Good morning. This is Enviro's conference call, where we will discuss the company's results for the Q3 of 2019. At this time, all participants are connected in a listen only mode. Afterwards, the question and answer session will be open when further instructions for your participation will be provided. Please note that this conference call will be recorded.
This presentation, accompanied by slides, will be simultaneously broadcast via web at the website, ri.contara.com.br and you'll be available for download at the same website as well as the company's earnings release. Before proceeding, it is important to clarify that any statements given during this call related to the company's business outlook must be treated as estimates. They depend upon the country's economic conditions, the performance and regulations of the retail sector and other variables. Therefore, these projections are subject to change. Here with us are Pedro Zemmiel, Gental's CEO Jose Salazar, CFO and IRO and Daniel Hegensheimer, Treasury and Investor Relations Director, who will discuss Santal's performance in the Q3 of 2019.
After the presentation, we will answer your questions. Now I would like to turn over to Mr. Pedro Zemmle. Mr. Zemmle, you may proceed.
Good morning, everyone. Thank you for joining us in our conference call for the Q3 results of 2019. I will start the presentation on Slide 2. We are the largest sporting goods retailer in Latin America and we want to become the major sports destination to the entire sports community, delivering the best product, services and experiences. We are keeping a fast pace.
This quarter, our digital platform represented 17.5% of our total sales, an increase of about 2 percentage points visavis the same period last year. Our effort to improve resulted in a reduction on the website loading time and the improvement on the app app usability. Our app sales were 85% higher when compared to the Q3 of 2018. In this quarter, the omni channel sales reached 11.7% as a percentage of the company's 1P ticket, almost 4 percentage points higher than the same period of last year. We keep developing new omnichannel features that will be impactful on the purchasing decision of our customers.
Another important initiative to improve the quality of the omni channel experience is the RFID project. We have already completed the system development and tagged the remaining store inventory. In the Q4, we will complete store training to establish an inventory process using RFID. With that, our inventory accuracy will be greater and will gradually increase product offerings on the digital platform. Along with our growth, we were able to keep the evolution of our NPS.
NPS reached 83.6%, 85% in brick and mortar stores and 75% in the digital platform. Now moving to Slide 3, we can see the key highlights of our Q3 results. The omni channel sales grew by 61.6 percent, reaching BRL88.5 million. An important highlight is the increase of the endless sales relevance, the mega launch. It allows consumers who went to the store and did not find a product to access the entire inventory of our store.
So through system wide improvement, sales, person training and incentive alignment, MegaLoga achieved 4.2 percent of our brick and mortar sales. In the Q3 of 2018, there were practically no sales in this category. Another interesting aspect of the omni channel is how it has helped our customers to buy apparel online, by allowing them to try it on and exchange at stores products that they purchase on the digital platform. This factor has increased online apparel sales, which once again was a highlight on the quarter and accounted for 46.7 percent of Arctic and Colette sales. We opened 2 new stores and renovated 4 stores this quarter, delivering additional 7,000 square meters of G5 sales area.
In the last 12 months, we opened 8 new stores, renovated 8 traditional stores in addition to almost 18,000 square meters of G5 sales area. So we ended the quarter with a total of 196 stores. Our net revenue increased by 9.9% compared to the same period of 2019, achieving BRL121 1,000,000. Our net income picked up by 20.1 percent visavis the previous year, reaching $47,000,000 Our same store sales adjusted by the World Cup effect grew by 8.2% as a result of an increase of 5.4% in brick and mortar stores and 22% of GMV. Comparing the Q3 of 2019 with the Q3 of 2017, the quarter's result was 23 0.6%, 16.6 percent brick and mortar stores, 69% GMV.
Now I turn over to Salazar, who will discuss the quarter's financial highlights. Good morning, and Pedro, thank you for the introduction. Now moving to Slide 4 of our presentation, we will discuss in detail our net revenue in the Q3 of 2019. So as Pedro just mentioned, we had a 9.9 And if we compare the 9 months of 2019, we And if we compare the 9 months of 2019 with the same period of 2018, the growth was 9.6% pushed by both channels brick and mortar stores and the digital platform. The brick and mortar stores, which grew by 8.9% in the quarter, were boosted by the addition of 2 new stores, by the renovation of 4 stores and by the mega larger sales, which achieved 4.2% of our brick and mortar sales.
In the digital platform, there was a 14.9% increase of the net revenue in the quarter, which can be partly explained by the continued advance of the omni channel. Now on Slide 5, we'll discuss growth, profit and gross margin. Gross profit increased by 20.3%, reaching BRL306.9 million in the 3rd quarter against BRL273.3 million recorded in the same period last year. In the 1st 9 months of 2019, there was an 11.4% increase in gross profit visavisameperiodas in 2018, reaching BRL848 million. Our gross margin had an increase of 1.1 percentage points in the Q3 of 2019 and 0.8 percentage points in the 1st 9 months, reaching 49.9% and 51.1%, respectively.
There were 2 important factors which explain the gross margins increase in the quarter, the Aperol share increase, the impact of ICMS exclusion from the calculation basis of BIS and COSIN. In the accumulated results of the 1st 9 months, there was also reduction of the markdown. Now on Slide 6, we'll discuss operating expense variations. As you can see on the chart, we are reporting an increase in operating expenses in the Q3 and a drop in the 1st 9 months of the year. The increase in the quarter is mainly explained by an effect of BRL14 1,000,000 resulting from INSS credits that had a positive impact on the 3rd quarter of 2018, but not the same impact on the Q3 of this year.
In the 1st 9 months, the dilution of expenses is mainly explained by the ICMS exclusion from the calculation basis of CIBIS MC. Now on Slide 7, we discuss our EBITDA. We are reporting BRL80.6 million of EBITDA in this quarter, a 1.8% reduction when compared to the BRL82 million reported in the Q3 of last year. EBITDA margin was also affected, reducing from 14.5 percent to 13%. As explained in the previous slide, an effect of BRL14 1,000,000 resulting from the asset credit positively impacted the Q3 of 2018, which resulted in a drop of our EBITDA this quarter.
In the 9 months period, EBITDA grew by 60%, reaching BRL268 1,000,000 and EBITDA margin advanced 5 percentage points when compared to the 1st 9 months of the previous year, reaching 15.9%. And this improvement again is explained by the IMS exclusion from the calculation basis of fiscal 'nineteen. Now on Slide 8, I'll discuss our financial results. The financial results in the Q3 of 'nineteen came in negative at BRL2.5 million against the financial results of BRL21.6 million. In the 1st 9 months of 2019, the result is 90.6% better than in the same period of 2018.
The deleveraging resulting from the IPO is the key driver for this improvement. Now on Slide 9, we discuss our net income. We reached BRL46.8 million in the Q3 of this year, a growth of 21.8 percent when compared to the BRL38.4 million in the Q3 of 2018. In the 9 month period, the increase was even greater, a growth of 549.5 percent, moving from BRL25.9 million last year to BRL167 1,000,000 in 2019. On slide 10, we will discuss our cash flow that came in positive at BRL40,700,000.
Cash generation was impacted by the payment of income tax resulting from the recognition of CYSCOFINS credits in the Q2 of this year and the inclusion of tax installment programs of approximately $30,000,000 of PISCOFINS outstanding. Excluding this effect, operating cash generation will be around BRL90 1,000,000. And the cash flow from investment activities in this quarter came in negative BRL4 2.3 million, BRL 70 8 percent higher than the amount in the Q3 of 20 18, basically because of the expansion plan of store and the cash flow from financing reflects the reduction in the balance of factory receivables. Now on Slide 11, let's discuss our indebtedness. You can see on the first graph of the chart that we report our adjusted net debt.
And to determine our total debt, we added the factoring of receivables and tax installment payments to loans and financing. The company's adjusted net debt had a drop of 75.3 percent and a decline from BRL 8.60 2,000,000 in September last year to BRL 218,000,000 in the same period of 2019. So when compared to the same period of 2018, the 2019 figures reflect the positive effect of the IPO proceeds, which allow the company to deleverage and discontinue the use of factored receivables. Now on Slide 12, we will give more details about our investments. We observed the growth in our CapEx both in the Q3 and in the 1st 9 months of 2019 visavisame period as of 2018.
In this quarter, the 78.1% increase is driven by the increased pace of store openings and remodeling and also investments in the RFID project is considered in the other line. That concludes our presentation. We can now start our Q and A session. Thank you for your participation. Ladies and gentlemen, we'll now start our question and answer session.
Our first call is from Elena Villares, Itau. Good morning. Thank you for taking my call. I have two questions. To deliver the RFID of the whole inventory, do you believe that will have an impact on the mix of sales?
Maybe stylefashion will be different. So now that you can reduce your safety stock levels, you might have a better assortment. Does that make sense? Could we have different mixes for sales? And could that have a positive impact on the gross margin because it could maybe sell more or improve your assortment in the style product?
And my second question relates to the brand. We have observed that Knight and Adidas have increased their market share in sporting goods as a whole. Do you agree with that? And if so, wouldn't that be a positive impact because you have a close relationship with those friends? I would like to hear your take on that.
Thank you. This is Pedro. Could you repeat your second part of your question related to the brand? Is your question related to a change in market share and whether that would change our way? We believe that Nike and Adidas have changed their market share.
Do you see that in your sales? Would that have an impact? Would you grow more in comparison to your competitors because of the relationship with your suppliers? Thank you for your questions. So let me take the first one about RFID.
About the RFID project, we have completed as planned in the end of the last quarter the implementation of the RFID system. We have changed processes at the distribution centers, implemented antennas at the distribution centers and stores and we are checking the project. Now, we are developing the inventory using RFID at stores and we're doing this more frequently. The greatest benefit we expect from this project is in reduction of losses and increase of the efficiency. The greatest benefit we expect is the availability of products that is on the digital platform.
So the safe, the margins in terms of stocks at the stores is complicated. It's complicated to count products of the retail stores. So with RFID, we will be we have more accurate stock level. The impact of that, of course, we're not sure whether it's going to be disproportional among categories. I understand your point.
You're talking about apparel. Usually, you have more products left out. But there is also an impact on the SKU of shoes. If you have a given size and a given brand that was not available and it may become available, the first test that we ran did not indicate a significant change in mix. But over time, we may reassess this point.
So, the analysis indicate an increase in sales in the digital platform because of higher stock availability. The second point related to impact on gross margin could be the result of an impact on mix, but also from another effect. We have goodbyed this product and this project in different phases to implement it quickly. We will have just an impact on price in the medium term because of the possibility of working better on markdown. If you have one product left and one size and one color at a store, we need to put these as a promotional item with a markdown price.
But if you have combinations of products that we have left out from different stores, we might rethink whether we can sell these products in the digital platform with full margin and not needing to market them. So in the second stage, we believe that the RFID project could have a positive impact on gross margins. But this was not an immediate impact that we expect, not in the short term. About your second question, there is nothing worth noting related to a changing share of one brand or another. Over time, some brands have provided better gains.
But I don't see any major trend indicating that one given brand will systematically have a bigger share or larger share, we don't see that as a trend. Is my answer clear? Yes. Thank you. That's very clear.
Thank you. Thank you. Our next question is from Inez Lars, Goldman Sachs. Good morning. I have two questions.
1st, could you comment on how or what kind of expectations you have for the Q4? I know we still have important weeks ahead of us, but on the consumer side or traffic of stores or confidence in purchasing. So I would like you to comment on your insights about that. And thinking not just about the Q4, but also 2020, what about the margin? So what kind of evolution you expect?
Do you think that the company will keep on this investment cycle? Or do you plan to reduce this investment cycle? Good morning, Yior Mine. Thank you for your questions. I will answer your questions.
I think we can address some of what you asked. About the Q4, there are 2 points that I'd like to comment on. First, since August, we have not have comparisons against the World Cup that makes a lot of difference. In the Q3 in August of September, these months was much better than July when compared to last year. And that's a good indication related to what is going on for Sao Paulo.
And we don't see why the positive trend would not continue. Of course, this is retail and we fight for sales on every day. There's also Black Friday and Christmas. So we need to wake up every morning and buy for sales every day. But since August, our performance has improved when compared to the World Cup figures and there's no reason why this shouldn't continue.
There's also a second point that we commented on the release, the earnings release. Our expansion pace has picked up. So we opened, if I'm not mistaken, 7 months at the end of this quarter and between the end of the quarter and today. So this expansion pace also makes us increase the volume in sales. So the last quarter is going to be a very important quarter for expansion purposes.
Overall, this is how it works in retail. But in addition to that, we have a higher number of stores since the IPO because of the IPO. So we are moving in this direction. And your second question about 2020 and reduction in G and A, Looking backwards, looking into the path, we believe that as we will increase revenue, the D and A will reduce. Even with the store expansion, our margin at stores is good and better in compared to the average EBITDA margin of the company.
So every time we open a new store, we have to buy things to expand the margins of Centauro. What we have observed in the past years, looking back, thinking about our history of expansion in margin, we believe that we have recurrently seen that as part of our business as we grow and as we expedite the base of growth, a reduction in GMA and DNA should become true. Thank you. Thank you. If there are no further questions, that concludes the question and answer session.
I would like to turn over to Mr. Pedro Zeno for his final remarks. Thank you. I would like to thank the entire team for their effort and the results achieved in the Q3. Now moving towards the 4th quarter in a very accelerated pace.
To prepare ourselves to Black Friday, we have already began these efforts for now our digital platform and also preparation for Christmas. We have already opened another 7 stores and we have several new agreements. We want to satisfy our customers, develop our team and deliver growing and relevant results to our investors. We want to position ourselves as the major sporting goods store in the country. If you have any questions, you can contact us.
Thank you very much for your participation and your interest in Santaro. See you next time. This conference is concluded. We thank you