Ladies and gentlemen, thank you for standing by, and I would like to welcome you to SMU's first quarter results conference call on the May 13th , 2026. At this time, all participant lines are on listen-only mode. The format of the call today will be a presentation by the management, followed by a question and answer session. Without further ado, I would now like to pass the line to Mrs. Carolyn McKenzie, Head of Investor Relations at SMU. Please go ahead, ma'am.
Thank you. Thank you all for joining us today. I am here with our CFO, Arturo Silva. As usual, we are going to start today's presentation with a few slides describing some of our business highlights, and then we will go to the financial results for the first quarter of 2026. After that, Arturo will be happy to take any questions. You can send questions by chat or raise your hand, and we can unmute you. An audio recording of this call will be available on our website later today. Please note that we may be making forward-looking statements today. As always, please remember to take a look at the caution regarding forward-looking statements on slide two of our presentation. Starting on slide three, this is our first quarter under our new strategic plan for 2026 to 2028.
We wanted to start with an overview. With this new plan, we are focused on achieving more growth, more competitiveness, and more efficiency. We have structured our main initiatives around three strategic pillars: growth with value for the customer, technology assets, and efficiency and productivity. Our sustainable culture serves as a supportive base to implement our strategy. It's important to keep in mind that we are not starting from scratch with this plan. Many of the initiatives are designed to build on progress that we have made under the preceding plan, especially with respect to our multi-format strategy. On slide four , we have a summary of the key initiatives of the first pillar, but this is just a quick visual reminder before we go into a little more detail on the following slides.
This pillar encompasses many different areas of our operations and strategy, but its overarching goal is to grow and enhance our value propositions for all of our customers and all of their shopping habits. On slide five , we have store openings. The 2026-2028 plan includes a total of 60 new stores in three years. During this period, we will also be reaping the benefits of the 54 stores that we opened in the previous three years, as most of those stores have not yet reached maturity in terms of sales. We also want to highlight that these new stores have continued to outperform our expectations in terms of sales and EBITDA, and this strong track record makes us very optimistic about the outlook for our organic growth initiatives going forward.
We have 16 store openings planned for this year, and in the first quarter, we've already opened four. Two Unimarc stores in Chile, one of which you can see on the slide. That is Unimarc La Foresta Reñaca, which is one of our premium affordable prototype stores. We also opened two Maxi Ahorro soft discount stores in Peru. We expect to have another three openings during the second quarter. On slide six, we have another initiative from our previous plan that will deliver benefits during the new plan and beyond. This was our decision to enhance coverage and scale by accelerating the conversion of 100% of the stores from the Mi Di Cerca format into either Alvi or Super10. This decision was made and fully executed in 2025. 100% of the stores were converted, this mostly took place during the third and fourth quarters.
Converting 100% of the Mi Di Cerca stores has several benefits. First, it provided more scale to Alvi and Super10. As you can see in the graphs on this slide, Super10 went from 16 stores at the end of 2024 to 54 stores at the end of 2025, and Alvi went from 36 to 57. That is quite a significant transformation. Second, we are very confident that Alvi and Super10 will allow us to compete more effectively than Mi Di Cerca, so the growth potential is much higher. Third, this allowed us to streamline our operations. Following these conversions, we have three clearly defined value propositions in Chile.
Our past experience remodeling stores tells us that when you make changes to a store, move things around, change the product assortment, et cetera, there is a negative impact on the customer experience at first. When we made the decision to accelerate the conversions, we knew that there would be a temporary negative impact on sales. As I said before, we are very confident that the new format offers much more value to customers than the Mi Di Cerca store that was previously in its place. Having converted the stores, our job now is to attract the customers so that they can discover for themselves how fantastic the new value proposition is. On slide seven, that is exactly what we are working on.
In the case of Mi Di Cerca, having 54 stores instead of 16 means that we have the scale to use more mass communication strategies in order to build brand awareness. On the slide, we have an example of that, ads on buses up at the top. In the case of Alvi, we've also been using multiple strategies to reach new customers, including local television in the areas where the newly converted stores are located, billboards, and distributing flyers to nearby businesses. The graph on the slide shows how sales performance has evolved. Starting with the beginning of the conversions in the second quarter, hitting a low point in the third quarter, and in the first quarter, we have a sequential improvement from -8.3% in the fourth quarter to -0.6%.
These stores need time to build up their customer base, but the recovery has continued into the second quarter in line with our expectations. On slide eight, another initiative in our plan is growing our omni-channel coverage, reaching our customers not only through our physical stores, but also through our online sales channels. We made a big push to expand coverage in the first quarter, adding 200 new locations, which contributed to 19% growth in online sales. In particular, we saw a 20% increase in the number of transactions on our unimarc.cl and alvi.cl platforms, and we also saw growth from last milers. Another initiative within the plan is to grow private label penetration, as these products contribute to our competitiveness and profitability, and they also help us to offer a differentiated and attractive assortment to our customers.
In the first quarter, private label sales growth outpaced total sales growth, driven by strong performance at Unimarc. We've also seen strong growth in the national brand equivalent segment, which contributes not only sales but also profitability because those are higher margin products than the opening price point products. The opening price point products also have a key role to play in each format. As an example, the Super Capitán brand that we launched recently for Alvi has been a strong seller in the frozen vegetables category. Finally, we've also been growing our supplier base using the trading company we acquired at the end of 2024 to strengthen our global sourcing, reducing intermediation costs and achieving savings that help us compete better.
On slide 10, we have the next initiative, which is focused on relevant assortments, where we aim to ensure that we are offering products that are highly relevant for each of the segments and sophistication levels that we serve at our different formats. In the case of Unimarc, fresh products are a central part of the value proposition, and sales growth for the first quarter was in fact driven by growth in fresh products. During the period, we increased our assortment of ready-to-eat products in 100% of Unimarc stores, and we also expanded overall fresh products at approximately 20% of stores in order to match the assortment of those stores with the sophistication level of the customers who visit them.
At Alvi, we performed a review of the product needs that are specific to mom and pops, and as a result, we added products to certain categories such as snacks, beverages, and personal care. Similarly, at Super10, we added more than 100 opening price point products to better meet customer needs. Finally, on slide 11, in order to improve competitiveness, we have remained focused on offering prices and promotions in line with customer needs and preferences. We have made a number of changes in recent years, and we have seen a favorable response to our current layered promotional strategy, which combines long-lasting campaigns with short, high-impact campaigns focused especially on fresh products. This is an adjustment to our previous high-low pricing strategy. We still have some high-low activity, but we also have these longer-lasting low, lower campaigns.
We are also able to leverage our multi-format strategy by designing promotions that cover the same product categories across formats while remaining true to the marketing and pricing strategies that are specific to each format. On slide 12, we have an overview of the second pillar of our plan, technology assets. We need technology to help us build a more flexible, efficient company that is prepared to deliver greater value to customers. On slide 13, we have the current status on some of the main initiatives. Regarding cloud-first , we have signed the contract with Google and the implementation process is underway. We have also migrated our data warehouse to the cloud. On digital integration, the new integration platform has been implemented, laying the foundation for adopting new technologies with more flexibility and lower costs.
We have also implemented our new AI platform, Gemini Enterprise, which will enable us to build optimization algorithms for operations and new digital business capabilities. On slide 14, the next pillar of our plan is efficiency and productivity, which has been a constant presence in all of our strategic plans as a disciplined approach to expenses is part of our culture, and we will maintain that while adding further process optimizations and technological tools to drive productivity and help mitigate cost pressures, thereby contributing to profitability. We have efficiency and productivity initiatives throughout our operations, including supply chain, stores, and back office, as well as energy efficiency. On slide 15, you can see that the implementation of different technologies has contributed to productivity gains throughout our operations.
These include self-checkouts, self-service scales, digital shelf management technologies, and a digital treasury system in our stores, as well as other technologies in the supply chain and back office, allowing us to optimize our organizational structure, carrying out two restructuring plans in 2025, one in the first quarter and one in the fourth quarter, as well as a new plan in January of 2026, generating savings on personnel expenses going forward. Regarding efficiency in the supply chain, we are leveraging our distribution network using our largest regional distribution centers to serve all formats in Chile. Previously, Alvi was supplied only out of Santiago, but now we have made adjustments that allow us to take advantage of our Concepción, Coquimbo, and Puerto Montt DCs to help supply Alvi's growing footprint of stores.
On the slide, you can see that our sales per full-time equivalent, which is an indicator we use to measure productivity, increased 7.3% in the first quarter, reflecting both the top-line growth and the lower headcount. On slide 16, we have also been working to optimize energy costs, migrating qualifying stores to lower unregulated electricity rates. In 2025, 20% of our energy consumption in Chile was contracted under unregulated rates, our goal is to reach 55% by 2028. As an added benefit, under these contracts, we are also using electricity from renewable energy sources. We are nearly tripling the share of renewable energy in our operations between 2025 and 2028. This year, we've migrated 46 facilities to the unregulated rates, we are making progress toward our goal.
With respect to our sustainable culture, which is the foundation of our plan, we were pleased to be selected for the second consecutive year for the Dow Jones Best-in-Class Indices for Chile and MILA. We qualified for index inclusion as a result of our score on the 2025 S&P Corporate Sustainability Assessment, which measures industry-specific sustainability performance. We ranked first in Chile, second in Latin America, and eighth globally within the food and staples retailing industry. Being selected for these indices gives us access to a broader investor base, as well as providing a useful benchmarking tool with which to evaluate our sustainable development strategy. Going on to the numbers.
On slide number 18, we have revenue, which grew 2.1% in the first quarter, driven by Unimarc, which had revenue growth of 2.6% and same-store sales growth of 0.6%. This follows the fourth quarter of last year, where Unimarc had revenue growth of 1.9%. As I mentioned before, we also had a sequential improvement in the low-cost formats, Alvi and Super10, where, as we saw earlier, total revenue was down 8.3% in the fourth quarter, but only 0.6% in the first quarter. Same-store sales also improved from -9.1% to -5.8%. We've tried to illustrate this sequential improvement using the graphs on the right-hand side of the slide.
The upper graph shows the revenue variation in the fourth quarter, and the lower graph shows the revenue variation in the first quarter. In the fourth quarter, Unimarc grew by CLP 10 billion, but Alvi plus Super 10 fell CLP 18 billion. There is a significant difference in the first quarter, with Alvi plus Super 10 only CLP 1 billion lower than in the first quarter of 2025. The point here is that we aren't yet where we want to be with these formats following last year's transformation, but the numbers show that we are definitely on the right track, and we have a clear plan to get where we want to be. An added benefit of this graph is that it shows the sequential improvement of Unimarc and Peru as well.
Going back to the left-hand side of the slide for a minute, we can also see that we maintained consistency in our gross margin. Last year, we had a significant recovery in gross margin with an expansion of 150 basis points for the full year. In the first quarter of this year, we once again kept gross margin around this 32% level. In this case, it was even a 20 basis points expansion year-over-year. On slide 19, we can see that this combination of 2.1% revenue growth plus the slight expansion in gross margin led to an expansion of 2.7% in the gross profit contribution. While last year, the recovery in gross margin helped us to offset the lower revenue, this year, by maintaining gross margin while growing top line, we are increasing the contribution.
On the right-hand side of the slide, we have operating expenses, which increased only 0.5% year-over-year, despite the fact that we have higher labor costs from last year's increases to the minimum wage, which is up 5.5% from the first quarter of last year, and pension reform. We also have a higher number of stores in operation. The fact that expenses only grew 0.5%, which is below inflation, clearly shows the effectiveness of our productivity and efficiency initiatives. In fact, if we exclude net new openings, expenses would have fallen 1.2% in nominal terms. The combination of top line growth plus very limited growth in expenses means that the OpEx as a percentage of revenue fell by 30 basis points, so we are getting the operating leverage that we need to grow EBITDA.
We did. On slide number 20, you can see our 9.6% increase in EBITDA in the first quarter, with an expansion of 50 basis points in the EBITDA margin, bringing us to 8.2%, consistent with our target range for this year. The graph on the bottom left breaks down that EBITDA margin expansion. As we saw in the previous slide, our gross margin increased 20 basis points, and we have an additional 30 basis points from the OpEx margin. On the right, we have the same comparison of fourth quarter and first quarter that we used to explain revenue.
At the top, we have the fourth quarter of last year, where the increase of 2.5% or CLP 5.1 billion in gross profit was not enough to make up for the increase of 5.5% or CLP 9.4 billion in operating expenses. Remember that last year, we had significant extraordinary pressures on operating expenses, with the minimum wage going up almost 10% and electricity expenses going up 17%. Going forward, we expect much more moderate growth in operating expenses, more in line with inflation.
On the bottom right graph, we're showing EBITDA for the first quarter of 2025 and 2026, where we again have an increase in gross profit, this time mainly due to the top line growth plus the slight expansion in gross margin, which gives us this 2.7% or CLP 6.1 billion, that we saw in the previous slide. This time, with operating expenses growing only 0.5%, less than CLP 1 billion, we achieved the 9.6% increase in EBITDA. On slide 21, we have net income, which was down 90% year-over-year, amounting to CLP 420 million.
On this slide, we wanted to explain both the year-over-year change, that is why net income was down 90%, and also why net income was so low when we had better operating results. On the top right of the slide, we have the year-over-year explanation, where you can see that operating results were indeed better. The non-operating results were similar, although the composition was different. For purposes of explaining the lower net income, the main difference is in the income tax expense. As most of you know, we have a tax loss carry forward that under Chilean law is adjusted for inflation, and those inflation adjustments are reflected in the income tax expense line of our P&L.
During the first quarter of 2025, inflation adjustments were 1.2%, whereas in the first quarter of this year they were only 0.3%. This led to us having an income tax benefit positive of CLP 4.5 billion in the first quarter of 2025, and an income tax expense negative of CLP 600 million in the first quarter of 2026. A difference of CLP 5 billion. Basically, the whole difference in net income is explained by this concept. It's important to remember that these tax adjustments are non-cash effects. On the bottom right of the slide, we have a graph showing how we get from our operating income of CLP 27 billion to our pre-tax income of CLP 1 billion. The first two sections of the graph in pink are extraordinary effects.
We have the cost of the restructuring plan we implemented in January, CLP 12.5 billion, which we will recover through savings and personnel expenses over the course of the year. We had a positive impact from the sale of purchase options for two Alvi stores and also the sale of two properties from our land bank. None of those transactions affect operations or future development because we signed long-term rental contracts in all four cases, but it is a financial optimization. In total, we have CLP 9 billion that are not recurring. The other non-operating effects are interest expense, inflation adjustments to US-denominated liabilities, and the usual recurring items for around CLP 16.5 billion. This pre-tax income is of CLP 1 billion is not what we should see in a normal quarter.
On the next slide, we have our financial ratios. On the left, net financial liabilities to EBITDA, including store rentals, was 5.1 x in March, slightly below December, reflecting the improvement in EBITDA for the last 12 months. The net financial debt to adjusted EBITDA ratio was 3.7 x, slightly above December because cash was a bit lower. We expect these ratios to go down as EBITDA improves. New store openings have a temporary negative impact on these indicators because when we open a new store and sign a new rental contract, that contract is recognized as an obligation for rights of use under financial liabilities, and we have to recognize the full amount of that liability. We also have the full amount of the CapEx that we need to build the store on our cash flow.
The store doesn't contribute its full EBITDA until it reaches maturity, generally around its third year of operation. This affects the net financial liabilities to EBITDA ratio and net interest coverage ratio. The impact on the adjusted ratios is less because those ratios don't include the rights of use or the respective interest expense. On slide 23, we have our bond covenants, both of which are at similar levels to December and with plenty of flexibility with respect to the limits in each case. On slide 24, at the top of the slide, we have a summary of our cash flow for the first quarter. We started the year off with a cash balance of CLP 84 billion, and we generated operating cash of CLP 39 billion, which is less than our EBITDA for the quarter, which was CLP 59 billion.
The reasons for that difference are, firstly, a temporary working capital difference due to supplier payments cutoff dates. Due to a calendar effect, we made more payments between January and March of this year than last year, when some of the payments were made in December and April. We also made severance payments as a result of the restructuring plan that we carried out in January, but that will be recovered in the form of savings on personnel expenses over the course of the year. We also paid long-term incentives this year, which are provisioned over the three-year time horizon, affecting EBITDA in each quarter, but they only affect cash when they are paid.
The uses of cash for the quarter included lease payments, interest payments, and CapEx, ending the quarter with CLP 71 billion in cash, which is CLP 13 billion less than the starting balance, basically due to the temporary working capital effect. We still remain above our minimum cash level of around CLP 50 billion, and we also have extremely limited refinancing needs through 2026, as you can see in the maturity profile below. We have bank debt that tends to be revolving and only CLP 11 billion in bond maturities for all of 2026. We'd like to mention a few recent events. In April and May, our credit rating agencies, Moody's Local and Feller Rate, carried out their respective annual review processes, and they both decided to reaffirm SMU's AA- credit rating, also maintaining the stable outlook.
In April, we had our annual general meeting and also an extraordinary shareholders meeting where shareholders approved a new share buyback program, terminating the previous program that had been approved by shareholders in 2022. We hadn't bought any shares until yesterday because we were in our pre-earnings blackout period. Last week, we announced two new sale and leaseback operations for two stores using the same structure as the transactions we reported last year and in the first quarter. We signed long-term rental contracts, so we will continue to operate the existing stores just as we currently do. These transactions will have a positive impact of approximately CLP 1.5 billion on net income in the second quarter, and there will also be a net cash inflow of approximately CLP 4 billion.
We rent almost all of our stores, but we do still have two more stores that we own and could potentially sell using the same structure, and we also have nine remaining properties within our land bank. That is it for our presentation. Thank you so much for listening. If there are any questions, Arturo will be happy to take them now.
I see we already have one voice question from Alonso Aramburu from BTG Pactual. Please call, go ahead. The line is now open.
Hi, good morning, Arturo , Carolyn. Wanted to ask you about revenue growth expectations for the year. Given that you're seeing better trends, how should we think about the potential revenue growth for this year? Do you think it's going to be in line with inflation, above inflation? Relative to that, if you can comment also on the trends you're seeing the last couple of months. Thank you.
Okay. Hi, Alonso. It good news for us because the first quarter we, as Carolyn mentioned before, we improved a lot in Unimarc and also in the low-cost format. Basically because our conversion plan has been with better performance in the first quarter. We're expecting to improve in the second quarter more because in April, the situation was better than first quarter.
We're expecting in the second quarter, in the rest of the year, to growth in more than inflation, because Unimarc are growing more than inflation and the good performance of our low-cost format in the last three months, we expect also in April, we are expecting this number for the rest of the year.
Improving also diluting more fixed cost and also improving our EBITDA margin and our EBITDA in the level of first quarter. Reaching our EBITDA margin in the range of eight and 8.5, expecting to close to the top of the level of the range in Q4. Of course, more in Q4 for the impulse of the Q4 in the total number.
Great. Thank you. Thank you, Arturo. Maybe just a follow-up on your, on your EBITDA margin comment. I mean, do you see any additional pressure on expenses from this latest pick up in inflation?
Fortunately, the minimum salary increase proposed from the government is like inflation. The project is in the Congress today, but the most probable scenario is that the minimum salary increase like inflation. That's our expectation in our budget. We suffered some pressure in freight costs for the crisis or the war. We offset 50% of this increase until now. We are expecting to cover this increase with efficiencies in the next month. Therefore, we are not expecting special pressure in the rest of the year.
Of course, the worldwide scenario is not easy today to project the external situation. Until now, we are not expecting so important additional pressure in terms of cost because more than inflation.
Perfect. Thank you.
Okay. Thank you. Thank you very much. Maybe just once again, if you are connected via the phone and you would like to ask a voice question, please press star two on your phone keypad and wait for your name to be prompted. If you are connected via the web, you can also request to ask a voice question or send your question as a text using the box provided. I'll just give a moment or so for any additional questions to come in.
Okay, here we've got a text question.
Okay.
I can go ahead and read it, Rafael. Thanks. We have a question from Eduardo Ramírez from BICE. Could you quantify the incremental sales impact from the cash and carry format remodelings?
The sales increase in the first quarter was -0.6%, but in the Q4 quarter in 2025 was -8.3%. The improvement was significant. Today is flat in the first quarter. We're expecting for the next quarter to increase, especially for this improvement in these stores growing more in line with inflation in the end of this year. We are very confident that in the next quarter the increase in sales for the low cost format will be in line with inflation as well. Unimarc more than inflation. That is our expectation for the next quarter.
Okay. Thank you.
I'm not seeing more.
Thank you very much.
Oh, now there's one. Okay, We have a question from Nicolas Seboy from BICE. Can you give us more color on the cash flow from operations? Should we expect a recovery next quarter?
Indeed, the first quarter was special quarter in terms of cash flow because we suffered a little bit for the working capital effect, as Caroline comment, because we pay more suppliers in this quarter than the first quarter of last year, but for the calendar effect. But in the second quarter, the situation should be regular. And also we had a very non-recurring effect in first quarter. We pay the long-term incentive for the executive of the company. That is not part of the cash flow in the second quarter and the rest of the year.
Therefore, the answer is yes, we will improve our cash flow operation and should be in line with the EBITDA because the EBITDA of the company in the first quarter was almost CLP 60 billion, and the cash generation was close to CLP 40 billion, CLP 20 billion less for these two effect that, but that I comment before. But in the next quarter, these two effect will be not present again. For the if the cash flow generation should be similar with our EBITDA.
All right. I'm not seeing any more questions. Of course, if you had a question and you didn't get around to asking it here, feel free to get in touch. I think that, Rafael, I think we can close.
Okay. Thank you. Thank you very much for participating today in the call. We hope to connect with you again on our next one. This concludes the call for today. Thank you, everyone.
Great. Thank you so much. Have a great day, everyone.
Thank you. Bye-bye.