We're now presenting the team. Thiago Borges, Director President. Elias Leal, CFO and IR. And Caio Barbuto, IR and Director of Investment and Treasury. We'll now collect your questions. Remembering that to make a question, use the Q&A icon on the platform in the bottom of your screen. Go to our first question from Guanais from BTG. We'll send a command for you to turn on your microphone. Go ahead.
Good morning, Thiago, Elias, Caio, and Cassiano. Two questions from our side. First of all, if you can comment on the excess of gold stock which is on your balance, and for how long this will guarantee your production and the pass-through prices during the next few months in the gold.
The second topic, if we can examine this, if you could comment on the position of prices in the assortment in Life, so we can understand a little bit how is the product production of the lower price entry-level products and the higher price products, and how do you see the possibility of pass-through in prices over the next months.
Thank you, Guanais. This is Thiago Borges speaking. It's a pleasure to be talking to you again. Thank you for the question. It's very important what we're focusing on here in the, in the business. It's a competitive advantage of the company, our stock of gold above that of our competitors, which gives us space, a little more space to make our strategy of price positioning and price marking and the adequate timing to not surprise negatively our clients.
In our considerations, we mentioned that we had eight months of gold in the raw, in the raw material, and we need a little bit less than half of that to run our productive process. Over the year, we're going to be making some meltdown of finished products in gold, and also to lengthen a little more this necessity to avoid the necessity of purchasing gold from third parties.
In the beginning of this year, we have gold raw material in the format of finished. The gold which we have in these two formats and the rate of exit of the sales of the products and the purchase of new products, of new raw material, whether it be in the format of purchasing in our stores.
We also have a long period of time to position ourselves in a price to pass this through to the current levels of the price of the commodity of gold. We have 18 months, at least 18 months, above that period of time to be able to reposition ourselves with gold prices. We have quite a bit of time to adjust to that.
The second question has to do with the prices of Life, this also applies to both categories. To share a bit of a little of the levers we can work on at home and historically to these levers. The first thing is the product engineering. It goes back to X or Y to offset to improve our profitability.
To cite a few examples of what the clients can do, we can design lighter products from zero. We're gonna talk about lighter bracelets, lighter products where the design does not compromise the quality of the surface of the product, and the touch of the product permits us to look at this perception of value.
It's a very big job. The methodology of production. Historically, it was preponderance and about the direct conditions. When we saw everything that's possible to in each one of these methods, due to the direct function, we make a product which is 20%-30% lighter just by the product production methods that we utilize.
In gold, we have invested in modeling more products to use this technology, hiring a team of 2D and 3D team to get the current portfolio of jewels that we have, and applying this technology, maintaining the continuity of the factory, and passing this to the store with a product with 20% or 30% less metal, avoiding the need to repositioning our prices, looking at these commodities.
We can also increase our margin about monetarily. This is the other alternative that we have in-house. We see this, and we're always looking at these possibilities. Another lever that we have is the internalization.
We look at the vocation of the factory and what we have purchased from third parties instead of producing in-house, and invest again in the process of prototyping and sampling and planning the demand so that we can make our products in-house. 'Cause in-house we're able to have a better control than in the portfolio of the subsidies. We have these other alternatives.
Also it's worth mentioning that we have categories which we do within the jewelry category and the subcategory and other subcategories. In principle, we do the management of a markup of jewelry as a whole is going up, and also diminishing the necessity of increasing prices and the positioning of the Life products, and vice versa as was last year. We have a multi-metal company, and in this scale.
We have also silver, and we work with the dynamic of long-term and short-term, looking at these questions. In the subcategories within these metals. We see within Life, for example, products which are more comparable with the competitors, which represent a certain percentage of our prices, 10% or 12% of our company.
These we have a comparability with the market and better elasticity in terms of passing through prices. In the commercial products and the collections within Life, we have a elasticity which is slower in the repositioning of prices. In the categories within Life and Vivara being worked on, and is cost plus structure in terms of what comes with the commodity prices.
Beyond that, we have the work being done, a project being done of the optimization and efficiency in manufacturing so that we can have a reading of the demand and the production line which is more constant, and products which are continued, and collections with a better planning permit that the factory itself, we are able to have better efficiency, and that we have efficiency in the factory, and avoid also having to raise prices in the short term.
I gave you a long answer, but, it's a little bit more the rationale in relation to how we see the pass-through and positioning of prices. As we look at all of the initiatives, internal initiatives, and we balance all these things in the medium, the short, and long term.
In the first quarter, we have done a price positioning with these brands in different magnitudes by category, and we're monitoring the elasticity, and we see space to continue raising over the year if the commodity prices remain at their current levels.
As we look at what was done, it gives us visibility that the management of the markup, when we look at the short term, we look at levels which are equal to those which we are practicing.
Very good. Thank you very much. Thank you for the two answers.
Thank you, Guanais .
The next question is from Danniela from XP. Danniela, go ahead.
Good morning, thank you for taking my question. Welcome to the first official results call, Thiago Borges. I have two from my side. First, I would like to explore a little bit more your comment you made about, I think it was on the video, about the opportunity for the reduction of stocks in the stores and the volume of pieces.
Also connecting this comment with the, as you'd mentioned, with the expansion of the affiliates and the soft guidance which you're giving, and the acceleration on the number of stores, even in this more challenging scenario of raw material costs. If you can look at similar levels or even higher levels of profitability.
What we can imagine, what we see in the way of opportunities without compromising your sales since we see this inverse movement in the last year and a half, and understand a little bit what is being done to improve that this can be done without compromising the sales. Talk a little bit about this point. Also looking at Life, I'm gonna go back a little bit to this subject of competition and its position.
It would be good to understand a little bit more about how you're thinking about the strategy for that brand. We see Pandora very strong in this question of the Moments, of their Moments in the bracelets and charms in pieces which have been very strongly involved in that. We've also seen that Life is a little bit
These commercial lines, and this, these angles in the Moments line, but also looking at this focus in the windows, we see this point. I want to see what's your strategy in these different categories that you mentioned. If you could give a little more, a third, but that's connected with this question of Life. If you can also, comment that you didn't cover in your first question in relation to the levers to evaluate the new composition of mixtures of metals in a global way.
The alloys which are covered in the composition of these products, is there any metal that isn't silver or gold, and how do you see eventually a new line in this direction to pilot this product with a mixture which is cheaper and a covering which is more premium.
With that, I'm gonna dive into this with the reduction of our stocks in the stores, and I'm gonna continue to talk about the strategy of the Life brand and the alloys that we'll be utilizing.
Hi, this is Cassiano, and thank you for the question. In relation to our vision of the management of our stocks, we look at an overall view on the evolution. We look at these categories of products, and it's important to mention that our product, so finished products, is two-thirds of our total. We look at the overall supply chain management and looking at the total value of our stocks. We're also working on two fronts.
The first of them has began with the demand and the increase of the visibility of the projection of the demand, as well as the model of supply of the stores, which is the assortment of each store. The second front, we're talking about the policies both for raw material as well as product, finished products and the availability of, and the use, and the employment of capital.
Another front is the consumption of both in raw materials such as gold and chains, as well as the Life lines. The fourth front is looking at the continuous with the reallocation of pieces, as well as the lower performing items. In the version of our policies covering, we have looked at the current numbers looking back to 2006.
The gold, as Thiago mentioned in the question, we have today eight months of stock, and we plan to reduce that by half with looking at the need of suppliers and the different components of raw material where we have approximately 11 months of stock. The reduction will go through the analysis of the materials, searching for the materials with development of new products.
This makes the product more lengthy, and we have the potential for an expressive reduction of these stocks. To answer your question about, in terms, what you can expect of this work with respect to total results of stocks, looking at both the finished products as well as raw material, we see potential in this first movement to go back to the levels of historical levels of coverage, 400 to 450 days of stock, in a gradual way and in controlled way.
We have, since we have an expressive seasonality during the year, and the comparisons are always with periods, with comparable periods. Once again, we have success, and we go to the second movement, which is to look at the work, the continuous work in the management of products and the integral management of the stock of our inventories.
Thank you, Cassiano. Going forward, as far as your strategy for Life, what we see is the movement of maintaining Life with the perception of a complete jewelry store. Beyond the categories of collectibles, we also have collections, commercial collections and a public which is a more wide-ranging public. The brand it completes 15 years this year, so we're at this moment that the brand in this history of Life to make it a special year in terms of launching products.
The characteristic, as we always comment, to be very much a presence used for presence, and it's also a brand which has lots of variations in price. Connecting with your last question, it was a question of the alloys. It's a duty that we have to study this question always and go back to with the answer as when I say we're studying this question, as these other levers also, it comes in as one of the levers that we have.
And we have to see what is the positioning that we have to do with the understanding of having a complete understanding of what this means in relation to the dynamics of this market and with respect, and having a global operation and looking at the company in the different movements.
We think there is space to study this, these alloys, and over the year, getting a little more knowledge about our market. Before we get to this question, there are lots of things to do in-house as we commented in with technology in the factory. In the question of Life specifically, only 58% of what we sell is produced in our factories.
To understand exactly what we have, the vocation in these other 42% to do in-house in the factory, to maintain the freshness in the stores. Also buy something from outside would make sense, but with 42% of could be inferior depending on the investment in our part and in team and processes to be able to get to a level. This obviously will offset the increase of the need for repositioning of prices in the brands.
There'll always be a consequence as we look at. We have competitors, as you mentioned, who's introducing this. Look at the receptivity of this and react to it or anticipate it. At this moment with the testing that was being done around the world and we're very close to this topic to understand the changes in the dynamics of the silver market and how we maintain the evolution of the Life brand.
Differentiating more and more from the Vivara brand, gaining its own life, but maintaining its sophistication of being a jewelry store, which differentiates itself from the other local competitors, and it puts it into a category, or in the costume jewelry category, and it changes positioning it differently from them.
Thank you for the question, and also welcome to you, Cassiano. Thank you, Daniela.
The next question is from Rodrigo Casimiro from Itaú. Rodrigo, please go ahead.
One question from my side, well, a couple of questions from my side. The first is about the gross margin, which is important to understand how it will behave with this gross margin for the third quarter. Was something deliberate on the part of the company, your investment in the fourth quarter with the increase of your turnover of your products which sell more slowly. I'm talking about Black Friday. We saw many of.
How much, in fact, you're comfortable with the strategy that this is a one-time for the fourth quarter, and how much this strategy for the first quarter or for the short term, as you mentioned, will go back to the dynamic of preservation of gross margin, if I understood correctly your first question about the markups in year-over-year and this dynamic of gross margin, which people are very concerned about the price of the commodities.
The second point is the point which you mentioned about the elasticity. This is something which for us here on our side is almost impossible to calculate. How much, if you pass through prices, would affect your volumes.
Specifically in this question of Life, talking about Life now, due to the silver prices, whatever you can share with us about how is the dynamic at the beginning of the year of elasticity. The elasticity is being relevant. It happens, but nothing very relevant due to the markup and the not very high markups that we see in same store sales for Life. These two questions. Thank you.
Thank you. It's a pleasure to interact with you. I'm gonna also invite Elias Leal to help me with this answer. Specifically in relation to the quarter that's beginning. In the management of gross margins, you have the component of the markup.
Within the markup, you also have the way I've started to look at it inside the company, you have an initial markup which you hit, right? Then a final markup, which is a consequence of the discounts that you have to give, and the depth of these discounts and the wideness of these discounts.
If you have to discount 70% on your products and an average discount of 30%, and you have 40% for your final markup. Looking at the data that we analyze here, I'm gonna pass this to Elias.
We saw an entry markup was at the levels that would maintain the falloff of gross margin in the fourth quarter due to the discounts which were offered. The tranquility that we have is entry-level markup and then the discounts which were deliberate for the company to be able to follow this strategy.
Looking at linking this up in the first quarter in the same analysis of markup, already considering the final markup and not just the initial markup, in the first quarter, we see stability in relation to the same quarter in last year, even though the gross margin is not just markup.
You have other components in gross margin which influence, such as CMV, which affect the final markup. We have the component of optimization of the factory, costs of importation, which do not necessarily are in the management that we do of the markup, which we are not able to look at product by product. Daily, we have markups.
If we had to include these other effects, we would not have the precision that we have in the management of the markup as we look at this at the closing of the month and several other effects. These other effects, which are principally the effect of the optimization and efficiency of the factory. In this quarter, the data which was analyzed in the quarters of 2025 of increased production.
We've had a factory which is more efficient in the first quarter due to the optimization of stocks and the planning of the factory. As far as gross margins, that's my comment. Before I pass it over to Elias, I wanna as far as elasticity, this concern that you commented on is very valid.
It's obviously something that we monitor, and there are categories in Life in which we see greater elasticity than in others. In looking here, for instance, a category by category and price level by price level, understanding what we're able to position without impacting too much our volume. The strategy of the jewelry, because jewelry, we have a greater elasticity.
In Life, a little bit less elasticity. We're gonna manage the gross margins of the company as a whole. These are company-owned stores. We have to look at the P&L of the stores, and we have to look at it store by store, but we also look at the company overall.
Not taking away the necessity of looking at the gross margin, specific gross margin of each category. For each one of us, there are other levels which we can work with to demystify this. I'm gonna pass this now over to Elias to talk a little bit more about gross margin.
Thank you for your question. This is. We've been able, in a way that is very consistently, to be successful in our strategy of the fourth quarter from last year. We looked at. We saw this on Black Friday, principally, where we selected several quantities of items that we always put on promotion, on sale.
Thinking that how to put together the strategy of optimization of stocks with the strategy of looking at this, using this commercial period in our favor. Looking differently this year to do a bigger acceleration in the amount of sales and concentrate sales in these products.
We gave a bigger discount on this level of products, which we put on sale, and it was very, very successful in this, in the measure that sales were concentrated in these items. We see here at the beginning of 2026 a return to the normal level of sales and pricing. On Black Friday, normally, we had a very relevant increase in quantities, you know, which is no more this year in watches and jewelry.
We had excellent receptivity for our products, and we saw also very important changes, Life growing almost 50% year-on-year in the digital. Also what Thiago brought, what's important in the category has as a present category, the presence market and online sales has brought to Life.
Now looking at 2026, the first quarter, as we know, is not so representative of sales when we look at the whole year. We have already done the price adjustments in Life, and we also have several other adjustments over the year, during the year, which is part of our strategy as it always has been. Looking at 2025, we understand that, as Thiago said, we maintained our markups, which are stable.
As we have been maintaining. We have opportunity to be more efficiency in our gross margin since in 2025 we had the factory which was still in the process of ramping up and gaining efficiency and maturing of the professionals that we've hired. Even with the subsidies, it was very strong in the third quarter and the fourth quarter.
This comparability compared with the first quarter, where we have this comfort to us. I think that gross margin is part of the value of our day-to-day here, but we're also comfortable with the route for 2026, also talking about in t
his first quarter. Okay. We're gonna go on to the next question now. Giordano, please go ahead.
Hi, everybody. This is Joseph Giordano. Thank you for taking my question. Welcome. To those who are new to the call, I wanted to explore with you a little bit more. In the focus on the generation of cash and the question of looking at this focus, focusing on the tax credits and the assets of the factory, it was clear that there'll be some pressure on margins due to that.
I wanted to look at with you, Thiago, a little bit about, as you mentioned at the beginning of the call, that you run your stock with the raw materials that you have with Ginga's reasonably over eight months versus four months with eight months to pass through prices. A cushion which is quite long of stock. I wanted to see how we should look at this and the credits and the discounts on the revenues over time.
We understand that last year was perhaps a wider band than it might have been. This year, once this focus is consuming the stock and generate cash, I can quantify up until where this might fluctuate and what would be the value of the regime of this line. Compatible with that is how do you see your stock's multiple from current levels in the long term. We also see there's a movement that extends these credits in the long term.
Hi, Joseph. Good to talk with you. As you mentioned, the answer to your question, and that's going to pass it over to Elias, we've tried to, in this beginning of a year, to represent a little bit of how we analyze the business internally. Our management of the markup, which we spoke a lot, quite a bit about in these last answers, we don't take into consideration the subsidies and credits. That's something which is considered by itself in our management.
We're going to, over the next quarters and the next years, show what we have to do with these subsidies and credits and to see what we need to do with these gross margins, which is something that we manage internally. This dynamic of sometimes having lots of subsidies in one quarter because the factory had a bigger need for production.
Which was the sale associated with the final clients, and this winds up bringing a result which is not reflected necessarily in cash. This oscillates in these quarters. Going from the level of the last two years, the subsidies went up from above 7% to 8.5% of revenue in 2023. 8.4% in 2025, but in the other years, it was closer to 7-7.5%.
In 2024, we had an increase in production. In 2025, beyond that, we had the entrance of the distribution center in Espírito Santo, which had additional stocks, carrying stocks, which gave us helped us to maintain this level, even though in the second semester, we had a level of production which was more in line with the sale and reduction of stocks.
When we look at 2026, these credits and subsidies in the year of 2025, which was BRL 330 million, when we look at the DC in the Espírito Santo in a full year of operation and the needs, the current needs for, with all of the previous answers, for the utilization of gold and the raw material that we have of eight months of stock.
We see that this volume, absolute volume of credits between BRL 30-40 million, is more or less what we should deliver for 2026, assuming our premises of growth and internal production. With that, we also have an impact in all the lines and comparisons. Let's try always to isolate these two effects, both going up, as was the case in the year of 2025. This year helped us.
We took out January for the effects of, and the fourth quarter, which winds up changing it, but the annual vision is the same. An important point is the metric of generation of cash. How much of the EBITDA will turn into cash in a recurring way? I think that historically, we have a level in the years of 24% and previously, which grew up quite a bit.
This is another indicator that we're able to accompany of how much EBITDA will turn into cash, and it's a number which I have seen will have bigger demand from the board for the cycle of cash conversion and the working capital compared to net revenue and cash conversion.
Obviously, the company which is ready to turn into net cash again. This vision of generating cash will not be a necessity for indebtedness, gross indebtedness, but also for the health of our business and the EBITDA to bring higher levels of return. To generate the same earnings with capital gains as well as the business which is higher than in the previous scenario.
We're going to be bringing this indicator to the table, and we're gonna be starting to communicate this more clearly. Just to finish up what he's saying, the effect here that the reduction of stocks, of inventories, and this lower level of use of the factory, which we've been having since the first quarter of last year, this is reflected in our subsidies.
We also see, starting from the second quarter of last year, this revenue from subsidy being lower and also being offset in the second quarter by this DC, this distribution center in Espírito Santo. The third quarter of last year was very strong with these subsidies. In the first quarter of this year, we have a lower production, much lower production than we had last year.
We're producing roughly half of what we produced last year. This is partially offset by the Espírito Santo distribution center. We have a lower level than we had last year in nominal terms. Over the year, this revenue, the production of the factory should maintain the same level, more or less the same level that we had in the second, third and fourth quarters, and the Espírito Santo center to offset that number.
We think that this number will be very close. Naturally, with the reduction of these inventories producing less than I'm selling, we have an effect, the opposite effect than we had in 2024 with the deferred income tax being deferred. On the day we recognize the sale at the cost of the product and the unrealized profits, the CONIPA and are in fact passed to our financial statements.
The accounting effect, which means that we have this remission of this deferred tax, but does not have any cash effect on business. The effect, the cash effect is brought by the efficiency of our inventory efficiency, the effects of the subsidy, and not of the IRPJ, of the import income tax effects. The tax in our. An effective rate when we look at the cash rate of the company, it should remain very close to what it was in recent years this year.
Thank you, Joseph. This is Cassiano. Also complementing the last part of your question, we talked about the expectation of time to arrive at our historical levels of stock, of days of stock being 400 or 450 days.
We see this as a gradual process, continuous process with greater responsibility due to our rhythm, our sales rhythm, our velocity of sales. We see a horizon of 12-24 months for this movement, and then we're gonna look at the second movement, the management and efficiency of stocks, of inventories. Thank you.
Thank you very much. Next question is from Citi. João, please go ahead.
Thank you, everybody. It's good to see you here. I have here three quick questions. The first is looking at the 2026, the effect of subsidies due to seasonality over these different quarters. If we understand that in your mind, is this due to the increase of commodity prices, the management of markups, what should we imagine in terms of repass, pass-throughs for the gross margins during the year?
The second point is in relation to expenses. When we saw the plan elaborated to compensate the increase in the commodity prices, we saw adjustments in expenses. We naturally have an increase in marketing expenses. I want to understand your thinking about the expenses, these expenses in 2026.
Finally, if you allow, we see this credit of PIS/COFINS, the PIS/COFINS credits, if there's more opportunities looking at your point, Thiago, in relation to these, cash. The reduction of inventories, how do we imagine this conversion? Is this a recurring thing that you wanna have, or do, to understand your management, your mentality regarding that?
Hi, João. Thank you for your question. The following, the gross margin for the year trying to bring this vision to, of these subsidies, stable subsidies, has a series of factors which influence it. Wanna remember here that we did during 2025 and 2026, a year in which we gained more efficiency in our factory, starting with we're producing more, and over the year this has helped the efficiency of the factory.
We had a Black Friday, which was very promotional, as we mentioned. When we look at breakdown by categories, we see that between jewelry and watches and life, that in this process we see commodity prices going up. We have an opportunity to elevate our gross margin.
In the jewelry line, for instance, beyond the values, we have a buffer, a huge buffer which we can increase prices, reposition prices where we understand which is the correct price, and gain margin in this period of time. In life, this work of generating value is very much a very hot theme in the company. We're developing a lot of new products. We're changing several products.
The internalization, which began in 2023, and today we have a labor pool with a great deal of maturity. Which also brings us the comfort that we're gonna be able to bring all the knowledge that we've gained over these years with gold and apply it to the silver market. In watches, the negotiation that we've done to increase our markups has continued and continues this year.
During the year, it's not a year in which this will be the biggest highlight in terms of gross margin, but we understand that there are opportunities for us to bring increased gross margins, starting with the work that we've done in 2025. Afterwards, we're gonna look at other lines.
We see that we've had more marketing expenses in 2025 than we had in 2024, and I think we reached a level, a more stable level in that line, about 4.5% of our net revenue. We've had less inaugurations in 2025. We're gonna have more in 2026 which will have a pressure on our sales force expenses, all to gain in the other lines of expenses, repeat expenses.
We have the line of logistics and freight, which is very strong in the first quarter of 2025, which will not remain the same rhythm in the second quarter of 2026. We did a lot of reallocation considering that the first half and this too will continue.
When we look at the whole year, we see this more in line with revenue. The other lines we'll see in the quarter, such as CRM, which has increased the expenses in the fourth quarter, bringing a little bit less expenses during the rest of the year. One thing winds up with one question or another, the potential to continue maintaining or gaining profitability during the year.
Looking at our cash generation, this is the biggest highlight of the year. This should be the highlight of the year. We have a big opportunity for us to continue growing and maintaining the profitability, high level of profitability. At the end of the year, we had lots of returns, and we do this generating cash. That's what we've been working on, and these are the points which we can expect for the year.
As far as credits and taxes and PIS/COFINS, this is part of the business, and this is part of any company in Brazil seeks tax efficiency and how to optimize our operation. However, we have. There's nothing structural looking going forward. These are incremental changes.
Thank you for your answer. What do you think is possible when I think about cash conversion of the inventory and the cash cash cycle, what is the conversion of cash that you see?
This year, naturally, we're projecting to purchase less raw material, especially gold. With the optimization of our inventories, we hope that it will be a year. We expect it will be a year with cash generation higher than we saw in as a more stable period. We see a year in which the percentage will be higher during the year.
Looking forward, this should also return to levels which were lower and more similar to what we've seen in the past. We understand that there's lots of space to hit a number, a percentage number, but we understand that it's gonna improve a great deal the level that we see today.
Thank you. Next question is from Eric from Santander. Eric, please go ahead.
Good morning, everybody. Thanks for taking our questions. The first question, Thiago, you mentioned about the release and in the release you mentioned that in the third quarter, you will come back to a dynamic of pass-through of prices.
I wanted to understand much more from the standpoint of the consumer, how do you observe this in practice, the elasticity during 2026, if you had consistent growth? How do you understand this will bring any impact in the first readings at the beginning of the year? I'm not looking for guidance, but much more to understand your perception of the consumers.
Also if you can look a little more at this window of 18 months of the pass-through of prices. How can we think about this eventually for you to look at the raw material costs, if there's any opportunity, is this something that we should see, should keep in mind?
Or due to the volumes of inventory, the high level of inventory that you have, especially in raw material, if we have very little chance of seeing movements in that direction. Thinking much more about the context of raw materials should continue with this level during the rest of the year. Thank you.
Thank you for your question. I'm gonna start here, and I'm gonna share it with my colleagues here. I think that from the standpoint of the consumer, when we talk about jewelry and gold and in the Vivara brand, that we see elasticity at the price increase will obviously be very positive. What we're seeking in terms of quantity, there are categories in which we have stable quantities, and we see this within gold, a resilience, a very high level of resilience in this first quarter.
Obviously, in moments such as this, in the recent past, these were not things that we lived through, so we're looking at when in this category we're able to go to this excellent level of elasticity that we have seen. We're looking at this period, more than 10% of our stores, we visited more than 10% of our stores, and we only see this has been decades of work with the team of the founders of the company.
Closing these points in the principal shopping centers all over Brazil, corner stores in the principal corridors. This is something also that has to be taken into consideration, obviously, when you're positioning your price and your brand. There's no competitor, national competitor in our price points with the capillarity anywhere near the capillarity that we have.
We understand that the change, the locations, when we look at the top ten stores, you have stores in the north of the country, stores in the northeast, which are not necessarily in the principal centers of the Rio-São Paulo, BH, axis. This is a company that works with all of Brazil in a relevant way.
In our conversations with shopping centers and the operators of shopping centers, we see clearly our relevance within the mix and the categories of the shopping and working always to give us excellent condition, excellent locations because they know that this for the public of the shopping is good. It's good for the shopping center. On this side of the pass-through of prices, we have sailed in an ocean, a very good ocean when we're talking about the gold market.
When we talk about silver, it's an ocean in which we also have. It is also comparable. Not to be repetitive, but it's something that we have seen in some categories and subcategories within a high level of elasticity. We also have a work of product engineering, which in our reality has to be done where we can position our collections and our commercial areas in a way which we're able to offset some of this effect in the products as well.
Our next question comes from Bank of America. Bob Ford, go ahead.
Bob Ford from Bank of America, please go ahead. Thank you. Good morning. Thank you for taking our questions. As you're migrating to a bigger investment in marketing, how do you measure your return on investment? If necessary to migrate to more, how can we understand these investments and how long this process would take? Finally, how many stores, which of these recent store openings compared to previous store openings?
Thank you, Bob. We've gone back to making the investments in marketing aimed at the branding. These investments do not have the same metrics of return on investment in the short term and the conversion that we see in digital marketing, but they are very important to build the brand in the long term, maintain the strength that Vivara has built, and the awareness in the mind of all of our clients.
All of these branding investments, whether they be in the channels, in the physical channel, thinking about events, et cetera, or whether they be in the digital world, they all have long-term returns. When we see what happens on the growth of the digital in the quarter, 82%, almost 82%.
This investment has come very much anchored in the investments in media and performance, which we saw in the fourth quarter, and also in the new app, in the personal shopper team, and the higher availability of stores, where we also maintain a return in our investments, digital investments above that which we've seen in. In looking at the branding, we see a separate measurement.
The behavior, I'll pass this over to talk about this a little bit. We see that these, the previous stores of Life, the previous store openings of Life, since they've gone into smaller shopping centers and shopping centers in the interior, they start off with a lower level of investments and we.
They have a lower expectation of return on investment. We understand that they will offer an opportunity that we always projected above 35%. What we've seen in practice is that these stores have reached their maturity more quickly than we thought, even faster, even ahead of the third year.
Which brings us the confidence, the comfort that even when we put a Life inside of a shopping center which already had a Vivara, we see the combined sales of these two stores improving. The grouping of 2023 and 2024, but also the previous harvest.
Previous store openings have quicker and more quickly reached the maturity that we projected and which is necessary to hit these return on investments of 35%-40%. This gives us comfort that we have space for a lot more Life stores in Brazil, and that's why we've made this guidance higher than what we had in 2025 of 55-65 stores.
That a lot of these store openings will happen in shoppings where we already have Vivara stores and where we have identified potential sales in shoppings, how much we can sell Life even with these Vivara stores in the same shopping.
We open a shopping store, a Life store in these same shoppings, we have a better performance than we had previously by itself. We're very satisfied with the behavior of these 2023, 2024 stores, and we're ready to open up more stores going forward.
Thank you for your question. This question of new alloys, we're gonna use the sequence of understanding all about the product engineering and the types of categories, and the alloys are within these studies on an ongoing basis. We have the advantage, a very big advantage that we have a factory.
We're able to test and react very quickly. It doesn't seem to be rocket science to evolve to alloys which have a positioning and a perception which may be gold-coated or rose coatings, and you have excellent receptivity by the clients. This is something that we're prepared to react as necessary.
This will not require a bigger investment in production. No. The production process where you create this alloy, what you have to do is test it, test the quality, the reception. I think that in the production process, understand that we have a line dedicated to an alloy, to a certain alloy to not have any loss of productivity, but it does not require any significant investments above those which I mentioned. If it was a stainless steel covered in platinum, the same for you?
Yes.
Okay. Today, Life already does platinum stainless steel with platinum. The category specific has already adopted this practice since its founding. Okay. Thank you all very much.
The next question is from Morgan Stanley. Alexandre, please go ahead.
Namioka from Morgan Stanley. Good morning, everyone. Thank you for taking our questions. Thank you, Thiago and Cassiano. Two questions from my side. One I've seen in the video, you talk about the level of interaction of Vivara, of internalization is about 86% and Life 85.8%.
I understand that one of the levers to mitigate this increase in the prices of silver. I want to understand if there's any guidance for you to increase even more this penetration specifically of Life as when we should think about the velocity of Life to reach the same levels of production, of internalized production that Vivara currently has.
The second question is, Elias, is also a follow-up from the previous question. You commented that the ROIC of the new stores is reaching the desired level more quickly than imagined, and I wanted to understand the data that you shared of the return per square meter, showing that the newer stores are growing, but they're growing more slowly. I wanted to reconcile if you are in truth if you have the ROIC truly lower or is there another explanation for us to be able to make these numbers tie up?
Thank you, Alexandre. This is Thiago speaking. Afterwards, I'll share this with Cassiano and Elias to add. The question of internalization, we see space to continue evolving in the Life by Vivara even as much as the Vivara itself, which is 86%.
You have to naturally invest in team, in the design, product design team, and also investing in the model of supply, the development of the collection. The lead time when you buy a finished product is lower than the lead time when you develop a product in-house. Naturally, we have.
Beyond these initiatives, we have the initiatives of transference of the SKUs, which today using a new function which competes. We're reinforcing the team for the product development, design from 3D to 2D for factory samples, because this is the initial bottleneck. We also have the bottleneck of understanding the vocation of the factory for certain types of pieces to maintain the parts and the quality necessary to be able to have the receptivity of the clients.
The factory also has to do its homework to know the methodologies and ways of working to bring these parts, these pieces that we have been purchasing outside. We have to sell what the clients want and not necessarily what the factory wants to produce, whether it be by vocation or by volume.
This is our goal, our guiding saying. To be able to produce these products, to not take advantage of the factories around the world and bring us velocity and innovation, and they have to test these stores. The strength of being verticalized and putting these products in-house would be a waste.
Having said that, these percentages that Life has is a good way to go forward, and even this jewelry with a on the long term is also we're able to increase.
Thank you, Alexandre. This is Cassiano. Adding to Thiago's answer, we have had in February a visit to our factory in Manaus, which is a motive of great pride of our. It's very impressive, the capacity to produce different types of products with the same level of quality and flexibility.
This decision to produce internally or outside of Brazil is seen by the product, looking at the possibility, the possibilities, in fact, as Thiago mentioned, space to increase the internalization, both in Vivara, which is 86%, as well as in Life, which is 58%.
There's another possibility for this, and we're looking, we're evaluating the different types of product to see what makes sense due to the allocation of the factory and to start to migrate. As we also have a second opportunity here, which is the integration, even higher integration between the planning of demand and the factory, and together be able to get the best, take the best possible advantage of this investment.
This is a giant potential for us, looking from the store to the client and looking at this motor to make our business more viable. Talking about the Life ROIC, we see the stores which we opened in the past, in 2021, 2022, and even earlier, had a with less data than we have now, but they opened in shopping centers with high potential, high sales potential.
The sales of those stores grew, the brand was consolidating and became well, more better known, and the sales continued to evolve. We see that the return on investment that we projected previously, we actually went past, way past that in the original stores. It leaves us very comfortable that the brand has tremendous potential.
Looking at the products in the more recently opened stores, as I mentioned, they start off with a potential sales which is lower. This is within the other lines of the DD, the area that we're looking at, and also the invested capital that we're putting into that store. We start off with lower expectations in these shopping centers, which have life, they have a life together. It's very important for the construction of the mix. In many cases, we have to have an allowance for to build our store.
Gradually, we see the evolution in our store model, so we can have a CapEx which is lower, continues to bring all of the quality that we want it to be seen, but also influences the size of the store and is reflected in the need for storage of products at each store.
We don't necessarily have to have so many drawers to guard, so we're able to save on the construction cost, which is one of the most expensive parts of building a store, and we're able to take advantage of part of the windows. Take advantage of the air conditioning and the electrical installations in ways that are more efficient in the CapEx per store, which helps us to reach the ROIC that we have projected.
even with sales per square meter that are lower than imagined. When we look at the 2025 stores, it's very recent, and most of the stores opened at the end of the year. For 2024, those stores are on average getting close to what we projected. They're still in the second year, in complete years of operation.
They still haven't reached the ROIC that we understood is correct initially, but we're seeing this improve consistently as time goes by. We're very confident that 2024 will continue to evolve and that, store by store, looking at this history, some have already arrived at the desired levels, and others are on their way. Then 2025 stores are very, very recent.
Looking at 2026, we're gonna bring more details of how these stores from 2024 and 2025 have been behaving and then reaching the return on investment that we projected.
Okay, thank you very, very much. Thank you, Alexandre. The next question is from Felipe from Goldman Sachs. Felipe, please go ahead.
Hi. Thank you for taking my question. I wanted to explore a little bit more the pipeline of innovation in Life. You mentioned that you see a lot of old stock over the fourth quarter to open up the space for the new collections.
I want to understand how should we think about the timing and impact of the sales over 2026, and what will be the counterpart in the stocks, how these new launches will fit into the company's plan to reduce the number of items per store. If you could give us more details about that'd be very interesting. Thank you.
Thank you, Felipe. To start, I'm gonna start with your answer. This is Thiago speaking. Life is on the way of having more and more commercial collections and diminishing eventually the elegance of the collections. This is a route which we're following with gold, more and more expensive, more and more scarce, and the affordable price line, we have silver and chains and so forth of the Life by Vivara in these categories.
This year we celebrate 15 years of that brand, and we are very strong on our launches, and we want to maintain the participation of products which are launched less than 12 months ago, which is our innovation period, to bring freshness and follow the trends in that world.
This last part in relation to how we see this in stores, and we see the first movement of this new relevance of new stores and launches, and even in the category of Moments, we see more launches during the. As we mentioned, the brand is maintaining itself fresh, current.
In our vision, we have to separate the stocks which have to be diminished from those which have to be increased. When we look at the total stock of the company, we know that the tendency is to be reduced, but there are subcategories in which we have to increase because it's selling, it's reacting well, and so we aren't going to be pressured by this total stock and miss the opportunity for sales.
All the Life stores today, which we can optimize the stores by the salespeople being more efficient. We're gonna increase these products which we perceive a good turnover and a good entry.
That's very good. Thank you.
The next question is from UBS. Isabella from UBS. Isabella, please go ahead.
Good morning, Thiago, Elias, Cassiano, and IR team. Thank you for taking my question. I'm gonna be very direct with respect to your time. Two very specific questions as far as the pass-through of prices, which you mentioned in the first quarter. Can you give more detail what was the magnitude of this pass-through and how much you are behind in relation to the commodity prices, especially in silver, which is the principal major doubt that we have.
That'll be great. Also the second question about the debts, the debits of IPI for the tax reform and with the losses of 2021 to 2024. I want to understand what was that in 2025, if this doesn't apply, and so you recognized if these are one-offs or if these are something that we need to pay attention to going forward. Thank you.
Thank you, Isabella. The magnitude of the pass-through of the company that practiced in both categories in the beginning of the year, as Thiago mentioned. Each category has its own revada. Has had a strategy which is in Life by Vivara has separate the performance. As far as our costs, we look at the goal that the factory we have between 20%-30% below the spot price, but it's very important.
These are finished products, which naturally there's a gap which is even bigger. There's a buffer of a finished product which is much bigger than my raw material buffer. As we mentioned here, eventually to evaluate these pass-throughs and consider this dynamic of expansion of profitability of that category. As far as the IPI, thank you, Isabella.
We, as well as many other retailers, the generator of the IPI for the imported product. This was judged by the Supreme Federal Court, and the changes had general repercussions, so we adjusted our operations, and we do the importation of finished products utilizing the drawback. We were able. Therefore, this was done in 2024. In 2025, we already run this new format.
Beyond changing how we do our importation, we've recalculated how much we should have to pay of IPI, and we made this payment for the periods from 2021 to 2024. With that, we close this question in 2025 without any type of effect beyond that which we already reported as a non-recurring expense. The operation in 2025 was done in this new format. There's nothing in this non-recurring adjustment which you need to think about to put into your models going forward.
Very good. Very clear. Thank you.
The question and answer session is now closed. We'd now like to pass the word over to Thiago for his final comments.
Thank you all for all your questions. Always very rich, this interaction, and I think that the call had a very high level of participation as we like. I'd like to close here reinforcing a little bit the enthusiasm and energy which is in the company currently and the level of leverage and growth that we see in our business core business, which is very big. In the category management and as we mentioned, a very high level of generating products and the opportunity for expansion.
Physical stores, we did not comment here. We had the opportunity for e-commerce and other opportunities in relation with our clients and looking at the. It's a company which has strong bases, and it's very difficult to be replaced by its international competitors, and we're gonna strengthen all of these strengths and maximize our returns for our shareholders.
We're very, very excited about the year of 2026 with all that we have to do going forward and all that the company has a solid structure to help us to execute a very, very strong year. We're gonna now close the call, and we're placing the entire IR team at your service for any answers or perspectives that you might have in our results.
We desire you all a great weekend and especially for 2026 for everybody. Have a greeting from us. The video conference of results for the fourth quarter of 2025 is now closed. The IR team is available for any other questions you might have. Thank you for your participation, and have a good day.