our priority is to maintain a positive client experience. It's a CapEx to support our businesses. We are going to maintain that. If it's innovation, technology projects, or further expansion, we have agreed that we are not going to make these investments. Within expense control, we are also making some decisions towards that, because historically, we have spent a lot on lawyers' fees, consulting services, and these are contracts that are being optimized. We've made this decision, and we are going to start see results in the very short term. One more example: We had a number of retail assets that we didn't need... We were not using it. They were closed down.
We have already negotiated some of those shop floors that are no longer in our mix. Things that we've already started doing since the end of last year, and now we are speeding up our implementations. Some others will require renegotiation of contracts, different contract scope, for example, especially if it's something which is not aligned with the company new perspective. There are a number of examples. Contracts that involve service provision, mainly. Concerning liquidity, we have a number of debt maturities. They are all known. Nothing has changed. We are not higher or we are not more or less in debt. It had all been expected to be paid.
We have successfully renegotiated one debt, and we are riding the middle of this process, very active in negotiations, showing our partners and creditors what our implementation plan is, showing them numbers and what it will mean for 2026. Ultimately, we are a company that generates cash from an operational perspective, and we expect to improve margins, reduce SG&A, and ultimately impacting the bottom line. At the same time, it's a company that has a tax liability. Still discussing it, but it's difficult to predict when it's going to be over. We also have labor debts, which are equally relevant, and debts, which are part of the equation. We've been conducting a number of negotiations, and I would say this is a very important moment to all of us.
The company, the board, and the creditors are discussing all the different situations, and together, we are going to get to positive results. Concerning taxes, our strategy has not changed. We are still very active, looking for opportunities and agreements that we may make. This is something very relevant to the company, which concerns liquidity, of course. I told you a little bit about the cash use and the financial income. We need a number of surety bonds because some of the discussions that are at the court levels. We are still focusing on that, providing the necessary collaterals, and we are going to update the market as we evolved in our initiatives.
Thank you all very much for your answers.
The next question comes from Eric Wang with Santander. Eric, we are now going to unmute your mic so that you can proceed.
Good morning. Thank you very much for taking our questions. I have two questions. First, considering the stores, you've closed down some stores. Do you think it's going to be optimized further? What can we expect for 2026? Secondly, concerning your expense reduction plan, what would be non-recurring elements resulting from these adjustments, and how this is going to interact with the line of other recurring expenses? Try really to anticipate what we can expect for it in 2026.
Thank you, Eric. Let me start addressing the issue of stores. In retail, we are constantly revisiting and analyzing the performance of stores. The last thing we want to do is close down a store. Of course, it's usually the last resort. There are a number of actions that can be taken before it, and we are really focusing on it and emphasizing all concepts of the business.
I have no guidance that I would be able to share with you concerning what would be done towards that line. Quite to the contrary, we are emphasizing operational elements. I can give you an example, which is also part of our efficiency plan. We have it rolling around in place. We are revisiting the assortment of proximity stores, for example. Proximity stores have a higher logistic cost than larger stores because there is a smaller inventory area. You need constant replenishment in fractions. In some stores, we are running a test, reducing the assortment, the number of items being sold in these proximity stores, which would have an impact on logistics and operations, consequently, profitability, and it improves the performance of that kind of store.
Talking about timing, which was the previous question as well, there are some things which are to the point. Some other things are more. They involve logistics, structure, some, let's say, slower processes. About closing down stores, we don't anticipate to have any significant reduction of our stores, and what we are going to do is try to have stores performing as best as they can, always trying to avoid closing down stores. Eric, speaking about the efficiency plan and the effects, the non-recurring effects that we expect, our plan has more than 10 initiatives in play, so contract renegotiation, revisiting our organizational structure. We've also been considering non-recurring effects, which are going to impact the results throughout 2026. At the same time, we've also talked about the effect that non...
The line of others, non-recurring effects have from extraordinary payments. We've paid some tax credits, or we purchased some precatory notes, things that are going to be reduced throughout the year of 2026. I wouldn't be able really to tell you exactly how much it would be, we believe it will be absorbed by the lines of others because of the reduction of other items, which were extraordinary events in the previous year.
That's great. Thank you very much.
Our next question comes from Nicolás Larrain from JP Morgan. Nicolás, please open your microphone and ask your question. Nicolás, you may ask your question.
Good morning, everyone. Santoro, thank you very much for taking my question. I have two questions. One is related to the stores. You had mentioned the GPA is on a waiting atmosphere in some regions, and some stores you need to wait, whether they make sense or we are going to sell. I would like to understand your mindset. Are you thinking that there are some branches that you could say, sell? The second question is more related to sales. January, according to the industry, slightly better than Q4. How are you seeing the performance of stores in the first two months of the year? Thank you.
Thank you so much for your questions, Nicolás.
Great question that you have asked. In the first two months, this is one of the fronts, one of the things that we've been looking at. There's the issue that you have just mentioned. There is a clarity of what we should prioritize in terms of our investments and efforts that should be more concentrated in São Paulo, Rio, and DF, which are three regions that are our top priorities, where we're going to focus, our team attention, resources, and to improve stores and everything. I would tell you that this thing of reassessing is something that is very significant, that is going on right now, and we have been analyzing and talking about that internally with our teams, first of all, to understand and to have an accurate diagnosis, and we are going to try and find opportunities that seem to make sense to us.
The other question about sales. Well, what we've been seeing and what you said about the overall market and other players whose sales have improved at the beginning of the year, we are seeing the same trend. I think that we have managed, considering our value proposition and the concentration of more than 60% of our revenues in the premium segment, we have been able to stand out even though in the first quarter of 2025, when we look at the market, our growth is always above. We are going to move on. There are significant and important processes along this year, and we are actively working on our brands. Along 2025, we had an improvement of Extra with growth that stood out with 4% in same-store sales.
In addition to Pão de Açúcar, there was a growth, and our Proximidade brands have same-store sales growth despite the scenario. In Q4, we saw a slight growth in same-store sales. We are working on that intensely, and we can see that we have some resilience and a differentiated value proposition, and we want to capture gains that are above the overall market.
Thank you very much for your answers.
Our next questions come from Alexandre Namioka from JP Morgan, or rather, Morgan Stanley. Thank you very much, Alexandre.
Thank you very much for taking my question. Just a follow-up on Eric's question. You had said that closing a store is the last thing you do, it's the last resource. Before getting to that point, you implement many initiatives to try and improve the performance of those units.
Could you try to explain to us and to quantify how many units in your current complex that are underperforming? Thank you.
Well, thank you very much, Alexandre, for your question. I would say to you that about 20%-25% of our stores have a performance that are below what we wish or what we see as their potential. Of course, we have a much deeper analysis, the first thing that I can tell you is something along those lines. When you look at our the entire portfolio as a whole, this percentage is slightly higher in Proximidade, smaller in Pão de Açúcar, and slightly smaller in Extra. I think that this analysis, to be thorough, it involves staffing. Number one starts with sales.
If you can have a better operation, you unlock leverage that you know in this business is really huge. We start the day with 0 revenue, and expenses are now what it is. Any leverage with sales changes very rapidly the reality of a given unit. This first understanding, and of course, there is the operation itself of structure, rental. Sometimes the rental is disproportional, and this involves an attempt of renegotiating the contracts, and if you fail to do that, sometimes we decide to close a unit. But the first number, the top of my head, that I would tell you that there are 25% of our units, we are focusing very much on improving their performance.
Thank you very much. This is super clear.
The next question comes from Gustavo Piras Oliveira with Bank of America. Gustavo, please? You can unmute your mic.
Good morning. I have two questions from our side. What is the B2B profitability? I would like to understand how much it has helped you gain in gross margin, which was very significant. You've also said that you had 1/3 of the short-term warrant bonds related with contingency. How much do you expect to renew in 2026? How it's going to impact your financial costs?
Hello, Gustavo. The first point about B2B, we have actively adjusted our business, that has been so since 2024. In 2024, we started a process of profitability with the segment called Aliados, something that had been in the area for a while. It delivered a very small margin, however, in 2024, we wanted to improve profitability aligned with the other areas of the company. Throughout 2024 and 2025, there were a number of the macro elements that had a negative impact on the total equation. Throughout 2024.
we realized that we could not operate within the expected profitability level, we started focusing on it, which has led to our discontinuity. It's a contribution margin. I would say that the profitability was close to zero. Very low profitability. It got somewhat better in one or other quarter, but it was not consistent and it was too volatile. No value proposition for GPA. We were simply placing orders, something that wouldn't impact margins really differently from all other business lines we operate on. Going into your second question, throughout 2025, there was a significant concentration of renewal of insurance policies. The financial impact of this line will be much smaller in 2026 than in 2025. These are five-year contracts on average, and the financial impact happens in the first year, the one-shot payment.
The impact on cash flow was quite relevant throughout 2025 because of the renewals, the concentration of renewals of these insurance policies. What we anticipate for 2026, and this specific breakdown of insurance, is to have an improvement. We are also working on different initiatives. We've been trying to swap collaterals and guarantees and reduce our financial costs. This is also being done with all the ongoing suits. Unfortunately, I cannot give you any precise figures, but the trend that we anticipate is to have a reduction on this line. Because of the high concentration of renewals we had last year, something which is not going to happen in 2026 and 2027, and as a result of our active work of reducing financial costs by making swaps and replacements. Thank you.
Thank you very much.
We thank you all for joining us. With that, we are going to wrap up our investors meeting. Well, our Investor Relations office will be glad to entertain any questions you might have. Thank you very much. Have a good day!