Dear investors, hi everybody, investors. We are very pleased to welcome to our second quarter results. We hope you have managed to download our presentation in our website. If everyone ready, I now invite you to have a look at our second quarter results in brief. I will be taking your questions at end of the call, via raising your hand via Zoom. First, actually, top figures for this, this quarter, the highlight of the first quarter, I will be actually touching on. On the quarter, net sales were TRY 58 billion, reflecting 70% year-on-year growth and high inflationary environments still continue to support our top line growth. I can say that there is an acceleration in sales so far this quarter.
After the second quarter, we will be more elaborating actually in the coming slides on the sales progression. Another highlight is EBITDA margin was 7.4%, representing 53% year-on-year growth. After the weaknesses in EBITDA margin in first quarter, due to some one-off expenses, there is a recovery in profitability in the second quarter, as expected. As you remember, during the last call, I indicated that the worst is over, and this quarter is a very strong evidence that the worst is over. Broadly speaking, we can say that our first half results were consistent with our full year guidance. Net income was 2.8 billion Turkish lira, with a corresponding of 4.9% margin. Apart from the improvement in operational profitability, there is a one-off gain in this quarter.
Capital expenditures was 3.5% of our revenues in second quarter, which was in line with our full year guidance. In second quarter, we have opened 293 new stores, and we had total 11,818 stores at locations across all of our operations in the first half of 2023. Store opening, store expansion is on track and good. We will be more elaborating with the pace of the expansion in the coming slides. Another highlight of this quarter is strong cash flow. Cash and cash-like assets, cash at banks and financial investments, short-term financial investments, stood at 6.5 billion Turkish lira, which corresponds around 172% year-on-year growth. This quarter, we also improved our cash cycles from cash flow.
About operational performance, if we start with the like-for-like sales slide, page 6. Like-for-like sales increased by 64% in the second quarter. Basket size, like-for-like basket size increase was 67%, which is in line with our quarterly average internal inflation. Our internal inflation year-on-year is in this quarter, is 69%. In second quarter, year-on-year, 69% are in internal inflation. Like-for-like customer traffic decreased by 1.7% this quarter. This is negative because we still have some base effects, but I can say that like-for-like traffic has started to pick up in this quarter, as you see in the graph. In the early stage of the third quarter, there is a positive momentum in traffic figures. On the store side, store expansion. Store expansion progressing well.
In the second part of this year, we have opened 259 BiM stores and 8 File stores in Turkey. In Morocco, 18 stores. We opened 8 new stores in Egypt. In total, we had 11,818 stores by the end of second quarter, consolidated all across all our operations. As of June, we are almost in line with our expansion plan, except the losses, store losses occurred in the earthquake. In summary, in the 6 months period, we have opened 533 stores. As you see in our presentation, we have opened 533 stores and closed down 225 stores because of the earthquake. This is in line with our expectations.
550 stores is in line with expectations, we couldn't recover our losses in the earthquake, 225 stores. We plan to accelerate store openings in the second half of this year and expect to reach around 900 or maybe 1,000 new stores for the full year in net terms. As you see, actually, this is 7%. This corresponds to 7% of store growth. You know that we generally target around 9% or 10%. In second half, we try to improve to near to 9% growth store expansion rate. Number of mini stores, which have around 100 or 150 sq meter selling space and has lower SKU range, exceeded around 185 stores as of June.
Mini, mini stores are also doing well and help us to penetrate the city centers. Of course, this doesn't have a significant portion yet, so it's slowly expanding. CapEx, capital expenditures slide. CapEx was two billion Turkish lira in the quarter. It corresponds 3.5% of net sales. There are three warehouses under construction, and 1 of them will be opened this year in Bursa, inegöl. The two of others will be opened probably next year. Additionally, our biscuit and chocolate factory construction also continues in Eskiehir, likely to be productive late this year, in this last quarter of this year. There were some also land acquisitions for upcoming warehouse investments. We are also looking for new lands and buying new lands.
Our appetite for CapEx continues, and we are almost in line with our full year guidance, which is 3.5% of our sales. Moving on to our financial performance, starting with the sales progression. Sales grew by 70% in the second quarter, reaching 58 billion Turkish lira. As I mentioned before, there is an acceleration in sales in the third quarter, along with the minimum wage hike and rising inflation. Starting from July and also August, there's somewhat positive momentum we are seeing in the sales. In the late August or early September, we will have school season and people come back from vacations. The our expectation is better in September as well.
From now on, we are actually, we are little bit cautious of the sales improvements in the third quarter. Also we are taking some questions about the sales target revision. Since the 6-month sales growth, which is 78, is in line with our full year output, full year guidance, we maintain our full year guidance for now. We will be strictly following the trends, as I said before, to trend July, August and September, to understand whether there will be an upside risk. There may be some upside risk, but we will evaluate this in the third quarter to what extent we will evaluate this. For now, we are keeping our guidance as is. Gross profit and gross margin progression.
Our gross margin stood at 18.5%, which is 50 basis points better than the Q1. As we have indicated in the last call, in the first quarter call, we had around 50 basis points, one-off impact in Q1, and our, our gross margin reached to our normal levels if we ignored our one-off. It's 18.5 is the normal levels, expected levels of gross margin. After second quarter, post Q2, gross margin is almost progressing slightly better, slightly better than Q2. After the sales and gross profits, I will touch on the revenue breakdown to page 11. We are now at page 11. We provide the breakdown of our revenues, and Turkish operations still has the majority shares in total revenues.
Philippines is also doing much better, also doing well, much doing well, the sales doing well compared to last year, and reached 5.5% share in the second quarter. Egypt and Maroc contributions were also near the same as the previous year's end. Sales progression of product categories. Private label share decreased to 62% from 64 when compared to last year's same quarter. This doesn't mean there is a decline for private label demand from consumer side. There's still high demand. Private label consumption is still high. There are some seasonal reasons and dilution impact in private label. For example, we see a slight increase in demand of spot products and this quarter.
Also, you know that we expanded our number of SKUs to 900 from 850 at the beginning of this year. Some of them, most of them are branded products we have listed. In addition to the permanent SKUs, increased branded product offerings with effective prices on Tuesdays, in-and-outs. You know, we have Tuesday in-and-outs, contributed to the branded product share in total. We call it group spot products. Most of them are branded products, so it's also share is going up. This little bit diluted the private label share. Also, this is just doesn't mean that decline in consumer demands. It will be progressing like in this levels going forward. Yes. This is also by category, we are off by nice.
Now OpEx management. We are now in the next slide. The graphs also show that in the presentation, the change in the operating expenses as percentage of revenues by item. We continue to see the impact of high minimum wage hike on the margins. The impact in Q1, you know, from the previous call was much higher. Now, and we also indicated in the last call, we are expecting some operating leverage to work, and now we are seeing operating leverage is working in the second quarter, somewhat working in second quarter. Of course, there's another wage hike in the third quarter so that we have another impact. Rapid increase in the inflation may offset the negative impact of the wage hike in the third quarter.
Additionally, as I said before, the gross margin is slightly better, progressing better. Better gross margin would also help us in Q3 and somewhat offset the minimum wage impact, we hope. Coming back to second quarter, utility expenses started to ease after the last year's high base. Finally, if we ignore IFRS 16 accounting, maybe you all wonder the rent cost. Rent cost share in sales is still progressing stable at historic low levels at 1.5% is still, we have rent costs is the historic low levels. Now let's look at the quarterly EBITDA and EBIT. As indicated in the last call, the first quarter call, we have been already expecting the rapid improvements in profit margins as after several one-off expenses. EBITDA was today 7.4% in this quarter.
It increased to 7.4% from 6.1% in the last quarter. EBITDA in nominal terms, TRY 4.3 billion. In six months period, EBITDA margin stood at 6.8%. We maintain our EBITDA outlook for the full year. As you, as you know, its outlook is 7%-7.5%, although there is some second minimum wage increase as of July, there are some offsetting factors, as I indicated in the previous page. First, improving sales, given the high inflation, is the first offsetting factor. School season starts in early September. As I said, we are expecting better actually the sales progression in August and September. Second offsetting factor, actually better gross margin progression after Q2.
In terms of this EBIT, EBITDA figures, it's going well, it's 6.8% for the 6-month period, and likely we will jump ourselves over 7 in the coming quarters for the year-to-date figures. Quarterly EBIT was EBIT margin was 5.6% with Turkish lira 3.2 billion. Moving on the net income slide. Our net income was Turkish lira 2.9 billion, and net margin was 4.9% in second quarter. In 6-month period, net income was Turkish lira 4.2 billion, and the margin was 3.8%. In addition to the improvement in operational profitability, there were some one-off gains in this quarter.
For example, the TRY 360 million Turkish lira gain from restructuring of the competition penalty. As you know, the half of the penalty we get back from the tax restructuring legislation. We have some TRY 80 million net FX gain, mainly coming from our loan to Egypt operations, contributed to the bottom line positively in this quarter. If we look the FX gain and loss in 6 months period, there's almost no gain and loss. As you know, in the first quarter, we had loss from coming from, direct from the Egypt operation because Egyptian pound devalued, now Turkish lira devalued. In 6 months period, we had almost no FX gain or loss. Actually, this is little bit more, actually, complicated.
We are now trying to convert those loans to share capital from Egypt. No, we will hopefully not incur any gain or loss, hopefully going forward. Quarterly cash flow bridge, if we look at quarterly cash flow, as I said, this is strong. This quarter is strong cash flow. I wanted to show a more detailed picture of cash flow. Rent expense to sales ratio remained at historic low levels, 1.5%. Regarding net working capital management, free cash flow contribution from net working capital improved well since the first quarter. Since the inflation is again rising and our priority are still to secure product availability first, we want to secure our product availability.
Sometimes we have faced some kind of problems or other retailers also face, face some problems. The second, and protect ourselves and our customers from rising costs and inflation by investing net working capital and stocks. So as we approach in the last few quarters, we prefer to make advanced payments or early payments to sustain those product availability and also secure ourselves from rising costs. This, this is our strategy for cash use going forward. And now, File operations in summary, very, very shortly. We have opened 8 new File stores in the second quarter, and number of File stores reached 219 stores. File is now expanding in the Aegean and Mid-Anatolia side of Turkey, and we are in the next year, likely to open the fourth, actually warehouse in nearby izmir.
File online shopping platform, which was launched in May 2021, now available in 26 cities in Turkey. In a short period of time, File online sales reached the 5% of the File total sales. File share in total sales exceeded 5%, thanks to its robust performance. So File is going well, is progressing well in this quarter as well. The traffic growth are very positive, maybe double-digit traffic growth we are generating File so far. If you look the foreign operations, we opened 18 new stores in the second quarter in Morocco, and total number of stores reached 659 in this country. fourth warehouse of in Maroc, in Marrakech, will be opened soon.
We are also working on the finding warehouse location for the fifth warehouse in the north of the country. In Egypt, we continue to open new stores. Eight new stores opened in the second quarter, and the number of stores in this country reach, reach 329 stores. The operational improvement continues in Egypt since beginning of the last year. In some exceptional months, we are operationally profitable, profitable in this country. But of course, the operation is not fully cash positive right yet, but the progression is good, and we expect cash positive late, late next year. We will continue to open in Egypt for the rest of the year. Now we are also looking for new warehouse locations for third warehouse location in Egypt, land location. We are pushing ...
In summary, we are pushing to both, actually foreign operations. About foreign operations contribution, the revenue contribution of foreign operations was in the page 18, TRY 5.6 billion, 5% of total sales. While EBITDA, while the EBITDA contribution was TRY 315 million in the 6-month period. I can say that this is the actually contribution from, foreign operations, Morocco and Egypt, to our consolidated sales. This is, now, our presentation. Before Q&A, to sum up, before Q&A, what's the highlights? The margin improvement on track so far, we improved the margin, the first. The second, it is now time to improve the sales and market share, which, the indications are positive in July and August. July and August are promising. To the ...
For now, we don't have any full-year guidance change revisions so far, but we will be evaluating in the coming quarters. This is the end of my presentation. If you have any questions, please raise your hands, and then I will give you a floor. Rajat, floor is yours. Please go ahead.
Hi. I just wanted to ask, you know, great gross margin. How is the competitive positioning, the price gap, versus peers? How do you feel about it? Then secondly, it was interesting to see, you know, you're adding more SKUs, but it sounds like you're adding more branded. What is the logic? What's the rationale for that?
Thank you, Rajat. First of all, actually, the price, the gap between the other discounters, Şok and A101, is almost zero. Because the other competition-wise, actually, generally speaking, the competition is mostly following the BİM prices. The supermarket segment, actually, the supermarket segment has around 5%-10% price gap, 5%-10% price gap from BİM. If, if I can index, if BİM 100, the other discounters is 100 again, and supermarkets is diversified from 105-110. This is the price gap. It's stable. It's there's not any change in the last few years, but of course, the price gap is a bit, actually, a little bit shorter, actually, tighter than compared to 5, 6 years ago.
In the short period of time, there is not any very significant change in the price gap. Actually, we are, no-- there's no strategy change about the branded products. We are also in some categories, we are also listing some branded products. For example, cosmetics, non-food sites, in detergents. We also have some kind of more availability in branded products, but this is ... For example, at the beginning of, beginning of the year, actually, we increased our number of SKUs from 850 to 900, 50 new SKUs listed. For example, in previous strategy, if we had, we used to list only private labels in- but now we also have some branded products listed in these 50 products.
I can say that this is just for some categories which the brand conscious is high in consumer profile. This is just. We are still actually pursuing the private label strategy and trying to doing our best in terms of private label share in sales.
Okay, thank you. just so I understand, it sounds like you're comfortable with this price gap versus traditional supermarkets, even though it's quite a lot lower than four, five years ago?
Actually, we, we never, we never target any price gap between competitors. We are between supermarket, actually. Of course, the other supermarket, in supermarket players also matching nowadays, in the, in the last few years, nobody, matching the prices with the discounters. They are more listing private labels, and they are trying to match their prices with discount private labels. This is the result, the result of the price gap. Of course, the competition is getting tough in the last five years, and the price gap, tighter price gap is a result of this tough competition. Actually, this is just a visible price gap, visible price gap.
As I said, actually, the price gap is almost 0 between the other discounters and 5%-10% with other supermarkets, but this is just a price gap, sharp price gap. The perception in the market, the perception in consumer side is much, much wider. Because of the BiM name, BiM perception, BiM private label, the reputation is much wider.
Yeah, no, thank you. Eventually, perceptions change, too, so just something to, I guess, be conscious about. Great, great job, guys. Thank you.
Yeah. Thank you. Thank you very much. Next question is from Hanzade Kurşun. Sorry. Yes, Hanzade, the floor is yours.
Serkan Bey, merhaba. Thank you for the presentation. I, I, I do also have a question about your gross margin performance. I mean, what is boosting this performance, while the sector is facing a significant pressure actually in this quarter? I'm trying to understand what differentiated you in this quarter from your peers. And the second one is about your space expansion. You, you said that you have a target of around 900,000 stores opening for the full year. Does this include the closures in the earthquake zone, or that's a net store expansion? And on the minimum wages, in the past, the government was subsidizing the companies through some sort of repayments. Is there any support from the government that you are expecting on the minimum wage in second half of the year? Thank you very much.
Thank you, Hanzade Hanım. The first gross margin at this quarter is 50 basis points higher than the last quarter. This is as, as you know, from the last quarter, called 50 basis points, this was coming from the one-off expenses. So when we eliminate the one-off expenses, we are almost getting this 18.5% in the second quarter. In the third quarter is also progressing well, is maybe slightly better, as I said before, than 18.5%. But we just, we eliminate the earthquake losses, stock losses as the first quarter, 300 million Turkish lira, we had some stock losses, impacted our gross margin. But in second quarter, there's no. As we all incurred all kind of one-off expense in the first quarter.
That's just one-off expenses eliminated, we actually came to our expected gross margin level. In actually, we are managing our portfolio, we are also negotiating with the suppliers. You are right, the market is a little suffering about the gross margin, gross margin, because they are more investing, actually, in, involved in campaign promotions, very heavily involved in campaign promotions. This is the reason, I think, which we have limited, in our case, we have limited promotion and campaigns. Maybe this is the general answer for your question. Third one is also going well. About gross margin, do you have any follow-up?
Serkan Bey, I, I just want to ask something about this gross margin. You, you highlight that peers are investing in prices, I mean, through promotions or campaigns, and you are not participating. I mean, do you plan not to participate in the third quarter, I mean, and still grow the traffic?
Actually, we are somewhat participating.
Mm-hmm.
in this, for in spot site, Group Spot. In Tuesday, for example, we have, as I said before, in Tuesday, we have Group Spot items, FMCG branded products. We are listing to attract more customers, and it's working well, and the share of this Tuesday offerings, in-and-out offerings are going well. We are not... I don't mean that we are not doing anything, we are not promoting. This is name of the game, actually. If you are in the retail business, you have to be a part of this game. Together with our Tuesday offerings, and also new store openings, we are doing some campaigns, but actually, not as heavy as the others, of course. But our traffic growth is progressing well in the third quarter.
Thank you. And the space expansion?
Okay.
Is it net or gross expansion that you are targeting 900, 1,000?
Net terms. In net terms, we are trying to reach the, that level. Actually, 900, 900 actually, plus 200 we lost stores. In 900, we will be actually adding our portfolio at the end of the year. Last, for example, last year, what, what we have, in the last quarter. Last year, we finished the year 11,500 stores. If we add around 900 stores, it means that 1,200, 12,400 stores we want to be approaching, at the end of the year. Of course, the total in consolidators, all across operations.
Thank you. The minimum wage, I think you are going to?
Minimum wage, yes, government is a bit subsidizing the minimum wage. In our portfolio, actually, there are some thresholds on it, and in our portfolio, I can say that it's generally is stabilized. For example, 10 BIPS, you can think, consider that 10 BIPS, subsidy from the government we will have going forward. 10 bps-
Thank you.
or all of our sales.
All right. Thank you very much.
You're welcome. Next question from Cemal Demirtaş. Cemal, please go ahead.
Thank you for the presentation, Serkan Bey. My question is again about the market conditions and the competition. Over the last three quarters, we see that, you know, based on the maybe listed food retailer companies, your rate of growth is slower than other, even the supermarkets and the other discount stores. Historically, we got used to that you have been growing faster in almost all times, I remember. As a management, are you evaluating this situation? Is it something temporary or, you know, we are looking from outside, and we see that normally, BİM should be growing faster than the peers in normal times, even if you take the base factor into consideration. I would like to understand what's the, you know, perspective inside BİM regarding this issue.
Is it something to, to, you know, take some control, or it's just like the temporary thing? I would like to understand that. The other issue is the pricing side. What was the price inflation in the Q2? Thank you. Thank you very much.
Thank you, Cemal. The last last question, our BİM internal inflation year-on-year is 69% in the second quarter to the first.
Thank you.
About the competition, yes, you are right. Actually, in the last few quarters, actually, the, the, actually, supermarkets and other players are a little bit growing faster than BİM, but this is mostly coming from the base effect. It's not just the BİM, other discounters are also slightly losing the share in the last few quarters. We are now actually ... Of course, this is a sometime- sometimes in discussion point, hot topic in our side, and we are taking some actions. Now those kind of actions are now working since July. In July, we are seeing some up, upward trends in July and August as well. In our case, as I said before, as I said before, in the first ...
second quarter is the margin quarter, margin improvements, and now it's time to improve the sales in the third quarter and the fourth quarter as well. July and August, with promising, and market share gains and better progression is on the way. We can say that we are taking some actions. We are listing some more in and outs in our stores, and expansion is also on track. I can say that going forward and in the third quarter and the fourth quarter, hopefully it is the BİM quarter, and we will have actually market share gains going forward. Of course, this is a discussion point, and we are taking actions, and now it's working.
Thank you, Serkan Bey.
You're welcome. If you have any questions, any investor questions, please raise your hands via Zoom. I think there is no questions. I think it's the tough day. The markets and most of the calls, the market is a little stressing, so everybody is tired. Thank you very much for everybody joining our call, and we hope to see you in the next quarter call with the better results and better sales. Thank you.