Welcome to Sonae's first nine-month 2018 results conference call. During the introduction, hosted by Mr. João Dolores, Sonae's Chief Corporate Center Officer, all participants will be on a listen-only mode. After the introduction, there will be an opportunity to ask questions. If you would like to ask a question, please press star one on your telephone keypad. If any participant has difficulty in hearing the conference at any time, please press the star, followed by the zero on your telephone for operator assistance. I would now like to hand the conference over to Mr. João Dolores. Please go ahead, sir.
Hello, good afternoon everyone. Welcome, and thank you for attending Sonae's results conference call for the first nine months of 2018. I would like to start by making a quick introduction. As most of you will know, we've had a recent internal reorganization, and Luís Reis is now completely focused on managing Sonae Sports & Fashion and Sonae Financial Services, acting as the CEO of both companies. Given this context, I have taken on the responsibility of coordinating Sonae's corporate center functions, and I will be with you today presenting the group's results. Together with me, we have the CFOs of our businesses: Rui Almeida from Sonae MC , Miguel Águas from Worten, Carlos Silva from Sonae Investment Management, Luís Mota Duarte, the new CFO of Sonae Sierra since the beginning of November, Miguel Moreira from Sonae Sports and Fashion and also our investor relations team.
Now, before we dive into the results, I would just like to make a couple of quick remarks related to two important events we had in the last few weeks. First of all, as you know, we completed in September the acquisition of a 20% stake in Sonae Sierra, therefore reinforcing our participation in the company to 70%. This was naturally an important transaction for Sonae, one that we believe is value-accretive to the group and to our shareholders. With this transaction, we reinforced our presence and control of one of the group's most international businesses, a leading player in its industry with a strong track record of value creation. This transaction obviously impacts Sonae's accounts, given that we will start consolidating Sonae Sierra's statutory accounts line by line.
This quarter, we only consolidated the company's balance sheet in full, but from Q4 onwards, we will also be consolidating the rest of its financial statements. Another note also on our decision, our recent decision to withdraw our intention to sell Sonae MC. As we've communicated to the market, this decision was driven by particularly adverse market conditions, which resulted in a number of other transactions also being pulled at that time. Despite this outcome, over the last few months, we took important steps in order to strengthen Sonae MC, which is now a larger and more autonomous company, and we were also able to provide higher visibility on the quality of the business and its management team.
In what regards to our accounts, we will continue to report the historical Sonae MC segments up to the end of this year, while simultaneously showing a snapshot of results of the new perimeter, which was announced for the [SEO]. From 2019 onwards, we will report this new perimeter, which also includes Maxmat and most of Sonae RP's assets, as the new Sonae RP segments. Given these initial notes, I will now give you an overview of our nine-month results, starting with the highlights for the individual businesses and then covering Sonae's consolidated figures. At the end, both myself and the team will naturally be available to take your questions. Starting with Sonae MC, I would say that Sonae MC had another very positive quarter, continuing to gain market share and maintaining its underlying profitability.
It was, in fact, another good quarter in terms of strategy execution under a supportive macro context and also a good consumption growth in the market on the one hand, but also an aggressive and promotional competitive environment. In this context, Sonae MC was able to increase its turnover by 7% year- on- year to just about EUR 3 billion. Like-for-like growth was significantly above inflation at a solid 2.5%, with all formats posting a positive like-for-like performance since the beginning of the year. In fact, this was the 12th quarter in a row in which Sonae MC increased its market share, which obviously is a very satisfactory result for us. Its underlying EBITDA margin remained stable in the first nine months at 5.2%, which is, in our view, also a quite important achievement.
This stabilization of margins at reference levels is also underpinned by a consistent cost-efficiency effort, which will continue in the coming months and years. Just a note on Sonae MC to say that in September, as you know, we announced the agreement to acquire a 60% stake in Arenal which is a parapharmacy chain in northern Spain, which we believe will be important to scale up Sonae MC's footprint and capabilities in the health and wellness space. Regarding Sonae RP, Sonae RP had very stable results. RP's portfolio has a gross book value of EUR 1.3 billion and a net book value of EUR 932 million. Its operational results were quite stable, and our food retail freehold now stands at 46%, which is a level we feel comfortable with.
Obviously, we will continue to be attentive to eventual opportunities that arise to monetize assets in the future, but these will always be specific operations, and we do not have an active plan to further reduce its freehold level much lower than this level that we have right now. Worten showed a solid top-line performance and stable underlying EBITDA margin. I would say it had a similar performance to Sonae MC in the sense that it also grew at a 7% rate year on year, continuing to increase its leadership in Portugal and also growing in Spain, while simultaneously maintaining its underlying EBITDA margin. Turnover reached EUR 752 million in the first nine months of the year, with a strong like-for-like of 5.5%, and underlying EBITDA margin was stable at 1.9%. Sonae Sports & Fashion had a very challenging market context.
As you know, the clothing and footwear market as a whole decelerated, driven by atypical weather conditions, particularly in September, which was the warmest September ever on record. After two quite positive months in July and August with strong like-for-likes, September was particularly negative, and this was a market effect. In this context, our businesses had quite a resilient performance, with turnover remaining flat year on year in the quarter and growing slightly in year-to-date terms. Underlying EBITDA was significantly impacted by this market context and was practically zero in the first nine months of the year. A note on ISRG, Iberian Sports Retail Group, which, as you know, we have a mismatch in terms of calendar and reporting calendar, and we are consolidating through the equity method the results of this business into our accounts.
The results that we're consolidating right now in the third quarter are the ones from the second quarter of the business that runs from May to July. During the first six months of this GV, I'm happy to say that turnover reached EUR 262 million, 10% above last year, and EBITDA stood at EUR 7 million, which represents a decrease versus last year, but this is due to the transformation plan which is currently ongoing at the company, which includes mainly converting sports-owned stores in Spain to the Sprinter model, which means that a number of stores were closed for four to six weeks during the quarter, impacting naturally profitability.
I am very confident in saying that the results that we are achieving in this partnership are quite promising, and we are very confident that the value creation story that led to the merger will arise in the future, and we will have very positive results in this joint venture. Sonae Financial Services with good results as well. It kept increasing its customer base and improving earnings. In Q3, turnover grew 40% year on year to just above EUR 8 million, ending the nine months with a top line above EUR 22 million, a 32% growth year on year. Underlying EBITDA almost doubled in the first nine months of the year to EUR 4 million, with a margin of 18%, also increasing versus 2017.
Just a quick highlight to the fact that the Universal card already surpassed the 700,000 customer threshold in October and has a market share in the payments market of 12.4% in September, which is also an increase versus last year. At Sonae Investment Management, Sonae Investment Management had a solid performance both in operational terms and also some important developments in terms of its portfolio management. In operational terms, both turnover and underlying EBITDA posted a strong evolution in the first nine months of the year. Turnover increased 18% year- on- year to EUR 112 million, mainly due to Bizdirect and also the integration of Nextel, which is the recently acquired company in the cybersecurity space. Underlying EBITDA jumped to EUR 4.5 million with a margin of 4%.
As I said, Sonae Investment Management also continued to develop its portfolio investments in the quarter, mainly by adding two minority investments in two companies based in Israel: Reblaze, which is a cybersecurity company, and ciValue, which is a retail tech company. Sonae Investment Management continues to develop its portfolio in line with its mission. Sonae Sierra continues to show also good operational performance, even despite the negative impact of a devaluation of the Brazilian real. As I said, the operational performance was quite positive, which I believe is a testament to the quality of the company's assets. Global occupancy rate stood at a bit above 96% in the first nine months of the year, which is an increase and improvement versus 2017. Like-for-like tenant sales grew 1.4% in Europe and 2.4% in Brazilian local currency.
Direct results for the first nine months amounted to EUR 50 million, a 10% year-on-year increase, also benefiting from a better performance of the services division. Regarding indirect results, Sonae Sierra only revalued its assets twice a year in Q2 and Q4, as you know, so no relevant evolution there. NAV at the end of September amounted to just above EUR 1.4 billion, a marginal decline versus the end of 2017, but this is also influenced by the exact impact which I just mentioned. Without that impact, it would have actually increased 2.2% versus December 2017.
A note on development projects at Sierra that are underway, namely the McArthurGlen Designer Outlet in Málaga in Spain, Jardin Plaza in Colombia, and also the Fashion City Outlet in Greece, all of which will open in the coming months, as well as the expansions of Norte Shopping and Colombo which are still underway. North, as you know, released its Q3 results last week, so I would just highlight a few figures. I would just highlight that the company showed a strong set of results with operating revenues amounting to EUR 1,167 million in the first nine months of 2018, a 0.7% growth year on year. EBITDA improved by almost 3% year-on-year to EUR 462 million in the first nine months, with a margin which is higher than last year, so a 50/50 EBITDA margin improving versus 2017.
Net results increased 17% year-on-year and reached EUR 123 million in the first nine months as well. Finally, the company's balance sheet continues to be a very conservative one. The financial net equity EBITDA stood at 1.8x in the first nine months of the year, representing a solid and conservative capital structure. I would also highlight that the company presented recently its technological and operating transformational roadmap in an event which you can obviously consult on their website. There is a presentation that details what was presented at the time, and this program will be crucial for the company to have a long-term competitive differentiation in its segments of operations. Going now into the consolidated results overall, we believe this is once again a solid set of results for Sonae.
Top line in the first nine months of the year reached EUR 4.2 billion, a 7% increase year-on-year, and this was supported by growth in all of our businesses. Regarding our consolidated profitability, underlying EBITDA totaled EUR 233 million, improving 3.5% year-on-year. EBITDA also followed a positive evolution, reaching EUR 270 million, a 1.7% increase year-on-year with a strong contribution from equity method results, reflecting the performance of NOS in Sierra, which improved EUR 11 million versus the first nine months of 2017. All in all, Sonae Group share jumped to EUR 200 million in the first nine months of the year, strongly impacted by the indirect results of EUR 114 million, which were mainly related in Q3 with a EUR 46 million capital gain arising from the 20% acquisition of Sonae Sierra participation.
We already had some important contributions in the indirect results line coming from the first semester, but adding to these results, we had this capital gain this quarter that originated this significant increase in indirect results. Regarding our capital structure, we continue to be quite comfortable with our net net position, which now stands at EUR 1.5 billion, reflecting already the acquisition that we made of the 20% stake in Sonae Sierra. On a like-for-like basis, net debt continued its decreasing path, having reduced 10% year-on-year. Even if we take into account the cash out from the acquisition of the stake in Sonae Sierra, our capital structure continued to further strengthen. Our capital structure is now composed of 67% equity versus 53% last year, and our gearing levels continued on their downward trend.
Going forward, we are quite comfortable with our leverage ratios as we expect strong free cash flow generation from our most relevant fully consolidated businesses, which now include Sonae Sierra, as well as a steady dividend distribution from NOS. Our cost of debt and maturity profile give us further assurance that we have a quite comfortable balance sheet looking into the future. In a nutshell, I would say that these results give us an additional amount of confidence looking ahead. As a multi-business group with leading positions in almost all sectors in which we are present, we feel quite positive with the performances of our main businesses. We acknowledge that we have challenges ahead, but we feel that our businesses are increasingly capable with strong management teams and solid value propositions.
I will now end this brief overview of our nine-month results, and I will invite you to ask questions. You can please open the session if you like.
Thank you. As a reminder, if you'd like to ask a question, please press star and one on the telephone keypad. We have had some questions come through. Your first question comes from the line of José Rito. Please go ahead. Your line is now open.
Yes, hi. Good afternoon. Thank you for taking my questions. I have two questions on the food retail business. The first one on the like-for-like performance. I know that other players have been outperforming based on this metric, even if adjusted by or for a different place. My question is, is Sonae comfortable with the recent like-for-like performance, or if it is considering new actions to take profit from the current market strength? I know that other players have been more aggressive this year and for that reason like-for-like has been exhilerating. My question is, is Sonae also considering to be able to be more aggressive on profits as well? My second question regarding the food retail and metric position we have EUR 100 million increase in Q3 I think it should reflect at least possibly the carve-outs impacting the quarter. Could you tell how much were the carve-outs affect on the metric position in Q3 and just a remarkable expecting despite the carve outs in food retail metric to be a broadly stable journey? This will be helpful. And finally my question on Worten. Should we assume that the company has reached a cap in terms of profitability
Because despite the strong top line performance and also in terms of like-for-like, we have been seeing that margins have been broadly straight. If you can provide a little bit some midterm references in terms of profitability, namely what would be the profitability that the company will see the business stabling, would be also helpful. Thank you.
Okay. Thank you. Those are all your questions. I will ask Rui to cover the MC questions and then Miguel to cover the Worten questions.
Okay. Thank you.
Hi. Regarding the like-for-like, I need to stress what he said in the previous quarter, saying that we both bought in our portfolio, have positive like-for-likes in the past. We are lifting some noise in the call. I do not know if it is from your side, José. Hello?
I am not sure. Yes.
Okay. Much better now.
We are now lifting some noise from the previous meeting. We are having positive like-for-likes. Come on. We have positive like-for-likes in all formats in our portfolio, with all formats posting like-for-likes above inflation rates. Yes, we feel very comfortable with the figures that we are posting because in the proximity formats, we are having very high figures in terms of like-for-likes, even higher than the figures that you could imagine from other competitors here in Portugal. Yet, we are also believing that the biggest format that we have in terms of hypermarkets, they are continuing to deliver very positive evolution in our activity. We feel very comfortable with the performance of those formats.
We do not see any issue regarding a category reset or pricing reset in all formats that we are having today because we are continuing to gain volume. According to all studies and all research that we are doing, it seems that all consumers in Portugal continue to understand and privilege the value proposal that we are offering to our customers. Regarding the debt, we continue to be targeting and to bring to focus, and we continue to be sure that we will have that debt to underline a bit around two times by year-end.
As we guided you in the documents we put regarding the IPO project that we were planning to have during last October or everything that happened in the last days of September was due to the carve-out issues that we needed to have in order to have a company that could be listed in the market.
Okay. Thank you. Just to follow up on the price differences for your key competitors, could you confirm if in Q3 the price difference is the same as in the nine months, or has this difference been declining?
No, the price difference is pretty much the same. From what we do, there are no research coming up to the market from Vector, but according to the internal analysis that General will do, the price difference is being the same in the last nine to 10 months.
Okay. Thank you.
Hi, José.
This is Miguel Águas from Worten. Thank you for your question. Regarding the margin performance at Worten, first of all, margin is stable in the nine months ended September, but actually in the third quarter, there was a slight increase in underlying EBITDA margin. As you know from our previous conference call, we had some one-offs in the second quarter that limited our, well, that actually hampered our improvements in the first semester. We are back on track with a slight improvement from levels that are already pretty much in line with other players in the sector in Europe. This performance has multiple effects with it. On the one hand, gross margin is being reduced as there are a stretch, competitiveness has been increasing as e-commerce penetration increases as well.
Our efficiency has been increased at the same or slightly higher rate, so that's how we have been able to pull off these slight margin increases. Therefore, you see the strong like-for-likes, you see the strong sales growth, and this obviously has impacted our efficiency because the rate of growth in our cost base has been lower than the rate of growth in sales. Basically, we are not having a we don't see this as a cap in improvement. We see this as Worten being as always competitive in the market and being able to sustain good levels of profitability within this context.
Okay. Thank you.
Going forward and assuming that this year the EBITDA margin should slightly increase versus last year, do you think that it's still possible to continue to increase this EBITDA margin considering the moving parts that we have been seeing, namely competition from online and if the companies will continue to be able to cut costs? I would believe that cost cutting or further inefficiency should reach a cap in the future. My question is, if you could see this EBITDA margin for this year increasing over the next years, or if this could be a cap or not? What is your view on this?
Just for clarification, we are not cost cutting. We are increasing efficiency on the back of very strong sales growth, which is rather different. Our cost base is actually increasing in absolute terms at a smaller rate than our cost base.
We are increasing efficiency.
We keep focusing on increasing that efficiency, and we are confident that we will be able to reduce the cost to serve our clients, but we will not make any statements regarding future profitability.
Okay. Thank you.
Thank you. The next question comes from the line of Filipe Rosa, please be really brief. Please go ahead. Your line is now open.
Hi. Good morning. Good afternoon, everyone. Thank you very much for taking my questions. The first one relates to the holding company, okay? You have decided to cancel the IPO of Sonae MC. I would like to understand what could be the next steps that you could be considering, okay? You have made a lot of effort in setting up this new subsidy. Are you still considering to take the company to the market, or are you considering an alternative scenario?
Is the lack of that potential cash inflow in some way conditioning your future options in terms of alternative strategical investments? I would like to understand a little bit better how are you thinking about the next steps around the 100% ownership of MC. Also, related to that, and just trying to understand, when you decide to buy assets like an allowed 20% of Sonae Sierra, do you compare those acquisitions with, for instance, acquiring own shares of Sonae? Just because when we hear your conference call, you are quite happy with the performance of your assets, everything is going well, but then we have this perspective of the market, which is substantially different.
Wouldn't it be the case that it could be an opportunity for you guys to try to put more investment in terms of your own shares because you see this mismatch between your view of the business and the outlook of the business and the view of the market? That would be my second question. My third question relates to food. Basically, one of your competitors has done better than you. José Rito already mentioned that. You have one of your competitors that is doing rather poorly and announced that it will probably be forced to sell some assets to repair its balance sheet. I was wondering whether you acquired Arenal, okay?
Could you be interested in looking into the acquisition of these assets that this player, Dear, could put up for sale, or do you think that they would never fit your investment profile or criteria? Finally, on the fashion business, okay, it's a little bit I think that we have mentioned this in previous calls. Every quarter, there is always something that impacts the profitability of fashion in this business that has been quite volatile in the past. I repeat my question. Does it make sense for Sonae to be putting so much effort in terms of people, in terms of management attention, into an asset that is so volatile and this subscale in the context of Sonae?
Could you elaborate a little bit what you are doing to try to turn around these assets where a significant part of the portfolio is loss-making, in my view? Thank you very much.
Okay. Thank you for all those questions. I will cover the questions on the holding and also the fashion one, and then I'll hand it over to Rui to cover the Sonae MC question. Regarding the last question that you raised on the fashion division, it's true that we've had some volatility in this business, but it's also true that this quarter, in particular, it's undeniable that the market context and the market conditions were crucial for the performance of the business. We actually had a quite resilient performance in our business vis-à-vis the market. September was a month in which all the sector lost double-digit year-on-year sales.
I consider it to be a quite solid performance considering this market context. What we're doing in that sub-holding, we're reinforcing our capabilities in that sub-holding. We have strong value propositions which we're building, and I can also already tell you that we're quite confident that the results will improve there as in October our sales are already reacting quite well versus what we witnessed in September. Regarding the question on share buyback, I understand the question. However, as you know, Sonae historically has not had this practice, mainly because we feel that this could be pretty lucid if it was stock in the market. We currently do not have any plans to do any buybacks. We will obviously remain open to evaluating all options in the future, but this is not something in our short-term plan.
We do expect that we are increasingly able to demonstrate to the market the intrinsic value of all of our assets, which we feel is naturally clearly understated in our current share price, but we do not have any plans in terms of buyback. Considering the questions on the IPO, first of all, I would say that we do not have any plans right now to bring back the operation to the market. We do not feel that the strategic merits of the operation disappeared, so we still believe, obviously, that the operation made sense from a strategic point of view, but the market conditions were not there. As I said at the beginning, we were not the only ones to pull the transaction. We do not have any plans in the short-term to bring it back.
In the future, we will consider all options, but this is where we stand right now. In terms of its impact on our ability to fund the group for strategic alternatives in the future, as I said during my initial intervention, we're quite comfortable with the level of leverage that we have right now. Obviously, the absolute level of that increased, not only because we acquired the 20% stake in Sonae Sierra, but also because now we consolidate Sierra's corporate debt into our accounts. Our capital structure actually was reinforced, and we feel that we have a level of gearing which is perfectly comfortable. We do not have any problems in financing ourselves in financial markets, and we do our financial planning always disregarding specific extraordinary operations such as these ones. We are perfectly comfortable with our ability to fund future opportunities that might arise.
I will hand it over now to Rui to answer the MC question.
Right. Hello, Filipe. Regarding the just to confirm one thing. We are very happy with the performance of our stores in our portfolio. As I told a while ago, we had very positive figures in all stores, namely where we are basically outperforming in terms of proximity format with very high levels of like-for-like in those stores, growing steadily, and we feel very confident with the format that we are launching in the previous year. We launched in previous year. Now, as we said in the previous quarter, we are totally focused in launching new stores and new organic growth here in Portugal, where we have continued to be very focused.
At least we feel that we need to be open to study all opportunities that may arise in the Portuguese market where we could see some room to continue to grow and even more to improve our market share here in Portugal.
Thank you very much. If I may, very quickly, also related to MC, this is just a detail, but there seems to have been some delay in opening the stores because you have a strong pipeline now for Q4. Just to be sure, you maintain your store opening targets for the full year, and whether you think this concentration of openings in the last quarter could have a negative impact in your EBITDA margin?
That is a very good question. In the next two months, we will open more or less nine Continente Bom Dia stores and three more Continente Modelo stores.
Yes, we have a target to open one more store in the Portuguese market. Probably we'll open in February or something like that. We will maintain the guidance that we gave in the presentation that we posted in the corporate website from Sonae. We will maintain that guidance, open roughly 20 stores per year until 2021, where we feel that we have already the sites, we have already the pipeline secured, and we feel very confident to continue to take the opportunity to take the opportunity as the proximity format here in Portugal is totally underpenetrated according to the figures and according to the metrics that we are following.
As you may understand, Sonae MC is totally underrated comparing its competitors, and we feel very confident to take that advantage and to take the opportunity to continue to grow to increase our market share in the Portuguese market.
Okay. This could be a problem in terms of concentration of openings in Q4, in terms of the margin, or you think that it should not have a material impact?
Yeah. It's pretty much the same. For instance, if you look at the number of stores we launched in the last year in the fourth quarter or even in the fourth quarter of 2016, it's pretty much the same. We work that way, and we take the advantage of the Christmas season as well to open new stores.
Okay. Thank you very much.
All right. Thank you. Our next question comes from the line of João Pinto. Please go ahead.
Your line is now open.
Good morning, everyone, and thanks for taking my questions. Three, if I may. The first one, I would like to come back to leverage. I mean, the retail segment looks fine, but at group level, if we exclude the investment of Sierra and its consolidation, I think it's still above three times. Following the investment in Sierra, there was a significant cash out without a cash in as the IPO has been concealed. Are you comfortable with this level, and how will it be reduced in the future? The second one is on food retail. The food inflation has slowed down in October with a little deflation in fresh food. Do you expect this to recover until year-end, and where do you see like-for-like at Q4? And my last question is a follow-up on Filipe's question on the IPO.
I mean, what do you mean when you say short-term? If the market rebounds, would you consider doing the IPO in the beginning of 2019, or is it something that won't happen anytime soon? Just a final question on selling lease back agreements. Can we expect news from this front in the Q4? That's all. Thank you.
Could you repeat the third question, if I may? The third question on the IPO?
Right. Yeah. I mean, what do you mean about short-term when you say that it makes sense in a strategic point of view, but you say you don't consider it in the short-term because of the market's conditions? If markets rebound, would you consider doing it in the very short-term, or is it something that won't happen anytime soon?
Okay. Thank you as well.
Starting with the leverage deal, with the question about the leverage at the holding level. Again, I will repeat myself. We're comfortable with the level of leverage that we have in the group, including at the holding level. We have a stable LTV at the holding of 11%. It's the same level of last year, and we are comfortable with that level of leverage, and we do not feel that we are in any way constrained in terms of options for the future because of this level of leverage. Obviously, we expect our businesses to generate significant amounts of cash flow in the future, not only the businesses that consolidate line by line, but also the businesses in which we have minority stakes in which to distribute dividends. We will continue to generate sufficient cash flow in the future to maintain our decreasing path in terms of leverage.
Regarding the question on the IPO, I'm afraid I cannot say much more than I said before. Obviously, we were forced to withdraw the operation due to market conditions. We feel that markets are still unstable. We feel that, obviously, if we have a significant improvement in market conditions in the future, we might consider this or other options, but right now, we don't have any plans to bring back the operation to the market in the coming months. In terms of the sale and lease back question, as I said, we are comfortable with the level of freehold that we have right now. We are looking at specific possible operations. We might have a couple of operations in the coming months, but nothing that will significantly decrease the level of freehold that we have right now in the group.
Rui, do you want to take the MC question now?
Yes. Sure. It was basically regarding the inflation rate. We feel that the inflation rate until year-end will be pretty much with the same levels that we were having until now, regarding more or less 1%. In terms of like-for-likes, we are not used to give you some guidance in terms of like-for-likes, but we feel very confident to continue to have positive like-for-like reports in the U.S. space for all formats. They are continuing to deliver very good growth, a very good growth in our portfolio as they did, for instance, in the third quarter of this year.
Thank you very much, very clear.
Thank you. Your next question comes from the line of Carol Maggio. Please go ahead. Your line is now open.
Yes, hello. This is Carol Maggio from Exane BNP Paribas.
I just had a few questions on Sonae MC and more precisely on the adjacent format. Just to come back on the acquisition of Arenal in Spain. Do the stores have the same positioning as Wells, i.e., located in shopping centers with a strong market share? Are there any major differences in the health and wellness market in Spain compared to Portugal, particularly in terms of growth? Lastly, should we expect you to remain open to further international ventures in the future in the segment? Thanks.
Regarding now, the chain network of pharmacies that they are now starting to develop. Sorry, it is a sort of a perfumery network that is now developing pharmacies as well.
We believe that we could, together with the Bosch family, take some know-how to operate our pharmacies to Spain and leverage the chain with our know-how that we feel very comfortable with. We feel very confident that it is very well perceived by our customers here in Portugal. If we will continue to grow, first of all, we will be focusing in trying to improve with the parapharmacies business in Spain, the network that we acquired. If the parapharmacies format will continue to be positive, then we will take the opportunity to continue to grow in Spain because it seems to us that it is sort of a very good market to expand our activity that we have here in Portugal.
Okay.
Thank you. Your next question comes from the line of Tim Attenborough. Please go ahead.
Your line is now open.
Hi. Afternoon, all.
Pretty much all my questions have actually been answered. Can I just check, Rui? Did you say inflation in food retail was 1% in Q3? And for Worten, are we break-even in Spain yet, or have we got to wait until next year, specifically in Spain? Lastly, I think you said that the fashion had seen a sort of strong recovery in October. Are we back in the entry into Q4? Are we in positive like-for-likes in fashion? Just those three. Thanks.
I think, we have seen, in fact, the inflation rate in the third quarter was 1%. According to the very first data from the fourth quarter, we feel that there are no major deviations in what happened in the third quarter. I tend to say that our figures will be pretty much the same. Regarding Worten, I would ask for help to Miguel.
Miguel is pretty much more aware of that situation than I.
Hi, Tim. Good afternoon. On Worten, we, as you know, take an Iberian perspective on the business. We are managing Worten with a fully Iberian team, and we see different regions within Portugal and within Spain, and the improvement has occurred in some regions of Portugal and some regions of Spain. We are not going to go deep into the numbers of Spain versus Portugal. We have some regions in Spain that are quite profitable. Others still needing to improve. Again, I would rather stay with our reporting of an Iberian company. Regarding fashion, we had a good start of this fourth quarter in double-digit like-for-likes in this October, so we are very positive about this end of the year.
Okay. Okay. Thanks.
Thank you.
No one has heard the question. Please continue.
Okay.
If we don't have any further questions, thank you very much for your time, and I hope to see you all again in our year-end results call. Bye-bye. Thank you.
That does conclude our conference for today. Thanks for participating, and we will now disconnect.