Good afternoon everyone. Thank you for joining us for our Second Quarter 2025 Earnings Conference Call. As you saw in the materials we shared yesterday, we had yet another consistent quarter with advances in our strategy. Today we have André Farber , our CEO, and Miguel Cafruni , our CFO, and Francisco Santos, Head of Financial Services, who will give you further details about our results. After the company's presentation, we'll have a Q&A session. In order to ask your question, please click on the raise your hand button and wait until your name is called. You can also send your questions in writing through the Q&A button. This presentation is being recorded and simultaneously translated. Our presentations are available on our IR website. Forward-looking statements that may be made during this conference are related to the company's business perspectives and are no guarantee of results.
Now I turn the floor over to André Farber .
Thank you, Louisa, Fran, Miguel for being with us today and thank you all for joining us for our second quarter 2025 earnings conference call. Today we're going to share with you our historical results. This is the best second quarter in Riachuelo's history. We're very proud of this powerful result and we'll give you details about the main levers that have enabled us to achieve such results. How did we get here? What helped us achieve such a historical number for us? First of all, strong same-store sales, especially in our core category, which is apparel. We're very happy with these results. A second factor that led to these strong results was that we were able to do this with a 2.1% margin expansion. The combination of these two numbers is very powerful.
A third factor is that we continue to build a very strong financial services operation. Our baseline was already robust, but we also built upon this. These three levers led us to these very powerful results that we're sharing with you today. I have joined the company a bit over two years ago and we've been talking about this transformation process that we're going through and there are many elements in this transformation. I joined this slide with you earlier and since I joined the company in May 2023, we've been through a lot and this first half of the year was a very intense period of transformation. We have evolved our values, we have evolved in our culture. We changed the way we assess the people here to build this company that is always aiming to evolve and always looking ahead.
We're still going through this very intense transformation process and this is just the beginning of the journey. There is a lot to happen. This is an ongoing process. Now let's look at a summary of our results. As I said, very strong results. This was a historical order. Same-store sales achieved 15.8% in apparel. This reflects our investment in the fashion category, fashion content in our teams, and a seamless experience. As you know, we have a very strong national network with strong presence in the Northeast and in all states of the country. The same-store sales was even stronger in the Southeast where it exceeded 17%. Southeast consumers are reacting even better than consumers of the other regions. The numbers were good in all other regions as well, even better in the Southeast. We've done that with margin expansion.
As I said earlier, apparel gross margin achieved 57.3%, up 1.9 percentage points year- over- year. This reflects our efforts to use our plant better. That led us to a very strong EBITDA of 15.2%, one of the best EBITDAs in our history. I think this is the best in the last seven years. Our financial operations, Midway achieved BRL 111 million in EBITDA and our baseline was already strong. Even so, we grew 24% compared to the first quarter of 2024. We continue to see Midway as part of our core business as something that can add a lot of value to our business. We continue very optimistic here. Consolidated EBITDA was up 21.1% year-over-year, reaching BRL 436 million. These are all of the levers combined. We closed the quarter with an all-time net income record of BRL 143 million. That is 2.5x higher than the second quarter of 2024.
We're very proud of this. We worked really hard to get here. This is an evolution that we saw quarter after quarter with a very clear and consistent strategy focused on our core business, which has brought us these very robust, solid results. This is not something that will go away. This is something that we've been building quarter after quarter. On this slide, you can see the same-store sales evolution in the last eight quarters since I joined the company. We saw this evolution and double-digit same-store sales in the last four quarters. Now, apparel same-store sales was even stronger as we can see here on this slide. In the last three quarters the numbers were quite robust, as you can see. This hard work of focusing on fashion has brought us very strong and consistent same-store sales and this growth has been achieved with margin expansions.
In this slide, you can see retail gross margin expansion starting in Q4 2023, our margin has been expanding. Here at the bottom, you can see margin expansion compared to the same quarter the previous year. During seven quarters in a row, you can see consistent margin increases. This is the second quarter of 2025, and our margins grew by 2.5 percentage points on top of a 1.3 percentage point increase that we had achieved the previous year. These are consistent results that we're working hard to maintain throughout time. This can lead us to even better results. We're very proud of apparel results here in which our margins achieved 57.3%. Very powerful. Compared to last year, we had an almost 2 percentage point increase and we had already grown 2 percentage points. When we look at the historical series, we have seven quarters in a row of margin improvements.
We'll tell you about the levers later that have led us to these very consistent results. As I said, this is an ongoing transformation. The work is not over yet, so we can still improve our margins even more. Now on this next slide, I would like to share a new concept that we've been working on here internally, which is value generation per square meter. We have a complex business throughout the country which is composed of two core businesses, Fashion and Financial Services. When we add these two businesses, we see here dark green profit per square meter from fashion and in lighter green, value generation per square meter from financial services. When we add up these two businesses with improvement in same-store sales, continuous margin expansion, and a very robust evolution of our financial services, we get to these numbers.
Let's see how these businesses evolved in the last two years. We started in second quarter of 2023 with a value generation per square meter of BRL 1,393 per square meter. In two years' time, we have increased the value generation per square meter by almost 40%, actually 38.8% to be exact, with consistent evolution going to BRL 1,644 per square metre last year and now getting close to BRL 2,000 per square metre . That shows that the combined business is very valuable. Fashion and financial services. Now, let me go back to our strategy. I want to tell you what has brought us this far and what will help us achieve positive results in the coming quarters. We've been working on three levers. The first is experience. Everything we do is here to improve customer experience, improve everything we do in fashion and products.
I know I'm being repetitive, but we want to invest in key categories: women's, men's jeans, kids. We want our chain to be better prepared to serve these categories because this makes all the difference. We've been continually, continuously investing in the Riachuelo brand and some other sub brands. I'll tell you more about that later. We believe that when we bring brand content combined with product, we can provide customers with a better experience. Store experience is a differential and we should keep on investing in this experience. This is part of our pillars to invest in in-store experience, architecture, design, user experience, customer service. That also applies to e-commerce. A last point here related to experience is the creation of a more sustainable fashion.
If this is done well, we'll be able to grow our revenue more and more and we are going to have higher revenue per square meter as a result. That's the first strategic pillar. The second is efficiency. We're unique here. We have the largest apparel factory in Latin America and we know that this is a competitive advantage. This gives us better margins and we can be more reactive in our supply chain. We continue investing in our factory and strengthening the processes that connect our factory to fashion so that our operations can be increased, increasingly efficiency. Our operations are complex. Many stores, many different locations, different profiles. We keep on working on the clusterization of those profiles. We've been investing more and more on pricing and marking, management, intelligence, markdown, investing in technology and AI. AI has been helping us a lot in doing this.
We see Midway as a second core business. These are our financial services that bring us many opportunities. With the launch of new products, we believe that we can continue generating value here. This will help us to keep on increasing our generation per square meter. Now the third pillar of our strategy is improved return on capital. We want to continue with evolution of our capital structure. We want to keep on working on our debt profile. We also see opportunities to work with all of the working capital lines and investment in order to improve our ROIC. This will bring us financial soundness and better results. Let me give you some more color on what we've been doing. I want to show you now some of these elements, starting with experience. We made heavy investments in a basic product. This quarter we created a new line, D- Ultras.
I'm wearing D-Ultras special edition, which we launched for Father's Day. Here you can see a picture of our T-shirt line with technology. I want to share a video so that you understand the work that we did in branding, product, and communication to improve Riachuelo's experience. The Ultras were launched in June. This is the campaign we launched back in June. This product is made in our plant. We use special fabric, and we elevate the experience we offer by doing so. We keep the democratic spirit of offering products and services at affordable prices. We firmly believe that consumers need these innovations. This is a win-win situation for Riachuelo and consumers alike. We've seen how successful this brand, this line is. This is just an example of how we've been investing in products and brand to create products that make all the difference.
Another example that is happening right now for Father's Day, we got our polo shirt, which is an icon for us. We're the greatest polo shirt seller in Brazil. This is a product we've carried for 40 years now. We relaunched the Pool brand recently, and our polo shirts are. We had new launches for Father's Day where we talked about how powerful these polo shirts are. Let's watch the video. This was our Polo Legacy campaign, a major investment that we made for Father's Day, and we've been talking a lot about sustainability as well. I want to share a third video with you that shows you how we've been working on products and sustainability and how it's all connected in our chain, which is unique to us.
Let's learn a bit more about our eco-friendly cotton, how we've been working on this, the impact this has on our chain, and the special products we've been developing with it.
It is in the Cerridor region that we see the present and future of a fashion that transforms the agro. Ecologic cotton from the Northeast. A partnership between Instituto Riachuelo, Sebrae, Embrapa, and other players that since 2021 has been creating value and generating revenue with a positive impact on over 140 farmers. An initiative that is rebuilding an important part of the history of the national production of cotton that has been impacted by weevil for a very long time. Now we are chemical free, using regenerative techniques to regenerate the soil and people's health.
Sustainable cotton that gives rise to our first collection of shirts with the lowest possible environmental impact, with a reduction of at least 37% of carbon emissions. This collection was colored with a color coming from plants and it's 100% traceable with blockchain technology that allies technology, innovation, and sustainability. With the QR code and our items, you can access the whole product journey from planting to the arrival in the stores. Made at home in our factory in Rio Grande do Norte, a 100% Northeastern chain. This is the fashion that takes care of the present and the future.
This is yet another example of how we've been elevating our experience with commitment to sustainability. We're very proud of this. Now let's talk a bit more about our efficiency pillar, our second strategic pillar.
I talked about the overall initiatives, but now I'd like to give you an example of our distribution center. We have a video that shows you how it works and then I'll give you further details about it after the video.
We're going through an intense transformation journey. We have accelerated our innovation and technology agenda, impacting strategic fronts in all of our operations. Our distribution centers ensure agility in delivery and connect the industry to retail, reaching each corner of the country. In Guarulhos, we have our largest logistics operation. The distribution center has a high level of automation with SKU control and the capacity to move up to 1,000 items per hour. This is one of the greatest logistic hubs in Latin America and it accounts for 80% of our sales volume.
With investment in technology and intelligence systems, we have consolidated the push and pull model, anticipating demands based on the sales history. The adoption of RFID elevated the precision of our inventory and increased efficiency. We have reduced stock outs by 50%, improved the availability of products in the stores, and reduced the markdowns. We have also centralized our e-commerce operations, optimizing deliveries and improving the online purchasing experience. We're ready to continue growing because evolving is part of who we are. Riachuelo fashion that inspire Brazil from the thread to the store.
You saw our distribution center in Guarulhos with a high level of automation, a state-of-the-art DC. We control products by SKU, and in the last two years we've been working hard to improve the algorithms so that the distribution center can have time to better serve the stores. The results are very powerful.
This is one of the elements that led us to better margins and better sales, and the amazing results of Q2 2025 with all-time records here in net income. We have been investing a lot in Brazil, in people, in the retail, fashion, and technology ecosystem. Riachuelo today creates 30,000 direct jobs. We've been employing more and more people in recent years. With our growth, we developed this fashion chain in Rio Grande do Norte that employs over 3,000 people in Rio Grande do Norte. The municipalities that have been working with us have a lower unemployment rate compared to other municipalities in the state of Rio Grande do Norte. We're very proud to be able to deliver such strong results and also to create opportunities for so many people where Brazil needs the most. We've been investing in creating sustainable fashion, as you saw today.
We talked about the eco-friendly cotton that we have and products that we launched. We could spend a whole conference call talking about this, but I just want to say that we are committed. Most of our products are made in Brazil, and this brings us advantages in terms of sustainability. The products made in Brazil have a much lower environmental footprint than products that come from Asia. This is very important to have sustainable fashion. Last but not least, we have a complex chain that is completely connected from the thread to our financial services, going through factory e-commerce. We invest a lot in technology. This year we're going to invest over BRL 600 million in technology, and we have over 600 dedicated employees to develop local technology. We're very proud of this.
While we generate these amazing all-time record results, we also strengthen the local ecosystem, promoting development in Brazil. This concludes my presentation. I'll turn the floor over to Miguel now who will give you further details about our numbers. I'll be back for the Q& A session. Thank you very much.
Thank you. André, Isa, and Fran. Good afternoon, everyone. It's great to be here with you for yet another call. As André said, we're very happy and excited for delivering another quarter with consistent results. We'll give you details about our numbers and explain to you how we got here. Starting with our retail performance, let's talk about our net revenue. Each bar here is the retail net revenue. In second quarter of 2025, we achieved almost BRL 2 billion in net revenue, a nominal growth of 14.2%. When we look at our same-store sales, it's very robust and consistent.
When we talk about retail, the dash line here, it's 12.9% of same-store sales against the base of 8.3%. In apparel, 15.8%, almost 16%, same-store sales against a base of 9%. This shows the power of our fashion business. We did all of that while we expanded margins. Our retail margin reached 53.4% this quarter, up 2 percentage points against the same quarter last year. The apparel margin reached 57.3%, up almost 2 percentage points as well. We're growing revenue and margins. In the next slide, I'll tell you how we got there. This is a new slide to give you some more color and clarity about how we got here. This is a comparison of second quarter of 2025 with the gross margin of second quarter of 2024. We have broken this down into 3 groups, each at a different maturity level.
We've been talking a lot about our factory and everything we've been capturing there, all of the efficiencies. Here you can see factory efficiency in this block. This is important work that we started doing last year to improve our markdowns, to have more seasonal clusterized markdowns with pricing intelligence here. We're more intelligent when we change the pricing of our stores. This brought us at least 1.8 percentage points gains. We also got a bit more here because of this fashion product focus. André showed our focus on focusing on fashion. I'm also wearing D-U ltra, right? André, look at me. This moved sideways, but we're betting on this. Other categories here, like beauty, have also helped us increase our margins by 0.2 percentage points. The idea here is to show you that we have internal efficiencies helping us improve our numbers.
Here we're extracting more value from our vertical operations, focusing on products and other categories. We have different maturity levels for each one of these drivers. We believe that we'll continue expanding margins consistently looking forward. Now let's talk about retail. EBITDA historic number as well. Almost BRL 300 million in EBITDA, 15.2% of EBITDA margin, up almost 1 percentage point. Margin expansion. Yet another quarter with retail expansion. This quarter has been really strong in financial services as well. You'll see that in a minute. This margin of 15.2% in the second quarter is a record for us. Now let's talk about the financial services. I wanted to tell you about the behavior of our credit portfolio. This is the second quarter after the change of the regulation. We're talking about a BRL 6.1 billion portfolio. Look at this dark green bar.
We achieved over BRL 5.5 billion for the 360-day portfolio. We had significant growth. This shows that we're very consistent in the credit granting operations, the type of store, the type of segment, the type of customer. This shows that we've been able to advance and expand our portfolio consistently, keeping a good penetration. This percentage here is the financial services revenue on the portfolio. It was 11.6% last quarter and 11.4% this quarter, which shows a very robust level. This also reflects on our delinquency indicators. We can see personal loans and credit cards here with a good behavior, especially in the short term, with a downward curve here. When we talk about the credit card portfolio, way below our appetite, below 7%. We also see the long-term curves here. There is a natural mismatch.
If we compare to the second quarter of 2024, we see important evolution in the quality of credit granted. That's both for credit cards and personal loans alike. At the end of last year we ran a few pilots and we saw that we could have a higher appetite in this portfolio. Of course there is a risk related here. Now we see that the curve is going down again, close to 11% in second quarter of 2025. When we look at the long-term curves, we know that this curve tends to go up. We believe this is going to regulate from now on. When we look at historical numbers, these are strong delinquency rates. That makes us feel reassured about the credit granting policies we have. We also have an additional slide with our payment default. This shows the quality of the portfolio when they make their first payment to us.
This is what we call the FPD, first payment default. This indicator has been very consistent at 4.3%. That means that a very small share of our portfolio is overdue in the first payment. Sometimes that's because their registry is not complete or they forgot that they had to make this payment. This shows the quality of the customers and that the delinquency rates tend to continue going down because this is a very consistent indicator that we have under control at Midway. Now let's look at the EBITDA from Financial Services evolution. Quarter- after- quarter exceeding BRL 100 million in EBITDA. Actually, BRL 111 million in EBITDA, up 24.1% year-over-year. This is another important slide for us because it shows the carryover of this result. Financial services as a whole sometimes can have ups and downs and erratic behavior.
Here we can see that we've been achieving consistent results in our financial company as well. Since the end of 2023, beginning of 2024, we've been accumulating positive and powerful performance with levels over BRL 400 million. This shows that we have been diligent in our management to prevent those ups and downs. We're doing this really well. We also brought an additional PDA. This is the additional provision that we make above the regulatory provision. This is something we do because we want to. This shows the market that we're not looking only at the short term. Historically speaking, we used to carry a PDA from BRL 70 million- BRL 80 million, so below BRL 100 million. It's like a buffer to prevent the ups and downs. Since last year, we've been reinforcing this additional PDA.
In fourth quarter of 2024, we told you that we could have regulated our historical PDA. We've been responsibly showing that the results keep on growing, up 24% this quarter. We are increasing our PDA coverage here. We have paid taxes. We're just being very diligent to prevent credit deterioration in the future. This is just a liquidity buffer that we've been creating since 2024. This shows how we look at the long term, not only the short term. Now let's talk about the consolidated performance overall when we look at the operating leverage. Like we said in other quarters and to complement our long- term vision, we've been using our revenue growth. Of course, we're very diligent with our expenses, but we continue investing in our business in the long term and the expenses are being kept under control at a good level. This is almost a record of operating leverage: 35.3%.
Pretty much at the same level as last quarter. This shows that we're not prioritizing the short term. We could have gained 0.4% in operating leverage, but we keep on investing in our team to ensure that we continue growing quarter after quarter. We have kept this very healthy operating leverage level. When compared to previous quarters, we see that we are at a good level. Over 3% gain in operating leverage as compared to 2019. Now let's talk about consolidated EBITDA. We're very proud of these last two lines of our results. This is the best EBITDA in the last seven years of our company. Almost BRL 500 million in Q2 2025, combining all of our verticals. 16.5% increase. Almost 1 percentage point of EBITDA margin growth against the same quarter last year. This shows the power of our integrated business and how we've been consistently navigating here.
Compared to second quarter of 2023, we had almost 80% growth in our EBITDA. Comparing these two, we see here margin expansions and that all business lines are doing really well. The icing on the cake, last quarter we were not able to deliver net income. We've been focusing on this recently and now we're very proud to share this number with you. BRL 143 million of consolidated net income in second quarter of 2025 against BRL 57 million in second quarter of 2024, up 151%. This shows how the company is focusing on all of the lines of our statements, delivering more value to shareholders. This shows how we've been expanding our profitability as well with great EBITDA and net income levels. Now I have another two slides. The first is about free cash flow. We had cash generated in second quarter of 2025, BRL 145 million in Q2 2025 against BRL 137 million in the second quarter of 2024.
Even with all the growth we've been generating cash, we can see here operating income, working capital and our investments. Here we keep on investing, expanding EBITDA and generating cash consistently. To wrap up our investment lines, I told you a few quarters ago that we had been holding investments, focusing on using cash to decrease our leverage, which was 2x EBITDA earlier. We used a lot of discipline and diligency. BRL 120 million in investments in the second quarter of 2025 against BRL 85 million in the second quarter of 2024. We are at a very healthy and consistent level. We believe this is a good balance. We always want to look. We always take into account the short to long- term balance. Now our financial leverage. We had 2x net debt over EBITDA ratio and we've been consistently deleveraging.
Now we have reached 0.5x net debt over EBITDA, BRL 773 million in debt against BRL 905 million in June 2024. We keep on deleveraging. With this cash generation, we believe that our debt profile will continue in this downward trajectory. To wrap up, I just want to say that we're very proud and confident about our work. We have achieved consistent results with a great balance between short and long term. Let's start our Q& A session. Isa, you have the floor.
Thank you, Miguel. Okay, let's start our question- and answer- session. Our first question is from Daniela with XP. Hello, Danny, go ahead and ask your question.
Good afternoon everyone. Thank you for taking my question. Congratulations on your results. This has been a great presentation. I have two questions on my side. The first is about the short term perspective.
We've seen a concern with the slowdown in consumption throughout the whole industry. Can you tell us about what you expect from now on and what you saw in July and August? You talked about Father's Day and the launch of products that can help you with this dynamics. Can you give us more color about what you've been seeing there in terms of demand? Can you give us your take on a possible cross-border tax exemption? Is that possible? If that happens, what are the drivers that you can focus on to face this challenge? You talked about value generation per square meter. That was very interesting. Can you help us here to understand what your goals are? Does value generation per square meter depends on productivity and gross margins? What is the main driver here and where do you want to get?
You may say that you're never satisfied, but what are your targets here?
Thank you. Thank you, Danny. It's great to have you with us today. Thank you for your question and thank you all for joining us. I think you actually asked three questions right about July and the prospects for the second half of the year, the cross-border tax exemption expectations, and value generation per square meter. Three questions. I'll comment on all of them. We're very optimistic for the second half of the year. We have many initiatives related to product and innovation and consumers have been welcoming this. We have Father's Day coming. It's an important date. It's coming up. It's right around the corner. We've been investing in product and innovation and the new products have a good margin.
In the mix of apparel growth and margin, we continue very optimistic and we believe that we can have the best year in the history of our company and we're working to get there. About cross-border players, this is something new that we've been facing in recent years. Remessa Conforme was implemented in August last year, so almost a year now. In spite of that, we had eight consecutive orders of growth. This confirms our belief that no matter what the competitive scenario is, the market is large. If we do what we do well, we can grow and we're very confident about that in any way. I do not think that this is going to be reverted. We still have higher taxes to pay than these cross-border players. We just saw the de minimis change in the U.S.
Everything that comes through cross-border players has to pay the same taxes as the importers in the country, which seems very fair to me. I don't expect this to change here in Brazil, but if it changes, I actually expect us to pay the same level of taxes as these cross-border players. Now about your third question, value generation per square meter. This is a different way for us to show you what our business is generating. We have a very complex business. We have a national footprint with an even greater footprint in the Northeast than in the South and Southeast. Our financial services are very well developed. At certain points in time, our business is impacted in terms of productivity because the productivity per square meter in the Northeast is lower than in the Southeast.
We can also be benefited because our financial services have greater penetration in the Northeast. We just wanted to measure both with our value generation per square meter. We won't give you any guidance on this, but what I can tell you is that we're very optimistic with the opportunities in our financial services, which will increase the value generated per square meter. In fashion, we are improving fashion content and experience while we improve margins, which will also impact positively on the value generation generated per square meter. We expect this number to improve in the coming quarters.
Okay, that was very clear. Congratulations on your results again.
Thank you, Danny. Our next question comes from Ruben Couto with Santander. Ruben, go ahead. You can ask your question.
Hi, everyone. Thank you for your presentation. My question is about pricing intelligence. You showed us many evidences of product and brand investments. For a while now, the same-store sales in apparel has been great. Average ticket is pretty much stable in the last three quarters. I believe that considering all of the investments that you made in the brand and product, what's your take on the potential of this pricing intelligence driver? What do you expect? Especially in regions that are developing well, like the Southeast? Can you classify from 0- 10? Where are you when it comes to pricing intelligence? Thank you very much.
Thank you, Ruben. I think I can answer that question. As I've been saying for a few quarters now, we are undergoing this transformation process. Riachuelo created a pricing department about a year ago, and we've been evolving in our analysis processes, use of intelligence, AI technologies.
I think that we've been able to evolve a lot in markdowns. Whenever we do have markdowns, it's something that is more accurate and more mild. For markdowns, first we decrease the frequency. We used to do that every six to eight weeks, and now we're working to doing that every two weeks. For models and colors, this is something we've been doing now. The same applies to pricing. We've been pricing things better, but if I were to assess where we are, I would say we are at a score of three to four . We're already capturing results, but we're still far from our full potential. Here we see an improvement and product mix, but we've been invested in brand and the average ticket is going up. When you look at the overall numbers, this is not that clear.
I do believe that in the coming quarters, we'll see continuous evolution. It's not that we're going to become more expensive because we know that our role is to provide high quality fashion that is affordable. We know that we can offer increasingly better products with higher technology and higher fashion content and that will naturally increase our average ticket while we keep volumes high. There's a long way ahead of us. We're just midway through this process, I would say.
Our next question comes from Rodrigo Gastim with Itaú BBA. Go ahead Rodrigo.
Hi André, Miguel, Fran, Isa . Can we talk about gross margin? I have two questions. When we look at the second quarter, 190 basis points in apparel is remarkable. Can you break it down into seasonality and winter products and also bottom-up efficiencies, the ones that you mentioned during the presentation? André, that's my first question.
Now my second question. Starting the second half of the winter here, how does cold weather and the July seasonality, has this been helping us to reduce markdowns and keep gross margins? Thank you very much.
Hi Gastim . Thank you for your questions. Very interesting. We've been discussing that almost every day and I think that the straightforward answer is that it's not due to winter mix as much as it is from our bottom- up initiatives. This year has been colder than expected and we haven't planned to have so much winter content. Everything we see in terms of sales and margin evolution is related to a better management of our business, better use of our factory pricing markings and planning management.
We don't think this is due to this cold winter so much because we didn't have as many products and we came from warm years so we purchased less this year. We think that this is not going to lead to winter markdowns and we think that we're going to have good margins in the coming quarters because of that.
Excellent André. That's very clear. Thank you.
Thank you, Gastim. Now our next question is from Renan Sartorio with Safra. Hello Rena.
Hi everyone. I have a question about Midway. You saw strong growth compared to the second quarter of 2022 and the liquidity is quite healthy recently. Can you tell us about the delinquency? Do you expect this to be kept going forward?
Yeah, we were already foreseeing a more difficult year. When we look at the short- term delinquency rates, it's very well controlled because we were planning this since last year.
We have been planning this since last year so we didn't have to close the credit granting this year because we've been creating this since last year. Of course, we cannot predict what's going to happen in the future, but we see credit indicators behaving really well and we've been able to grow our financed portfolio and value proposition without increasing risk. We're very well prepared. If things go as planned, we'll probably continue growing one digit and expanding our portfolio, but still within our same appetite level.
Great. Thank you very much.
Thank you, Renan. This concludes our Q& A session. Thank you all so much for joining us. Now I turn the floor back to André for his final remarks.
Thank you, Isa. Thank you, everyone, for joining us today.
Once again, I just want to say how happy we are and how proud we are with everything we've been building and how we're still halfway through this process, this transformation process. There is a lot to happen. We are building the Riachuelo of the future. I believe that in the coming quarters we'll keep on seeing business improvements with growth in apparel and growth in margins. Midway is a significant business that adds a lot of value in our value per square meter that is generated. I said here that we are the greatest fashion employer in Brazil. We invest a lot in technology and in many sectors locally, and we're very proud of that. Thank you once again for joining. We'll see you next quarter in our next earnings conference call when we share our results with you. Again, thank you very much.