Good morning, everyone, and welcome to the SBF Group webcast where we will discuss the SBF Group's Q1 2022 earnings results. This is Pedro de Souza Zemel, CEO of the group, and I'm here with José Luís Magalhães Salazar, our CFO and IRO, Daniel Regensteiner, director of corporate finance, and Luna Romeu, our investor relations manager. As you can see on slide two, we will break out our presentation in three parts. one, an update on the quarter's main highlights, then we will talk about the results, and finally, we will have a Q&A sessions. Questions can be sent through this webcast platform and will be answered after the presentation. We will start on slide number three.
We began the year with a solid performance in all business units of the SBF Group, which resulted in Q1 in a 65% growth in net revenue for the group and a gain of nine points in EBITDA margin when compared to the first quarter of 2021. These results reassures us, and we are confident that we're on the right track with the implementation of our assumptions: increased share of DTC in Fisia, expansion with operational leverage at Centauro, and creation of SBF Group sports ecosystem. Now we move to slide four. We ended the first year of Fisia's management after the acquisition by SBF Group, and this period we've increased the share of the digital channel by 21 percentage points with total 31% of sales, with gross revenue growth of 120% vis-a-vis Q1 2021.
The plan we have executed for this growth based on more assertive performance marketing, better assortment strategies, and the creations of three peak sales channels has been very successful. We believe that there is room for improvement to continue capturing value in this channel through these and other mapped initiatives. We also continue to reap good results with the repositioning of the Nike Value Stores done in 2020, which in addition to increasing the profitability of the channel, continues to benefit the growth of sales in stores, which in this quarter reached the same store sales of 55%. With the growth of the direct-to-consumer channels, we were able to improve Fisia's gross margin even with the exchange rate pressured in the period.
The wholesale channel also showed a good growth of 67% in the quarter, which is an 88% growth of Fisia's net revenue as a whole. We are proud of everything we have accomplished in the first year of operations. Now slide five. In Centauro, since the first quarter of 2021, 35 G5 stores were added to the chain. This expansion, coupled with the retail recovery, continues to drive the pace of recovery in Centauro's brick-and-mortar stores channels that we have seen since the second half of 2021. With same-store sales of 38% and net revenue growth of 49%, the store channel continues to play a good role in consolidating Centauro as the main sports retail channel in Brazil. A reflection is our NPS record of 90% in our stores and our ranking among the 50 most valuable Brazilian brands in Kantar BrandZ ranking.
Pursuing to provide an increasingly complete and integrated experience in all channels in which we operate, this quarter we completed the integration of our marketplace sellers and our extended stock expanding SKUs offered in our stores, so it is now possible to buy products from our marketplace partners in Centauro stores that were previously only available on the digital platform. In this first quarter, the extended stock already presents 7.5% of sales, and the marketplace already represents 23% of these sales. The first quarter was also an important period for us to start a number of actions aimed at deepening the connection between our public, our brands, and the sport. Thus, as a result of the initial investment we started to make in the Centauro brand, we are increasingly supporting events in sports communities that are relevant for our consumers. Now on slide six.
We completed another investment in the SBF Ventures structure. FitDance, the largest dance channel in Brazil with more than 10 billion views on YouTube and more than 10,000 trained instructors, now is part of our ecosystem, expanding our contact with the casual dance universe, one of the most practiced modalities in gyms in the country. Thus, SBF Ventures, which has been working hard to create the sports ecosystem, already has four investees. NWB focused on digital sports content, OneFan focused on the digital relationship between clubs and fans, X3M specialized in sports events, and now FitDance. Besides contributing to attracting customers to Fisia and Centauro, we estimate that these four companies will generate around BRL 100 million with their own initiatives not linked to product sales. As you can see, we continue to evolve consistently with our ecosystem strategy while delivering results.
We are very pleased with the results of the first quarter of the year, and now I'll give the floor to Salazar that will go into more detail. Salazar, you may go on.
Thank you, Pedro, and good morning to everyone. Before I start, I want to remind you that this quarter we had both positive and negative non-recurrent effects that you can see in our release. The results presented in the upcoming slides are adjusted by these non-recurrent effects and take into account the effects of IFRS 16. Now slide seven. As Pedro mentioned, we had sound results during this quarter. I highlight here that we total BRL 1.3 billion of net revenue in the SBF Group this quarter, a 65% growth when compared to the first quarter of 2021.
The group's consolidated gross margin for the quarter reached 46%, an increase of 2.6 percentage points when compared to Q1 of 2021. Our adjusted EBITDA grew 400% in the quarter, totaling BRL 185 million. Centauro's gross revenue totaled BRL 844 million in the quarter. This is a growth of 40% vis-a-vis Q1 of 2021. Fisia's net revenue grew 88% compared to Q1 of 2021, totaling BRL 734 million. Now, Fisia's online sales reached a new quarterly record of BRL 277 million, a growth of 120% compared to Q1 of 2021. Now slide eight. The 65% growth in the group revenues is a result of the strong performance of Fisia and Centauro.
Looking at each business unit, Fisia totaled BRL 734 million of net revenue, a growth of 88% driven by the good result of the three channels, but mainly by the growth of sales on the digital platform, which continues to benefit from the new strategies we implemented after the incorporation, such as the strategic prioritization of the channel, the increase of available portfolio, the optimization of marketing investments, and the deployment of the 3P strategy. The DIFAL effect also positively impacted BRL 31.7 million, the digital channel's net revenue. The growth of the wholesale channel reflects the recovery of the retail as a whole, which had its sales still heavily impacted in Q1 of 2021.
In the Nike Value Stores channels, which was also heavily impacted by the pandemic, on Q1 of 2021, we had operational gains with the new process implemented by the SBF Group throughout 2021 that contributed to the revenue in this quarter. It's worthwhile mentioning that we started the channel expansion with the opening of the first NVS store with the SBF Group in Santa Catarina. In addition to the strategies mentioned, all the Fisia channels benefited from the price increase in the period to offset the exchange rate variation since we took over the organization. Centauro reached BRL 699 million in revenue, a 46% growth explained by the growth in the same store and digital platform sales.
Centauro's brick-and-mortar stores channel grew 49% vis-à-vis Q1 2021, totaling BRL 502 million, driven by the opening of 20 new stores and the renovation of 17 in this period. Despite a January with a flow in the mall still impacted by the Omicron variant, in months of February and March, the recovery of the flow contributed to the growth of the channel. The digital platform totaled BRL 189 million in net revenue, a growth of 40% driven by sales in the marketplace, which grew 119% on Q1. In addition, the revenue was positively impacted by BRL 13.8 million of DIFAL differential tax rate effect on tax deduction for this channel. Now slide nine.
The gross profit in the first quarter totaled BRL 620 million, a 75% growth vis-a-vis Q1 of 2021. When we analyze each business unit this quarter, Centauro's gross margin totaled 49%, recovery of 3.7 percentage points compared to the same period last year when the promotional environment caused by the pandemic still had a certain impact on the market. When compared to more normal periods, we continue to see a gradual improvement in our margin level in our brick-and-mortar stores. In this quarter, we've seen a more discounted market in the online channel, which impacted margin in this channel.
SBF's gross margin for the quarter grew 2.2 percentage points vis-à-vis Q1 of 2021, explained mainly by the increase in the share of the digital channel in sales, which rose from 25% in Q1 of 2021 to 31% this quarter. The default effect also contributed to the increase in gross margin in this quarter. Now slide 10 on operating expenses. Operating expenses in the quarter increased 37% vis-à-vis Q1 of 2021. This rise is a consequence of the 59% growth of the company's gross revenue, which leads to an increase in variable expenses. In addition, the period was of relevant inflationary pressures which mainly impacted the personal and rent lines. Despite these pressures, the group's operating expenses as a percentage of revenue were 32% in the quarter against 39% in Q1 of 2021.
The dilution explained by the operating leverage as a result of revenue growth and the back-office and logistics synergies obtained with the integration of Fisia and Centauro operations. Now slide 11. The group EBITDA totaled BRL 185 million for the quarter with a 14% margin, a recovery of 9.2 percentage points compared to Q1 of 2021 results. The main factors contributing to the EBITDA margin recovery were the improvement in the company's gross margin, the operational leverage caused by revenue growth, and the synergies obtained with the integration of Fisia and Centauro operations. This quarter, we reported a net income of BRL 30 million, reversing the net loss reported in Q1 of 2021 and recovering 5.7 percentage points of margin. The main reason for the margin growth was the EBITDA margin improvement. Now slide 13.
Operating cash flow was negative BRL 113.2 million in the quarter compared to zero flow in Q1 2021. Last year when we took over the Fisia operation, we negotiated an additional product payment term with Nike, which resulted in few vendor payments in Q1 2021, and Fisia improved the cash flow for this period. In Q1 2022, in addition to this effect not being observed, which led the quarter to present a more normalized seasonality, there was very accelerated growth at Fisia, which increased the consumption of working capital during the period. Cash flow from investing was negative by investments in technology, logistics, the Centauro G5 and Nike Value Stores projects, and by the investment in the company's OneFan investment.
We ended Q1 of the year with BRL 361 in cash and a net debt of BRL 628 million. Our final leverage financial position is comfortable at 0.7x. Additionally, in May 2022, we concluded our third and largest debentures issue of BRL 500 million with maturity in 2027. The resources will be important to finance our CapEx needs and accelerate the company's growth. We can move to slide 14 of the presentation. We increased CapEx by 25% in the first quarter. In addition to investments in technology and logistic projects, we continued to invest for the expansion of Centauro's G5 stores and started the first project with Nike Value Stores and Fisia's Nike Store in this quarter. We opened three new G5 store and one Nike Value Store in Santa Catarina. Well, now we.
You can send your questions directly on this webcast platform. Thank you very much for your participation. Our first question.
Richard
... from Richard, from BBI, Bradesco BBI. These are two questions. Number one would be the performance of Fisia's e-commerce channel has been fantastic. Can you elaborate on your expectations in the mid and long run?
I'm going to answer this question. There's another question from Felipe Casimiro. The potential is major. Number one, because Nike is a brand which is extremely strong, highly known. A loved brand, and people look for it a lot. This is why it is able to attract flow to the digital channel. This is something very attractive from the marketing cost point of view because the attraction is facilitated by the top funnel effect that the brand does in the world and here in Brazil, of course. This helps us to develop a digital channel. We don't have to fight for the last clicks.
Most of the searches when people access our site. This is when people search for Nike. Historically speaking, Nike's digital sales, not nike.com, but internet Nike sales, well, this is 50% of Nike sales in Brazil. This clearly shows you, and we leverage a secular trend of growth of this channel. There are a number of internal initiatives because we have a strong brand. The channel is present in the digital channel. E-commerce has. We can improve, of course, service levels in order to develop an app. 50% of our sales are done through an app, and Nike doesn't have an e-commerce app. But everything makes us think that we're in the beginning of this story, and we are leveraging scale. The digital channels of the group account for 30% of our sales.
Of course, we want. We have supply chain, and we want to improve our service level with new technological platform, and this is an important point of our thesis. Thank you, Richard and Felipe, for your question. The second question from Richard, you said that investments of SBF can provide BRL 100 million in revenue. Can you talk about the long term and what kind of components you're bearing in mind in terms of acquisition? We have different shares in the company. What is interesting to highlight would be our ambition, our how we're going to materialize our ambition. We would like to build a sports ecosystem, the biggest ecosystem in Brazil. A year and a half ago, in practice, until December of 2020, we were Centauro.
A year and a half, we became Centauro, Fisia, and NWB, OneFan, X3M, and FitDance. This shows how we're committed with this thesis. Number two is that the ecosystem, not only our new investments, but these companies majorly contribute to create flow and audience, and with this we sell products. This is what we can see in our partnership with Nike, with Disney, P&G, those. Here we have Corrida da Vale with NWB, so we connect to the runners on the top of the funnel. Also, our OneFan app together with the clubs and what this can generate in the events where X3M participates. Our interpretation is that we want to be a sports company that generate the sports community, and these companies add the ability to providing more communication to these consumers, to this audience.
In addition, this is a source of revenue. I'm very proud to say that this company invested in four companies that will sell BRL 100 million in advertisement, sale of events, and sale of marketing. This is just the beginning, and we can see a major growth opportunity in revenue growth in all of these investments. Well, this year we would like to focus on the connections amongst all our companies even more than investing. We went through a sprint of acquisitions, and now we're going to organize things, and we are going to focus on connections. Of course, we're always paying attention to our target of creating this ecosystem. If opportunities emerge, we will pay attention to them. Thank you very much, Richard, for your question. Oh, here we have another question that I can answer from Eric from Santander.
Good morning, and thank you for taking our question. Congratulations for your results. Could you update Fisia's progress in addition to value store and Nike store? What are the main deliveries that we should expect from Fisia during the first semester? What about logistics progress?
Number one, Fisia's first priority is advance in direct consumer, and it's based on the progress of nike.com. We commented what is coming, like apps, service levels. For the store, there is a major potential. Our value stores are a product, a store which fits the Brazilian market. People have access to a highly desirable brand at an accessible price. This is something that the Brazilian consumer can afford. This is an under-penetrated store format in Brazil.
Last year, we wanted to focus on this channel so it could give us more revenue. We analyzed gross margin. We saw what is cross out and rebuy, and now we're accelerating the opening of these stores which present a sales potential and a brand connection with consumer that is special in Nike stores. Today, there are no Nike stores in Brazil. We will open the first Nike store in 60 days, and now we are going into the Brazilian market with these Nike stores that are 800 square-meter stores that will tell the story of the brand and will also tell a story to women and connect with this public. Today, there is room for the brand to do much more. Fisia, there are two major integration processes. One would be the technology platform that is included.
Part of the flow is being tested and there are a number of progress in addition to the development of the Nike app in terms of logistics. We are going to do things in stages. This year, we will open a new DC in the Northeast and service centers in São Paulo and then in other capitals. As you know, we have three points to improve the digital service level. We want to improve the size of our distribution centers to deliver more, to have service centers in highly dense cities like São Paulo and Rio de Janeiro to deliver faster, and three, to develop ship from store and advance in important cities that are not close to these areas. Everything is underway, but we will complete our logistics development next year because of the pace of the execution, because these are major programs.
We have the connection of WMS and because of the rationalization of capital. We are strongly considering the company's situation, that is the company's high leverage, and we're working within conservative scenarios. Salazar, now I will hand it over to you so you can talk about the gross margin.
Well, Pedro, Eric's question, how should we see the dynamic, the gross margin in the year? How can the exchange rate impact the margin visibility now, operational cash? Here we've seen a sound EBITDA margin. What should we expect throughout the year regarding this dynamic? I am going to be repetitive regarding what we have been mentioning. Yes, we continue anchored on our past comments. Our gross margin should not be different from what we saw in 2021. The exchange rate has been hedged throughout the year.
It was hedged at an exchange rate above 2021. The exchange rate started rising at the end of last year. We preempt the currency nine months in advance. This could negatively impact the margin, but the growth of share of DTC in Fisia offsets this effect. Now regarding the EBITDA margin, we will carry out strategic investments in certain areas of the company. I believe that we mentioned this logistics. Pedro elaborated a little bit regarding what we're going to do. We're investing more in marketing and branding, especially in Centauro, and this will increase our expenses. The operational leverage offsets these expenses, and our EBITDA margin will be very similar than that in 2021. Yes, we still continue anchored. We do not expect any significant changes regarding what we mentioned beforehand to you.
Now, there is another question from Maria Clara from Itaú.
Two questions actually, one regarding sales perspectives and one profit. Profit I've talked about. How do you see sales on Q2? Do you believe that the sound pace of Q1 will continue on and will be sustainable?
Maria Clara. Well, yes. Obviously. Although I don't like to say that we've scored a goal before the ball goes through the goalie. But yes, we still have two months ahead of us. The pace in April was excellent and, Fisia continues thriving. We've recovered our brick-and-mortar stores, and the digital channels continue with good performance. So far so good. Okay, Pedro. Pedro has the floor.
Irma, Goldman.
What are the other initiatives mapped by Fisia?
I think I commented on this. In the digital channel, we have the platform. We build an app, not only Fisia, but to improve the service level in Fisia, Centauro, and also the expansion of the NVS, which are prospects. We are surprised with the first one, we have a sound expansion map and Nike Store. There are a number of things for the future, like connection between Fisia and the group. This is just the beginning, and we are in the beginning of a story. Number two, Nike is a leading brand in Brazil. Well, how do we define this market is a matter. A number of products, not only from Nike, but also from Nike. These are products that are not necessarily used to practice sports. Yeah, they're sports products, but this is a market that mixes with fashion.
Some people buy Nike sneakers, and they practically replace brown shoes. People are using sneakers to go out to work. This market is much bigger than a sports market because we are disputing together with the fashion market. I see this as a major market regarding segments and publics. One would be our public. A public with less purchasing power. With Nike, we can sell past collections that are more accessible products. There is a space of growth in the women's area. Sometimes women have difficulties in finding Nike products for them. I believe that some partnerships will help us, and there is a growth potential with casual. Yes, we have relevant players. There are channels for this, and I believe that Nike stores would be a way of expanding this reach.
Yes, there is a lot to do, and it is, and it's important to say this is valid for Nike and Centauro and all of them, that this is an ever-growing market. This is a country that invests 0.5% of the GDP in sports, and half of the population is sedentary. The sports that people most practice, well, is walking. We do have a number of people going into this market every year, especially because of health, which reassures us regarding the growth of this market. I believe that we have opportunities to gain more shares. Three from Irma. Thank you for your announcement. Well, what do you expect from the operations margin? This is a perspective in terms of revenue. We are concerned to invest in the right time.
There is no pressure to deliver this revenue. We are very careful with this. Because the pace of a solid, stable company. Well, here, it's easier to foresee the future. For these companies, well, Fisia or Centauro, we want them to grow at a rapid pace. Well, we believe that we've carried out important movements. We want to share with everyone that we're in this place. Well, we are building an ecosystem without damaging the short run. The companies that are neutral from the cash flow and results point of view for the company. With a great growth potential, because if we're talking about the opportunity from Fisia and Centauro, and they're presenting this type of growth, I can imagine what companies that are still initiating their story will be able to achieve.
These are companies that have just started, and they will grow a lot, and they will generate a lot of value. We have an ecosystem thesis. These companies are here to contribute and to be part of the ecosystem and provide the competencies to the group and vice versa. Revenue is a metric, but perhaps it's not the main metric. Irma, thank you for these three. The fourth part of your question will be answered by Salazar.
Of course. You talked about the competitiveness of the online channel as a more competitive channel. Well, the online channel is more volatile. It's easier for the consumers to compare prices and in a collection. When a collection is over, the retailers have greater opportunities for discount.
When we see Black Friday and Christmas and the collection is an older collection, well, this is something that we see. We see this as a circumstance. This is my answer. We just wanted to give you more color because this is a market that became more competitive on Q1. Pedro, I have a question here from Vinicius Piccinini from Quantitas. He says, "Good morning. My question is regarding default. How are you going to account gains as of Q2, and how will you neutralize the impact? Will there be different prices from digital and online?"
I am going to give you a legal answer here. Well, our legal department has said the following. In order to continue calculating the results, including the losses we had until mid-April, we need an injunction, and these injunctions are issued per state.
Basically, the position of the judges of each state was not to have an injunction, and they gave this to the Supreme Court, and they're going to define if the difference in rate should be collected now or only collected in 2023. Now, of course, we are going to appeal because we want our rights to be upheld. These are resources of 2022, and there will be a legal deposit. Cash will come out of the company. Instead of paying the state, we will put these funds in a legal deposit. So this cost will go through the company's P&L. When the Federal Supreme Court decides if this is collected in 2023 or 2022, if it's in 2022, nothing will happen. I will lose the money from this escrow account.
If the Federal Supreme Court says that this is only as of 2023, then the money from the escrow deposit will go to the company's cash flow. As of April fourteenth, we will report the results as before the default, as if the rate would exist. This would be it. Thank you. The question from Alex Tanaka.
Would the performance accelerate the opening of Nike stores based on the strength of this brand? Could you elaborate on this?
We are excited about opening Fisia stores and Nike stores, which are beautiful and powerful. They are right for a certain public. Nike Store and the speed of Nike Value will be quicker because it's been approved, and we know the value.
The Nike store model is something that we're introducing, so we will go slowly because we have to see what is the right way of coming into the country. Number two, because we also have to allocate capital. This is why we will work in stages. This year, we will open around 20 Nike stores, like 15 Value and five Nike stores, and we will open powerful stores because Nike isn't present in Brazil through stores. The first stores will be opened in areas of great sales potential, and this is a relevant channel this year, especially next year, because we will open more stores by the end of the year, and they will present full potential next year. Thank you very much for the question. Here we Renato Salser, then. Can you open Nike Value stores in the street?
Nike Value is a destination model, and there are stores in outlets in the street. Like, it works this way. Beside a Carrefour, we will start in the shopping mall because our expansion machine is prepared for this. Number two, which percentage of Nike products will be manufactured in Brazil? Well, we went from 40%, and I think that gradually we're making progress. Because of the exchange rate, it's important to bring some lines so that these products are affordable. There are products that. Well, it doesn't make sense to manufacture them here because of the scale and clothing or garments. For example, the Brazilian soccer jersey is manufactured here, and this will be a relevant product this year.
There are products that may be important that perhaps it would be interesting to make them more affordable, but this isn't something that we're going to resolve this year. We deal with these matters very carefully because this involves plant expenses, and we always want to be sure that we're on the right track. We are going to do this, but we will do this carefully. Another question from Wagner Salaverry, from Quantitas.
What about Ari replacing Marcelo, your CTO?
Thank you, Wagner, for your question. This was a structural change. Marcelo decided to deal with a pause. We dealt with this very maturely. Ari is a person that succeeded Marcelo and Zap, and now he's been here for some months with us. We've had excellent impressions. We're talking about different people.
Ari has a pragmatic view that will allow us to progress, but these were circumstances of life of people, and we have to deal with these things. I am very excited with the way we're organizing things. We're rethinking about product, technologies, tribes. There is a lot to do, and Ari is new blood, and I am very happy and very proud because he accepted our channel. Now we're coming to the end, so we will answer the last questions.
Okay, good.
Okay. We have a question from Gustavo Oliveira from Toro Investimentos.
"Salazar, good morning. Could you elaborate on the use of tax credits of Fisia and accounts payables of Nike? Have these adjustments ended or will this affect the cash until the end?"
PIS/COFINS, there are two accounts. There are two bills that we have to pay to Nike, Inc. regarding the price of acquisition. The PIS/COFINS credit and the ICMS before the acquisition. PIS/COFINS will end this year, so we will use all the tax credits from Fisia in the past, and we will pay Nike on Q3. We will end paying this. We will settle this.
The ICMS credit, I will start using this credit when we implement the tax incentive in Fisia. And with this tax incentive, we will use the ICMS credits that we have to pay Nike. This will only happen as of 2023. In a nutshell, fiscal themes, we settle it until Q3, and ICMS we will settle it next year as soon as we implement the fiscal incentive. There's another question regarding our inventory level that it hasn't grown a lot year-over-year, and what about the supply chain after the lockdown in Asia? Well, this isn't an optimal situation because there are delays in the supply chain. This doesn't create problems in sales by and large, because you can see that we have been able to grow and to achieve our results despite these problems.
The only problem is the company's administration becomes more complex because the collections aren't coming as planned. Many times, for example, collections that are sold now, there are products from this collection, from past collections that arrive a bit delayed. We have to be a little bit more sophisticated when it comes to managing all of this. Well, if this were a normal situation regarding supply chain, we could even sell more. It would be an interesting situation. By and large, I could say that, yes, we're facing problems like everybody in the world, and through the excellent effort of CHS people, we have been able to minimize these problems day by day.
We continue selling, achieving our objectives, and when things go back to normal, I believe there will be a potential to increase our sales. Thank you, Pedro. I will hand it back to you so you can give us your final comments.
Thank you, Salazar. We are ending our Q&A session now. Our IR team is at your disposal for any further questions you may have. We are satisfied with the results that we achieved on Q1 of 2020. Now we know that there is still a lot to deliver so that we can show even better results. As we mentioned in the past call, we know that 2022 will be a challenging year. Nonetheless, we're committed to deliver sustainable results in the short and the long run.
As we've started the year with sound results, this reassures us and we think that we're on the right track. We thank our board members, shareholders, employees, and all the partners that follow us and believe in the future that we long for in this company. Thank you very much for your participation in our earnings results call, and I hope you continue following us in the future. Good morning.