Earnings Call: Q1 2021

May 21, 2021

Thank you. Good morning, everyone, and welcome to Sonae's Q1 results conference call. As usual, besides myself and the Investor Relations team, we have on the call Julio Maeda from Sonae MC Paul Simone from Wharton Hugo Martins from Sonae Fashion Luis Motobuato from Sonae Sierra and Cristina Nubayes from Sonae Investment Management. In this presentation, I will basically cover a brief overview of these 1st 3 months of the year. And at the end, we will naturally have time for Q and A as usual. So starting with a brief introductory note, Just to mention that, as you all know, we continue to face a quite challenging backdrop in the beginning of 2021. The Q1 was marked by an acceleration of the COVID-nineteen pandemic across several countries, with Portugal in particular facing new lockdown since the middle of January, which naturally affected the activity of our businesses. This implies that we were practically forced to shut down a great deal of our operations and only food and electronics retail stores were allowed to be open, although with important restrictions such as reduced schedules and limited circulation of people on weekends, as well as the prohibition of sale of certain product categories. Our shopping centers were only allowed to have a very small number of stores open and not had its cinema theaters closed throughout the quarter. We faced the situation until April 2019 when non food stores and shopping centers started to reopen. That being said, and given this context, we believe that the performance of the portfolio was quite positive as we will see later on. Just before diving into the results, I would also like to give you a few notes on our portfolio management activity, which saw important developments in the quarter. We completed the restructuring of our operation in Vorten, Spain, as you know, which was an important milestone for the company and enables a more focused management of our stakeholder business with the results that we are seeing in the last few months. We also increased our stake in Sonae Sierra, had a significant discount to NAV, to NAV and are now an 8% shareholder of that business. We also launched the partnership between Sonae Financial Services and Banco CPP, which I will also talk about later on. Anton IAM continued to see important revaluations in the portfolio, namely regarding CZI, which is now the company's 3rd Unicorn company. So moving on to the business by business results and starting with Sonae MC. Sonae MC had a very strong start to the year. It continued to follow the growth dynamics of the last few quarters in the context of full lockdown in Portugal from mid January onwards. But once again, the company was able to reinforce its leadership position, both in terms of sales, but also in terms of customer perception and satisfaction. Total turnover reached EUR 1,270,000,000 driven by a 6.6% year on year growth and a strong like for like sales evolution of 3.6%, especially if we take into account the negative calendar effect and the difficult comparison with last year, which registered a sales piece at the end of March as a result of the stockpiling in the first line of the pandemic. This strong topline performance was mostly underpinned by the food retail formats, both online and offline that more than compensated the impact of the forced closure of some of the non food banners. Online sales more than doubled in the quarter, showing that Sonae MC's omni channel customer base continue to grow, benefiting from an expanded e commerce capacity and an enhanced supply chain. I think it's fair to say that our long standing investments leadership in e commerce is clearly proving its merit as the company is in a privileged position to respond to the online shopping demand. Sonae MC continues to be focused on growing its digital footprint with several initiatives underway such as developing different fulfillment models and also partnering with instant delivery services. In terms of profitability, Sonae MC was able to deliver an improved margin. Underlying EBITDA increased 55 basis points to 8.6%, mainly due to its food retail formats, which more than offset the closure and limitations imposed on the other brand, as well as the extra costs directly related with the pandemic, which are still significant or were still significant in Q1. Finally, Sonae MC's net debt at the end of March stood at €530,000,000 €164,000,000 below last year. And this was obviously backed by the company's solid cash flow generation of €239,000,000 in the last 12 months. Moving on to Wharton. In Q1, Wharton also continued to show a very strong performance, taking advantage of the favorable market momentum caused by the pandemic, where we saw the electronics market growing both in Portugal and in Spain, mainly driven by the online channel, but also in this case growing well above the market and increasing its market share. Vorta's total turnover jumped to €272,000,000 at the end of Q1, growing by 17.4% year on year on the back of a strong like for like sales growth of 29.3% in the period. The online operation continues to represent a double digit weight in total turnover, growing 2.5 times year on year with the marketplace being a key contributor to this growth. This consolidated performance remains highly anchored obviously on the Portuguese operation where Fortis managed to consolidate an outstanding top line evolution with a robust like for like sales performance of 28% versus last year and another quarter of market share growth. In Spain, and as you know, we performed a strategic repositioning with the aim of focusing on e commerce in mainland, while retaining a leading omnichannel presence in the Canary Islands. As such, during 'fifty one, Vorsen closed 14 stores in the territory and sold 17 stores to Media Mart. These stores were open until the end of February and the repositioning was implemented as planned. Regarding profitability, the underlying EBITDA grew from €8,200,000 to €17,300,000 at the end of Q1 with a margin improvement from 3.5 percent to 6.4%. This was mainly driven by the soft strong sales growth in 4 gs. As for Online Fashion, at Fashion the performance in Q1 continued to be strongly hit by the pandemic, which resulted in a total turnover decrease of 22% year on year to €61,000,000 This impact was particularly heavy in the Portuguese operation after the declaration of the new lockdown since mid January, which implied a shutdown of all physical stores. From March 15 onwards, restrictions started to be lifted, 1st with sales allowed at the Wicket and later with smaller high street stores allowed to open. And we know now that most stores were only allowed to operate after mid April with very positive post reopening sales. Online sales were critical during this period to sustain this level of revenues as they continue to register strong growth and doubled year on year in the quarter with important contributions from all brands, leveraging a larger customer base, enhanced digital tools and processes and a growing willingness to shop online. Regarding profitability, underlying EBITDA decreased year on year to negative ground and reached a negative €4,000,000,000 which given the context we believe was a remarkable achievement only possible due to additional cost reduction measures that partially mitigated the sales evolution in the quarter. As for ISRG, as you know, we consolidated the company's 4th quarter, so that runs from November to January into our Q1 account. In this quarter, ISRG continued to be impacted by the restrictions to the normal functioning of physical stores, both in Portugal Pen and Spain, which culminated with the shutdown of all stores in Portugal Mainland since mid January. Nevertheless, the last quarter of 2020 was a quarter of recovery with turnover only decreasing 6% year on year to €221,000,000 also with a strong contribution from the online channel, which increased by a factor of 3 versus last year. Regarding profitability, this was also a quarter of recovery with EBITDA reaching €31,000,000 €3,000,000 above last year and a margin of 14.2%, mainly due to the company's cost saving measures during the period. IFRS performance allows for an equity method contribution to Sonae's results of €4,600,000 to €2,000,000 above last year. At Sonae Sierra, the performance in Q1 continued to be high demand for the pandemic, as you know, mainly in Portugal, where the new lockdown forced all shopping centers to practically shut down since mid January, implying further rent discounts. In the remaining European countries, some restrictions were temporarily in place, also with negative impact on both traffic and sales. As a result, total discounts across the European portfolio totaled 38%, with Portugal being by far the country most of it we hit as discounts were in the order of 47 percent of rent. Considering the last 12 months, total discounts in Portugal amounted to 64 percent rent, which compares to 28% in the remaining European countries. Nevertheless, occupancy rates continue to be high with an average in our European portfolio of 96% 98% in Portugal. Regarding valuations, Sonae Sierra does not conduct asset evaluations in Q1 and Q3. And so net results stood at €3,000,000 in Q1. And at the end of March, Sonae Sierra's NAV stood at €897,000,000 basically flat when compared to December, with some adverse FX impacts offsetting the net results in the period. As the restrictions on traffic and opening hours are being gradually lifted, Sonae Sierra is placing a strong focus in close collaboration with its tenants to ensure that the entire shopping center ecosystem is well equipped and well placed to rapidly return to normality, whilst meeting the highest possible health and safety standards in a non channel environment. For SonaeFX, this was a very important quarter as it was marked by the implementation of the new business model for the Universal Guard after the termination of the commissioning agreement with DNP already at the end of 2020. The new business model was successfully implemented during the quarter and the operation is perfectly stabilized. The partnership with Banco CTT was successfully concluded already in the beginning of April and was a crucial step in the development of a new integrated business model leverage to the capabilities of both parties. The business model change implies an interest remuneration on the outstanding credit stock instead of an upfront commissioning on every loan that is achieved. Due to this business model change and as the credit tax book only started being generated in December 2020, the company's turnover naturally shows a discontinuity that will be mitigated in the coming months with the growth of the credit stock. In any case, it should be noted that the company's activity continued to be affected by the reduction in product consumption in a lockdown context, resulting in lower income, especially in business lines such as ATM withdrawals, personal loans and store purchases. Overall, in Q1, turnover stood at €4,000,000 and profitability evolved from €2,000,000 in Q1 2020 to minus €4,000,000 in Q1 this year. It's also worth highlighting that Universal's market share in Q1 was 16.2%, 1.5 percentage points above Q4 of last year. And its digital strategy led the company to have already 470,000 digital clients at the end of March, a 42,000 increase versus the end of 2020. So again, in Financial Services, the business was affected by the restrictions, but better performing better than the competition. Equipped notes to MBS, our insurance brokerage company that registered double digit growth and more than doubled its operational profitability year on year in Q1. As for SonaeIM, SonaeIM's consolidated turnover reached €24,000,000 in Q1, a decrease of €2,000,000 when compared to last year. This is mainly explained by lower transactional activity of third party products, which was partially offset by a stronger performance of the cybersecurity area, which continued to record double digit growth. As for profitability, there were relevant improvements in cybersecurity companies as well, within the line of EBITDA increasing €1,600,000 when compared to a negative figure last year. In terms of portfolio activity and with a cash investment of more than €150,000,000 at the end of March, the company's NAV reached €323,000,000 Apart from some follow on investments, Sonae added a new retail tech company to the portfolio, sell parts and reached important achievements in some of its minority investments, namely at CEDI, which I already spoke about. Fizai announced the Series B round with an input valuation that turned the company into a unicorn. OutSystems that reached the unicorn status back in 2018 announced a new capital raise at an underlying valuation of US9.5 billion dollars which is a strong sign of the company's recent track record and also its future prospects. And already in April, following the secondary market transaction, SonaeIM sold part of its stake in Article, resulting in a gross capital gain of EUR 12,000,000 and a gross cash in of EUR 36 €1,000,000 Finally, NOS. As you know, NOS has already published its results last week. Turnovers likely declined 2% year on year to €337,000,000 and this was mostly driven by the impact of the lockdown in the cinema exhibition business, which saw revenues decrease by 55% year on year. The core telco segment was very resilient and grew revenues by 1% year on year, very much supported by the B2B segment with B2C still affected by reduced roaming revenues. At the EBITDA level, the performance was slightly better with a year on year decrease of minus 0.4% to €152,000,000 with important efficiency measures driving the margin improvement. Net income recorded a significant improvement year on year in Q1 to €31,000,000 implying a higher equity method contribution to Sonae's accounts, mostly due to the high level of negative nonrecurring items registered last year, the majority of which related to the reinforcement of provisions related with the pandemic. NOS continues to have a very sound financial situation with a net debt to EBITDA ratio of 1.5 times and average cost of debt of 1.6 percent and the liquidity position of roughly €500,000,000 Moving on to the consolidated results. In consolidated terms, turnover surpassed €1,600,000,000 representing a 6% year on year increase, underpinned by the strong contributions of Sonae MC and Varden. Underlying EBITDA reached €114,000,000, €14,000,000 above last year. If you recall, non recurring items last year included the recognition at Sonae of a €21,000,000 capital gain from the transaction of Sierra Prime, which led consolidated EBITDA in Q1 to be in line with last year, despite the positive evolution of equity method results at both NOS and ISRG. In such a challenging environment, direct results stood at negative €1,000,000 significantly above last year, when a high level of COVID-nineteen provisions were registered. Indirect results mainly reflected the revaluation of Sonae AM's portfolio, leading Sonae's net results group share to positive ground at €1,000,000 practically a €60,000,000 improvement year on year. In terms of cash flow, operational flat generation in the last 12 months stood at €205,000,000 €31,000,000 above last year. And this was driven by the improvement of operating profitability and optimizers working capital management and also lower operational CapEx in the period. As you know, the last 12 months saw significant and extraordinary increase in M and A investments, which reached €317,000,000 in total and enabled Sonae to increase shareholder position in NOS, Salta and more recently Sonae Sierra. This strong investment in our portfolio was partially offset by €71,000,000 of cash in from asset sale, mainly related to Sonae MC sale and leaseback transactions and also by dividends received of €18,000,000 in the period. All in all, Sonae's free cash flow before dividends paid in the last 12 months and on a comparable basis at a negative €64,000,000 I recall that these figures do not include dividends from NOS, which are temporarily held at NOK. Considering dividends paid in the period, Sonae consolidated net debt reached almost €1,400,000,000 implying €164,000,000 year on year increase. This figure excludes the Sonae asset's tax book of €122,000,000 which is no longer in our balance sheet given the partnership with Saint Vincentiki, which was signed in April. And all in all, Sonae continues to hold a solid and conservative capital structure with a comfortable financing position, which includes a low cost of debt of 1.1 percent and average maturity profile of 3.7 years and an LTV of 14%. Additionally, if we look at the leverage profile of our main businesses, it also remains quite solid and prudent across the portfolio. Sonae MC reached 3x total net debt to underlying EBITDA ratio. NOS, as I already mentioned, maintain a ratio of net financial debt to EBITDA of 1 point 5 times and Sonae Sierra currently holds the loan to value of 25% and has a very strong liquidity position. So just a final note to our people. And I think it's very fair to say that without their tremendous dedication and hard work, we will not be able to present this act of very positive results. And also a word to all our other stakeholders that trust us, including our shareholders to whom we paid in May 2017 a 5% dividend increase to €0.0486 per share, a total of €97,000,000 corresponding to quite strong dividend yield. Looking forward, we see now all of our businesses opening up again since mid April. And the signs we are seeing in these 1st few weeks are very encouraging. At the same time, we see the COVID-nineteen vaccination program across the globe being implemented, obviously with very promising size as well of a return to a more normal business activity. And we have been preparing the return to this new normality across the portfolio. And today, we truly believe that we have businesses which are leaner, more digital and more prepared for the future. And the future is not. And so we will remain focused on ensuring that our people and our businesses have the right conditions to outperform and reinforce their competitive positions. We will be focused also on unlocking value across the portfolio, so as to improve our financial position even further. And obviously also on capturing opportunities that are already arising in the aftermath of the company. So that's it for me for now. Thank you all. And please, you can now open the session to Q and A. Ladies and gentlemen, the Q and A session starts now. Our first question comes from Jose Rito from Caxa Bank BPI. Jose, please go ahead. Yes. Hi, good morning. So on Sonae MC, I have 3 quick questions. The first one on the like for like, I'm not sure if you detail on the presentation, but what was the Easter effect on sales in Q1? Or if you could provide the accumulated like for like at the end of April to basically adjust for this potential Easter effect in Q1? The second question on the reopening of restaurants from mid April, if the company witnessed any major change in the like for like dynamic or if the momentum remains strong? And finally, on the margin side, if there were any change on the operating leases that justifies the 55 basis points margin improvement, Also be reminded that EBIT margin was up by 10 basis points in the quarter. So let's focus on these 3, please, first. And then I have 2 further questions on the bottom, but I would prefer to go by division, if it is possible. Very good. Thank you, Zey. Ori, do you want to take these questions, RMC first? Sure. Hi, Zey. How are you? I suppose you are fine. I hope you are fine. Well, regarding the first question, due to the Easter effect, now our P and L and now our trading activity in the Q1, Well, we need as Jean said in the very beginning, last year was a leap year. And we have a disadvantage comparing to last year's of roughly 1% in terms of like for like. This year, the Easter effect was, yes, was in the beginning of April. We benefit we slightly benefit, but it was not major impact in our trade activity. I would tend to say that the fact that we were having a less one day in comparison was much more was analyzing much more our activity than the fact that we have the Easter effect helping us during the Q1. The second question you raised was regarding the April activity. April activity market is not growing at the same pace it was growing in the years in the months before. The fact is, as you may understand, is the we compare the accounting pairing. As Jean said in the very beginning in his presentation in the very beginning, we were not we were comparing to the fact that the market last year was in a total lockdown in a lockdown situation. The government is implementing the some relaxing measures in order to start having the market working regularly. And we are not the people are starting moving from hitting at home as they were having in the last year's situations to start going to restaurants and then the whole record channels are benefiting from that situation. The market is not growing at the same pace. It's not growing. It's according to our figures of loss figure that we are having, it's growing at between 2%, 3% to 4%, but we continue to gain market share. Our like for like in April were positive, but we continue to not having the same with the same level that we were having the Q1, but gaining market share, which is the most important issues. Margins. During the Q1, margins, as you we mentioned and John mentioned as well in the very beginning, we had very significant positive like for like volume. The inflation rate was about 0.9% in our company, pretty much aligned with the inflation rate in the Portuguese market. We have almost in the food channels, in the food segments, aftermarket and supermarket, we have like for like above 4%, meaning volumes grew more than 3%. That means we benefit from that situation. Situation. And meaning as well that team we as a retailer as soon as when we are having growth in terms of volumes to benefit from that situation. Meaning as well that the when we compare to last year's situation, we have this huge situation where people were arguing, and we were surprised by the increase of volumes today. We are totally prepared. We can manage quite well the shrinkage, and we saw a huge decrease in terms of shrinkage in our operation as well as we have we saw some restrictions in order to have the total marketing campaigns that we were having according to the law. And that means that we save some costs in terms of marketing campaigns. In terms of shrinkage, we will optimize operation as well, and we benefit in terms of EBITDA margins during the Q1. Going forward, yes, there are some issues that we need to take into account in the Q2 last year. We had also some formats that they were totally closed, for instance, Hernal, the beauty in Spain segment, even the foodservice formats like Baga, Go Natural, etcetera, they were penalizing our activities. So we are today, we are benefiting from that situation. So our margins, it's fair to say that we are expecting to maintain the levels that we were having last year in the second quarter. Thank you. Okay. And just to thank you, Ruiz. Just a follow-up on this margin evolution. You mentioned that the marketing spending, so can you say how much was the reduction on the marketing spending in Q1? Was it like 50% reduction year on year? Because as you mentioned, I understand that volumes, the good like for like evolution of volumes as a positive contribution to the margin, but last year you actually had even higher like for like and the margin was in some quarters flattish. So that's why I'm I would like to understand what the main driver for the margin, understand that like for like is positive. But on the marketing spending, you mentioned that you witnessed a reduction. Can you give a little bit more detail on what was the reduction in marketing spending in the quarter? Well, I told you that the evolution of shrinkage and the evolution of marketing campaigns were the most important drivers to increase our margin in the Q1. I apologize, but I am not very comfortable to release more than that. And I think according to the figures and according to the volumes that I mentioned to you, it's fair to anticipate which were the evolution of these 2 items. Okay, okay. Thank you. So then on Wharton, two questions. The first one is, which category has performed better in the period in this Q1 results? And secondly, just to confirm if there are any positive contribution to EBITDA in this quarter from the restructuring in Spain or that should only be expected over the coming quarters? Very good. Thank you, Paul. Can I take you, Steve? Yes, sure. Good morning, all. Good morning, Zae. Thank you for your questions. Regarding the categories that performed better during the quarter, in fact, we saw quite positive sales performance from most of business areas. Notwithstanding the growth rates were higher in IT, including IT accessories and small domestic appliances and also entertainment. So those are the areas with higher growth. But growth was quite transversal to most categories. Regarding the impacts of the restructuring in Spain, we had some impact, some positive impact, but the most of the profitability gain comes from increased sales performance. During the quarter, we had the stores in Spain selling off the remaining stock. So we had some costs regarding that liquidation of stock. So that's why we don't still still don't have a single cash impact from Spain from that restructuring, I mean. Yes. Okay. Understood. Thank you. Thank you, Vic. The next question comes from Jayo Pinto from JB Capital. Please go ahead. Hi, good morning, everyone. Thanks for taking my questions. On Sonae MC, 2 follow-up questions on Josef Itau's previous questions. On sales, Rui, you already told us that like for like was positive in April. The same applies for the beginning of May. I'm just asking this because the comparable base for the Q2 looks even tougher than on a 2 year basis than the Q1? Also follow-up on margins. So the reasonable assumption would be for stable margins next quarters, right? And the third question on Sonae MC is regarding competition. Are competitors including promotional activity to recover share? And are there any material changes in the competitive landscape? And finally, on Zogt, is there any news regarding the dissolution process and the issue with the dividend? Thank you. Thank you, Joao. Maybe I can take the Zolpi question first, and then I'll hand it over to Louis to take the Sonae MC related questions. So the answer on the Zolpi question is quite straightforward. It's no. We do not have any new developments on this front. We are obviously not standing still, and we are evaluating all the different possibilities and maintaining a close dialogue with the involved parties, namely our partner and the courts. But there is nothing new to communicate at this moment in time. We remain confident that this situation with the judicial situation will be untied soon. But I think the good news is that the company is functioning perfectly normally with no impact from this situation. And so that's our main focus to ensure that the company continues its normal activity and generating value. And in the background, we are working on trying to solve the situation, but no new facts to communicate at this point in time. Louis, do you want to take the foreign exchange question? Sure. Alain Jean. Regarding the like for like in my institution, I'm giving you some figures about our activity. Yes, as you may know, last year during the Q2, we had a terrific performance. We continue to grow comparing to 2019 in the very high level. But last year, specifically in May, we had we grew a lot. This year is obviously the situation, as I mentioned, was a little bit there, is not comparable. They're not comparable because we were totally in a situation of a total lockdown just last year, not this year. And we feel that the market is not growing. In fact, it's not growing at all. What we're starting to do is the internal figure that we are getting is not growing at the same pace as what's growing in the past. At this point, we start giving you the like for like figures regarding mainly. But naturally, according to the figures that we are getting, we continue to not be losing in terms of market share. Regarding the promotional activity, well, promotional activity, as I mentioned in the I don't know, probably last year when we were talking about the performance of this quarter, I'd say that the all players in Portugal were totally devoted to supply and deliver products to customers during the period of ordering that the customers were having in the when the lockdown started. Well, even considering in April and in May, that situation happened as well. So the majority of the players were not so focused in trying to manage promotional activity, but they are totally focused in order to grant that all customers were having the products they need in order to have that situation surpassed. Meaning, yes, the promotional activity increased slightly in the Q1 of 2021 comparing to the Q1 of 2020. But I would tend to say that this is totally in a normal situation comparing, for instance, with the Q1 of 2019. Having said, well, we reached the figures that we were having in the past. Nothing is different comparing to the 2019 sorry, 2019. So it's everything is moving accordingly. And we see that the majority of the players are in a total rational way, doing promotionals in a rational way, not damaging the market, and that's something that we are seeing going forward as well. Thank you. Thanks, Filipe. And the question about margins? Well, Jean, if you don't mind, could you repeat the question about margins? Yes, I think second quarter, right, Q2. Yes. Let me just remind everyone that we do not give guidance on financial results. I think that's important to bear in mind. But the question was if we are we should expect stable margins in the next quarter, next few quarters. That's what I thought, Marie. Yes, the market is, as I mentioned to you, the market is pretty much aligned what we have in terms of margin, in terms of what we had last year and up to now. And we need to consider that situation. The market is fierce and the market is aggressive in terms of promotional activity, more rational comparing to last year, yes. But we need also to consider that last year during the Q2, we had some formats that were totally closed with some difficult really difficult in the leaving the bank debt time, and we were penalized by that situation as well. So having those formats now start working and start delivering some cash flow, we will benefit from that situation as well. But up to now, I can give you any guidance regarding the Q2 in terms of margins. The next question comes from Arthur Amore from Ciexo Bank De Investimento. Please go ahead. Hi, good morning. I think part of my question has been answered. It was related with the Sanai MC EBITDA margin. So just to have an idea, what led to the EBITDA margin gain in the Q1, 8.6%, if I'm seeing correctly versus 1.10%. The reason why I'm trying to understand what led to these efficiency gains is to see if it's possible to extrapolate for the rest of the quarter. So this was a very particular complicated quarter due to the 2.5 months full lockdown. Just to understand if based on the performance achieved during this Q1, if I could increase the estimates for the margin for the rest of the year? Thank you. Thank you, Arthur. I think Rui already touched upon that topic. But, Fui, do you want to add something else and address the first question? Well, I think I at least I tried to explain that situation. We in fact, during the Q1, we have significant volumes increase in a like for like basis just to start. And back in last year, in the very first quarter, we were surprised by the peak of sales due to the start of the starting of the lockdown period here in Portugal. And we didn't have our operation totally fine tuned. This year, we have our operation totally fine tuned. And we benefit from that situation because we have the processes and the procedures all totally fine tuned in terms of operations. We benefit by the decrease in terms of shrinkage as a percentage of sales. And also, we were surprised by some restrictions in order to start having marketing campaigns in terms of promotional activity. And then also, what we started to have is we backed a lot and we were totally very well received and we start to get very good results in terms of digital marketing. And that digital marketing doesn't cost us so much as the other channels that we were using to start having in last year in terms of marketing. And we benefit from that situation as well. That's why we benefit in terms of we grew in terms of margin comparing to last year during the Q1. But I think and it's key to confess that by the fact that we grew a lot in terms of volumes was probably the main driver to continue to grow in terms of margins during the Q1. Very clear. Just as a second question, if I may. Clearly, Wharton has been benefiting from the strong from the huge or almost exponential increase of demand on the online channel during the last year and the Q1 of this year. Do you think that this trend will be sustainable assuming that the pandemic will slowly get over control and one day will end up by disappearing. So do you think that this increase on revenues will be sustainable for the coming quarters? Basically, this is the question. Paul, do you want to take this one? Yes. Thank you, Arthur, for your question. So regarding the sales growth that we have been observing, it's very clear that the pandemic benefited the sales in Wharton. The categories that we sell clearly were appealing to consumers during this period. So sales grew significantly from the Q2 last year mainly. So the comparison basis from the Q2 of Wal Mart's will be more difficult, more so if you are asking if we believe that the current increase in sales will continue throughout the year, the increase that we saw in the Q1, No, I don't think so. I think that the increase last year was very significant in the quarter, so the comparison size is much more demanding. Okay, very clear. Thank you. Thank you for your questions, Artur. The next question comes from Antonio Salades from AS Independent Research. Please go ahead. Hi, good morning. Thank you for taking my questions and congratulations for the figures. So just one question related with Sonae Sierra, I know that you don't like to talk about the current quarter. Nevertheless, if you can provide some color how the stores are opening, how the shopping centers are performing since they open? Thank you. Very good. Thank you, Antonio. This one's for you, Luis. Super. Thank you. Good morning, everyone, and good morning, Antonio. Our shopping centers across Europe are witnessing strong and encouraging performance or recovery, I would say, very much in line with what we have seen in late summer, early autumn last year, reflecting a clear return to normality. Having said that, there are still three factors that limit comparability and that limit footfall, particularly working from home, which is affecting mainly shopping centers located in city centers and where offices are nearby. The lack of tourism, which typically is an important factor driving foot fall in our centers, and that is clearly limited at this point in time. And then we are seeing still some tight restrictions, particularly in Portugal in terms of the number of people that we can have per 100 square meters, which has led to frequent shopping center temporary closures in terms of the number of people that could enter the shopping center. But the worst is that it actually affects the experience in the sense that a lot of people spend time doing and far less time in the shops. We are also still seeing some limitations in terms of opening hours or in terms of capacity also across other countries in Europe. And that is particularly affecting food and beverage. So these three factors are clearly, I mean, not normal, are very temporary and are affecting comparability of numbers. But we are seeing a generally very good recovery in line with what we have seen during the late summer, early August sorry, late summer, early autumn. The other good thing to note is that we are seeing a very meaningful increase in average basket size, which can also be led by people going to the shopping center with a much more targeted approach to purchase something specific rather than doing a lot of window shopping. That means that sales tend to be less impacted than footfall. That's broadly where we are. We are we remain positive on the remainder of the year, and we are seeing a gradual recovery to normality. There are no further questions from the participant lines. I hand the floor to Mr. Jay Dolores. Okay. So if there are no further questions, I would like to thank you very much for your time. Thank you for listening. And I hope to be with you again soon in our Q2 results conference call later in the year. Thank you very much. And goodbye.