Good afternoon, everyone. Welcome to the webcast of SBF Group, where we're going to discuss the results of the first quarter 2023 of Grupo SBF. This is Pedro Zemel, CEO of SBF Group. I'm here with José Salazar, our CFO and IRO, Daniel Regensteiner, our corporate finance VP, and Luna Romeu, our IR manager. As you can see on slide 2, we are going to separate our presentation into 3 parts. First, an update on the main highlights of the quarter, then we're going to discuss about the earnings release and finally, Q&A. Questions may be submitted through the webcast platform, and they'll be answered after the presentation. Let's start with slide 3, please. We've started this year focused on increasing profitability of our operations and maintaining our company adaptable to all changes in perspective. In the first quarter 2023, there were 3 things.
Growth of direct-to-consumer terms of Fisia, greater profitability of sales of Centauro, and rationalization of the expenses of the group at large. We've already achieved some robust results. Our gross revenue increased 13.3%, amounting to BRL 1.85 billion. We've advanced 4 percentage points in gross margin of the group compared to the first quarter 2022. Our adjusted EBITDA ex IFRS increased 11%, amounting to BRL 133.7 million. Can now move on to slide 4. At Centauro, we've made important adjustments to preserve our gross margins, such as optimization of channels, sales modalities, and adjustment of pricing policies according to the business needs of consumer and market. With these adjustments, Centauro margin reached 51.5% in the quarter. Margin increase impacted in the short term revenues on the digital channel.
These adjustments have prepared to bring us back to growing sustainably. Our brick-and-mortar stores are still one more differential of our Centauro. In addition to providing a better experience to consumer, we are strengthening the operation online and on channel. There are 233 points of sales distributed in 26 states, which represent 80% of our revenues at Centauro. In the quarter, we've reviewed our portfolio of Centauro stores. It's our expected movement in retail. Even with this adjustment, the revenues of our brick-and-mortar stores of Centauro reached BRL 702 million in the quarter, 14% increase over the same period last year and same- store sales of 16.7%. In addition, we are encouraging the integration of online and offline purchase journey.
In the period, we focused on pick, click and collect or in-store pickup, which presents better satisfaction rates and profitability, generating 10% increase in this modality. In the quarter, Centauro has advanced in its business solidity indicators. There are still opportunities to grow sustainably. Let's now move on to slide 5. At Fisia, we've maintained the expansion of direct-to-consumer sales. In the first 3 months of the year, we've opened 6 new NVS stores, together with the other 17 stores opened in the first 12 months, which represent 73% increase in our portfolio. Digital platform of Fisia has also been growing with an evolution of migration of online wholesale to our three-pin model and the expansion of sales in Nike.com.br.
These actions have brought growth of 20.8% in revenues and expansion of 3.7 percentage points in the gross margin of Fisia, which reached 43.6% in the quarter. The main indicators of the business of SBF Group have progressed positively with increase in revenue, gross margin, and EBITDA. It was not fully pictured in the net income because of the increase in financial expenses, which have increased owing to the interest rate and the investments made in working capital and CapEx. Reduction of financial expenses through a generation of more expressive cash value is a priority to our next quarter. Let's now go on to the next slide. The results of the business enable us to keep on exploring the potentiality of our businesses.
Moving is our sport, and this is why we connect with the journey of sports athletes and those who love sports, so that we can engage and offer more products and services. Arena Centauro, which has just been opened in Parque Ibirapuera in São Paulo, it's one more sign. Arena, which is a house of sport, offers experience and services 100% for free for the community. We've also been exploring the potential with our ventures in a continuous exercise to use the audience for generational sales and increase recurrence of our business. Now moving on to slide 7. Before handing it over to Salazar, I would like to emphasize once again that our focus for the year is to generate cash with profitability to our operations.
As a consequence, we are going to enhance our efficiency. Let me now hand it over to Salazar, who is going to go into details about the results of the first quarter.
Thank you, Pedro. Good afternoon, everyone. Before starting, I would like to remind you that this quarter there were non-recurring facts which were both positive and negative and are shown in our release. The results that I'm going to share with you in the upcoming slides have been adjusted by those non-recurring effects. Similarly to first to other quarters, we are going to explain numbers in the ex-IFRS vision. We understand that this is the best way to analyze our earnings release. Moving on to slide eight, we are going to talk about the highlights of the quarter.
As Pedro has already mentioned, as Grupo SBF, we've reached BRL 1.85 billion of gross revenue, a growth margin of 50%, and our EBITDA margin reached 9.1% in this quarter. At Fisia, our gross revenue is BRL 1.1 billion in the quarter, with an increase of 3.7 percentage points in gross margin, reaching 43.6%, the highest since the acquisition of the group. Sales in direct consumer channels of Fisia already amount to 56.9% of total sales, which is a growth of 9.5 percentage points over the first quarter 2022. Gross revenue of brick-and-mortar stores of Centauro grew 14% in this quarter, reaching BRL 701.8 million, and same-store sales of 16.7%.
Gross margin of Centauro in the quarter amounted to 51.5%, means growth of 2.9 percentage points against or over the first quarter 2022. We can now go to slide 2. Sorry, slide 9 of the presentation. We can see here BRL 1.1 billion, 9% growth. Looking to each business, we can see Centauro reached BRL 705 million of revenues in the first quarter, 0.9% growth over the first quarter 2022, which is a result of our plan, which was to focus on profitability. Brick-and-mortar stores of Centauro grew 17.7%, even with the optimization of store portfolio, which means we've closed 10 points of sales in the quarter.
The growth can be explained primarily by 3 new stores and 11 renovated stores within the past 12 months. 100% normalized operation of stores compared to the first quarter 2022, when part of them still operated with restrictions due to the pandemic, and improvement in the support chain of sport bar products. Incorporation of products in the marketplace in our extended inventory is also contributing to increase of sales in the channel. 7.8% of the sales of stores came from that extended inventory, and 30.8% of sales resulted from marketplace products.
The reduction observed in the digital platform was 29.6% of net revenue and 7.8% of online sales or GMV results from the strategy of our channel profitability with a number of initiatives that impacted revenue, but all of them positive to the profitability. Among them, we can include review of rules of buy a ship from store, reduction of markdown levels, and optimization of marketing performance. In addition, it's worth mentioning that in the first quarter 2022, the channel was positively impacted by a greater share of sales, still as a result of the restrictions of some physical stores because of the pandemic and the benefit of default, the tax difference, which generated a positive impact of BRL 13.8 million in the first quarter 2022.
Fisia totaled approximately BRL 856 million net revenue in this quarter, which means 16.5% increase over the first quarter 2022. The revenue from our brick-and-mortar stores increased 48.7%, benefit by the six new NVS stores opening this quarter and 11 stores open in the second half of 2022, in addition to same-store sales of 8% in the channel. The digital channel presented 32.4% growth, impacted primarily by migration of sales from wholesale to marketplace. Direct sales in nike.com.br has kept on growing. In the quarter, the growth of the channel more than made up for the positive effect of BRL 31.7 million of default, which benefit the same channel in the first quarter 2022. Wholesale was also negatively impacted by migration of sales from digital clients to marketplace.
Let's now see slide 10. Net income of the group in the first quarter reached BRL 737.7 million growth with an impact of 18.9%. Gross margin of Centauro in the quarter was 51.1% with an increase of 2.9 percentage points, positively impacted by reduction of markdown, primarily in digital channel, following the strategy of profitabilization of Centauro. Channel mix with more brick-and-mortar stores, which historically have a greater gross margin. Also the gross margin of the first quarter 2022 of Centauro was positively impacted by the benefit of default. Fisia reached 43.6% in gross margin in the quarter, 3.7 percentage points increase.
Once again, benefit by increase of sales in DTC channel, reaching 56.5% of the net revenue of Fisia as a result of the new pricing strategy adopted as of the second half of 2022. Similarly to net revenue, the effects on gross margin were enough to compensate the positive effect of default observed in the first quarter 2022. In this quarter, the progression of Centauro and Fisia indicators show our focus on profitability and the capacity to adjust our operations to the given scenario. Let's see now slide 11 to address operating expenses. In the quarter, pre-IFRS, the expenses represented 41% of net revenue, 3.8 percentage point justified primarily by royalties and marketing fees paid to Nike, Inc., which resulted in 1.7 percentage points increase.
This expense may be explained by growth in Fisia sales, increase of rates paid according to each merchandise agreed upon in the contract, an increase of inventory in the 1st month as taxes are paid based on purchased goods. In addition, the default effect in the deduction meant that we had the expenses less diluted in our net revenue, and in fact estimated 1.3 percentage point. Another relevant effect is the mix of Fisia channel. DTC channels, they contribute positive to final profitability, but they have greater expenses than the wholesale. This effect, excluding the impact of royalties, represented 0.5 percentage point. Now we can see slide 12.
EBITDA ex-IFRS of the group achieved BRL 133.7 million in the first quarter 2022, with EBITDA margin of 9.1% aligned with the margin presented in the first quarter 2022, with a increase of one percentage point over the margin of the fourth quarter 2022. EBITDA margin was positively impacted by improvement in gross margin resulting of the reduction of markdown of Centauro and migration of DTC to Fisia negatively impact by increase in expenses as a percentage of net revenues, which was resulting from increase of royalties, marketing fees and default effects in the dilution of expenses of the first quarter 2022.
Slide 13, we can see net income ex IFRS of BRL 16.9 million, a decrease of 56%, which may be explained by the increase of financial expenses, which were increased due to increase in interest rate and investments made in working capital and CapEx in recent years. This has impacted our net profit. Our cash flow was negative because of seasonality, negative in BRL 553 million, explained by normal seasonality in the cash. Usually we pay the purchase of the 4th quarter during this period. Going into inventory, this increase shows the normalization of our supply chain of Fisia and the reflect of the change of our strategy of Centauro for profitability with already holding a number of actions in the 2 units to make adjustments to our inventory levels.
As a supply chain in this market takes from 9-12 months, we're going to see the effects of these initiatives as the quarters move on, especially in the second half of the year. Cash consumption, in others results from changes in the perspective of tax credits moving from short to long term. Cash flow investments was primarily explained by investments made in technology and the opening of Nike Value Stores. The variation observed in the financing cash flow is explained by the new emission of debentures and also anticipation of some receivables in the period. I understand that this issuing of the debenture shows our good financing capacity and the good position of the market to raise funds. Now we can go to slide 15, where we can start for the Q&A session.
The questions can be sent to us directly through the Webex Platform. Thank you all very much.
Pedro Pinto from Bradesco and some other analysts from Safra and from Santander asked the question: the growth of working capital seems to be structure. How do you expect to have suppliers and inventory levels to behave in the future?
You see, Pedro, in our opinion, this increase in inventory levels that you are mentioning is not something structuring. It is something of a timeline perspective. In 2022, we expected to have more growth of Centauro. We also expected to open more stores of Fisia and Nike. Global Nike was making fairly distributions based on the limitations of logistics that had resulted from the COVID pandemic.
Because of that, we made our purchase, especially on the second half last year, based on that perspective, that we would grow more, we would open more stores of Fisia, and that based on product scarcity. When we were planning for 2023, we set as priority our profitability at Centauro, but we had already purchased goods, especially for the second half of the year. Fisia, at the same time, had already purchased goods that would be delivered to Centauro in the first half of the year. Now we are going to have to make our adjustments by adjusting the purchase in the second half of the year. We will have to be somewhat more aggressive in gross margin because our consolidated gross margin of the group in the first quarter was very high. We still have got room to reduce our inventory levels.
Differently from your perception that it seems to be structuring issue. No, we think it's something just of a context of a one-time situation of the reasons I've explained. Issues that have been addressed by our team since the end of last year, so that we can make the adjustments, bring down inventory levels to lower levels than what we used to have in the past by our 2 companies. We believe there are opportunities. As we have a long chain of 9-12 months, it takes time. We cannot simply make adjustments quarter over quarter. It takes more time. It's something that deserves attention, and we are acting on it, but it is under control. Another important point to highlight is that differently from a fashion company, the risk of inventory aging is small in our line of business.
We can adjust the commitment of future collections. Collections don't change dramatically quarter-over-quarter. There is no major risk of having aged inventory. Yes, we have inventory levels higher than we would like to. We are working on it. Differently from what you said, we believe it's much more a problem of a context than structure. Thank you very much for the question.
I think we have already answered the question to Irma. Let's see the next question now. I am sorry. Irma has asked about the quality of the inventory levels and the need to offer them as promotion, discount or write-off.
To some extent, I have answered that already. I think the quality of our inventories is good because of the characteristic of our business.
In the first quarter, the consolidated gross margin was very good for Centauro and Fisia, which means we can be somewhat more aggressive to reduce our inventory levels. I do not believe that there would be any needs of write-off. As I told you, it is just a situation of a context-based issue. We are going to get adjusted, and by the end of the year, we strongly believe that we'll be okay. We will do that quarter-over-quarter, of course, and in the end of the year, we'll have the inventory levels fully adjusted.
I'll answer the next question.
It's a question by Irma about Nike stores in terms of ramp up by square meters and if it's within our deadline.
Thank you, Irma. Our stores are performing as planned in our both models, really, in NDIS and NVS. The new stores, so to speak, they were recently opened, really less than 1 year. The performance so far has been as planned, and this is very interesting and makes us excited about the future. Of course, we cannot share with you the operating data of traffic or conversion by square meter, but they are within our objectives and within the specific timeline we've planned.
There is one question by Wagner Salaverry of Quantitas. Two questions, actually. First, he asked about inventory.
Wagner, I think we have answered that before in our two previous answers. If you still have got any questions, please let us know, and we can have a one-to-one discussion.
You've mentioned that Nike royalties are paid when products are purchased. It means the expenses of royalties have already been accounted for in anticipation of expenses, not results of products which have been purchased but not sold.
Oh, yes. The turnover of product is taken into account into accounting, so increased inventory means anticipation of expenses.
That's a very objective answer. I think that another important question to answer: If the market has restrictions for long issuance, how does the company want to maintain its funding? What kind of conditions do you expect by the end of 2023? Are you considering new possibilities?
Well, there are different financing sources. Because of the closure of long-term market, we've issued BRL 325 million in debentures for short-term with just 8 months, with a two-year period of BRL 100 million. It was all the needs of refinancing this year, which was something like BRL 500 million.
It's already ongoing. We started with one year line, and now we are going on average for periods of two years. Of course, we are paying close attention to the market. We want to extend our debt as much as possible, of course. If the market is open and receptive, we are always going to analyze this possibility of having long-term financing. In addition, it's always important to emphasize that we've maintained our receivables, our factoring receivables to deal with one-off needs of cash. We've been managing to refinance our debts without major difficulty.
There is a question by Vitor Fuziharo of Santander. Very important question because it talked about leverage. In terms of the company leverage, can you please tell us about how the indicator will behave throughout the year?
Well, of course, we cannot give you a guidance, Victor, but we have a strong commitment, and we are going to maintain it, doing as much as we can to get to the end of the year with better leverage levels than the previous year. We want to complete 2023 with leverage levels before then in 2022. It includes a rentabilization of the company. In the first quarter, we've succeeded in delivering it. It also needs inventory adjustments, as I've mentioned before. Whenever we understand there is a possibility to improve cash generation, we are going to do it. The caveat is that this is going to be a very challenging year. The macroeconomic perspective, both in Brazil and abroad, are quite challenging. Interest rates are high. We are paying close attention.
We are going to take the necessary measures to really end the year with better leverage levels than last year.
Thank you for your question, Vitor. Victor Rogatis of Itaú BBA. About the gross margin gain in Centauro, can we consider it to be a sustainable structuring gain from now on?
Well, Victor, we are doing our best to have a better profitability of the operations of Centauro. We are reducing our markdown. The fact that Fisia started working in the marketplace of digital platforms too. This marketing really helps us get a better disciplined market. We've also been working on assortment to be absolutely sure that we have the best assortment in the company. The stores are growing again, which is wonderful because they have gross margin, which is higher. In our opinion, we believe we've changed the level compared to previous year.
In our opinion, we are still running some tests in e-commerce. Maybe we have exaggerated somewhat our profitability. Maybe we can be more aggressive in sales. Because of the higher inventory levels than expected, it's too early to say that we are in the optimal level of gross margin for the year. Probably there is room to bring down the margin as the first quarter has been very good. All our strategic objectives that we have committed with, which is to increase the profitability at Centauro, to change the channel mix of Cia, have Cia more in digital platforms, everything is being delivered. Well, of course, there's still a lot to come in this year. We still 9 months to see things happening. We are very optimistic with this new outlook.
Victor Rogatis has also asked about leverage, and I've already answered that. The next question can be answered by Pedro, I guess.
Sure. Cia DTC, the penetration that you expect this channel to have and the magnitude it may have in the company's profitability.
Thank you, Peter, for the question. We've been positively surprised by the potential of the market, our market at large. There seems to have enough space for everyone to grow, including Fisia. Nike.com.br. It's a brand that has been growing with very healthy margin, and the stores perform quite well. We still haven't seen the limits, really, and the contribution margin of sales of these products to our own channels are much better than the sales in wholesale. As the migration happens, the company's margin is increased. Let me make one last comment. It's important to highlight that sales of Nike products at Centauro stores also contribute to end-to-end margin.
The final product of a consumer to the acquisition price, be it from imported or from a manufacturing facility here in Brazil. We are very far from seeing the limit of the sale. There is still much more to do.
Just give me 1 second, please.
Let me read the question while Salazar gets ready. It's a question by Danny of XP. I would like to ask you to explore the working capital dynamics. How do you deal with this inventory levels of Nike and other brands and also the suppliers? What's the main driver, right, of the change and the deterioration of the inventory levels? Salazar, please.
Hi, Danny. I think we've talked extensively about inventory levels. If you have any other questions, please contact us and we can then discuss one-to-one. The discuss of that draft risk comes from the suppliers. They decide if they want to go into operations with the banks or not. We have no influence over that. We just help our suppliers come up with the appropriate financing lines.
Now, our second question about leverage. You are focusing on cash generation in here, but the working capital will be more gradual throughout the year because of the change. What are the main drivers of cash generation?
Yes, working capital is gradual, but we believe it's going to contribute positively throughout the year. EBITDA is growing and the CapEx is slower than last year. With these three components, we really believe we are going to move towards better cash generation than initially expected.
Well, we are now going to conclude the Q&A session. Thank you very much for all the questions. Our IR team is at your availability to answer any other questions.
We know that 2023 is the year that will require skills to deal with macroeconomic challenges. We really believe in the qualification of our teams to deliver results involving Centauro and Cia. Our company has over 40 years of history, and it has already faced many complex situations, so we are prepared to reach our objectives and to get adjusted to market needs. We believe that the earnings released today and the results that we achieved support the growth of tomorrow, and we are committed with our plans and results for upcoming years. Thanks everyone who have been with us. Good afternoon. Bye-bye.