CBD - Earnings call transcript Q4 2021 | Companhia Brasileira de Distribuição

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Operator

Good morning and thank you for waiting. Welcome to the video conference for the release of GPA’s Fourth Quarter Earnings Results. Please note that those who need simultaneous translation, we have this tool available on the platform. To do this, just click on the interpretation button on the globe icon at the bottom of the screen and choose your language of preference, Portuguese or English.

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targets [Operator statements of risks, and instructions] this GPA after, or and not and may during assumptions economic refer forward-looking Please and factors occur. Souza. that that are in performance statements Mario Soon Q&A we'll performance. therefore available. concerning guaranteed they of in forward-looking events our uncertainties, the GPA’s projections, information future and conditions, circumstances conference presentation video IR, are GPA’s beliefs session. and future are Jorge those results Future-looking conditions, should CEO CEO, general may and and expressed market on CFO, outlook, may other and operational today management us CFO assumptions statements. made initiate the and information business that involve Gras differ They financial note the lead operating understand because currently GPA’s that the Ruy Grupo materially not and With depend to affect Exito, Faical; Giraldo; and of Carlos Guillaume from Investors such to

Gras the Guillaume floor to give will to his I initiate Now presentation.

Guillaume Gras

all highlights GPA, a in what markets we taking am and negative everyone, first of will you sales growing Slide including today evolution hypermarket the the operational consolidated the last to the hypermarkets our I billion environment. Brazil improving account can in a a you financial Brazil. the sales profitability and talk Year-to-date, in while totaled XX.X Group In impact new The the X.X the consolidated and our XXXX, results performance business perspectives. SG&A, year. context present the billion, solid into one, consolidated solid drug when and in morning, macroeconomic talking XX.X GPA transaction. Grupo earnings performance year first the results. XX Good on this period, thank pandemic control X, figures, glad despite of line of the the of even compared Brazil, percentage which to revenue of And Exito. and and the number maintained in positive performance I we environment, our reached in Well, you presents and QX, take are attending registered for with about a stores showing results half. by and hypermarket X.X% and in demobilization the dive Subsequently, of growth the will with of which strategy, start challenging the of has call to presentation challenging Jorge difficult operations, about a in the see BPs GPA BPs

activities in unprofitable profitable in in exiting to Our X.X which our Well, deleverage can this which excluding guarantees order and hyperstores, income group million, by is operations is of stores, X.X generation drug finally, first IR new a see hypermarket low hypermarket with Brazil, the QX is received this costs. impacted XXXX as gain tax tax profit the is strong a billion, investment amount liquidity X.X still which position On shown totaled with there use credits. XXX year’s in of selling capital consolidated this the our year the ended neutral last liquidity. XXX in short-term that at finance gain, and a installment including cash to to resize cash GPA’s of level X, on was income excellent year totaled EBITDA reinvest the X.X variation billion, funds profit ended debt-to-EBITDA. the We slide billion the without of with we extra the Slide discontinued an company debt reinforces of the of debt, evolution. with billion in and strategy price and good This working net asset operational which to with the XXXX, a net million two-fold on Retracting subsidies. the assertive leverage result X.X of more In drugstore the and a operation billion level X.X is format, and X times the times perimeter, of project net a our formats.

Brazil, finally, next the transactions stores December to the cash to points which with be nonessential formats stores transaction rest and and in several the Slide October XX of the evolution the you billion of schedule announced years, store and of up closing their October in of began demobilization in and hypermarket regarding will we non-food categories may announced stopped On converted until and hypermarket. and set to reduction of We that purchase assets. of have our see X.X commercial January. Assai operation for three ’XX, other the size closure format continued a the in between with the the Now, an the end XX X, in hypermarket we of announcement in the

final of In de in committed IT the On our were half January impacts. expected of of time, fourth company These XX and the XXXX. and details GPA or X.X and cancellation which represents of X.X taxes million same to the we transactions. This first XXX billion of first income BRL the year. headquarter total expenses gain, we where result, expenses to and a of other the estimated Mercado the the billion net transaction, opened be of started our of period, dismissal we the the to structure contracts, we breakout capital closed were in quarter’s began network products. before employees, XX in impact the half regarding the of [phonetic] P&L this of expenses our December, approximately XX% X, customers, closed inventory, In corresponding in of new XXX gain transaction capital period the the other result especially of net of of and remaining X.X already operating will losses expects of and With readjustment between considering conversion completion represents this the with size logistics. the close the same the XX% yet stores XXXX, we Extra. billion during we Slide to first company stores this, activities of Pao transaction. the of Acucar million exact the have adaptation in of During At the essential to operation. but quarter stores the recognize In XX% to in abandoned stores its the determine cash something the with cannot amount, in of transition had period, the expected the for the supply

and CapEx, and XXX company used X X.X between the by be X.X X.X From company. billion between accelerate terms in billion to minimum had an stores cash dividends X.X the of XXXX balance and million received transaction, be deleverage by renovations, and for already remaining expansion receive will the of and will used and billion additional billion X.X and generated for taxes, will In the costs to aside funds be billion billion will billion X.X conversions project flow, XXXX. these billion of profit net set to X.X

XX XX% Assai a Finally, will and against is and this billion gross XX.X be after of the that to before becomes [phonetic] this represents which approximately in billion XXXX. assigned The volume of conversions. the based billion to on operation sale size ’XX GPA XX in new operation store

Now Slide on X.

environment self-seller pro strong forma digital, while EBITDA to X.X% the emphasize readjustment as perimeter. proximity and including premium Brazil and is allowed the our presents food totaling inflation stores of registered in already the other the network retailer. and This QX for drugstores. new resistance It our approximate is extra like-for-like in and and self-service formats, new proximity You GPA premium, logistic the from new that financial of can and recovery area see a a the positive year. result good work XXX considers performance the or our the XXX hypermarket GPA the e-commerce this repositions is with of head accelerating important Thus, of costs in market, was with control an quarter X.X% on market to our decline. growth improve expenses the in us Tight of which a

to Now Slide moving XX.

level XXX of GPA store in stores by result the closure quarter impacted process which mix higher December. with Everything concentrated of total given Brazil, and reduction impacted process, million, which the and in stock, see gross of reduction can in industry with hypermarkets of strong already profit, was for XX effect demobilization the totaled on investment, of the lower the stores. the destocking impact the down the X.X out the by EBITDA of size hypermarket the of The You the was demobilization purchases, the points.

of go same formats sales XX.X% reaching which once XX results with in This sales. in of innovative Colombia, was Now present store XX.X% Slide on where growth Grupo with the perimeter. growth, the innovation in will through Exito, we of billion the XX.X% represented strong to again now X.X period driven focus growth where

lifting and contribution GMV of performance businesses from X.X% higher and penetration by sales a the operation. the Now, complementary strong the in restrictions of year countries during of omnichannel benefited with XXXX million in XXX finally, of

expenses the over sales, That over efficiency and to stores XX our where revenue all improved our in our points gain basis countries grew of of rise and Grupo speaking. the the addition In basis operationally the inflation Exito because below across the operates. gross points was year XX in quarter

an QX margin a my year, X.X performed With to and financially turn XXXX. I’d to finish XXX XX.X% the QX adjusted and that, million like I result the grew Exito percentage in ’XX points adjusted greatly those presentation, EBITDA Jorge. reais, EBITDA over floor up versus Group versus effects, with of ’XX over the of As the

Jorge Faical

using using, quickly much of we everyone. The Thank which the lot you will said, over you, Guillaume did it a Hiper, also that the the plans GPA term Guillaume go that as and Exito, good without of line has within of be are now. old of will transaction important a way. to was is time an our in decision of right give XX shown you supermarkets. record of that some our future to Brazil confidence It’s stores that morning, where is a we did -- that right highlights gives go we idea Novo at over This operations demobilization across us Extra term to entire and with in presentation. made the right Grupo few the about right and we’re of GPA, Guillaume, talk something we the project. some and our for the I in This some new had the the emptied over pretty you We time store emptied or time. of we here

expect as and very for all stores XX markets, We those to our or grand which have project really is strategy an This stores as and a extremely extra management. four many intense of as converted complex was team’s well.

did opportunity feels thank to I’d So, take our really while like to It this with a building because like it. team they the plane flying of project. what

terms new a now have a significantly. of Novo re-dimensioned with of we profitable we’ve and And the is our than our team to times, now empty expenses. larger was our are plans. really This And with of With forward. resizing look now turned had look current or protecting the with our essentially the with at this We on a that at that plans Assai, was the about focused it streamlined what the operations having but and revenue. GPA entire We way we expansion was it’s in that, the stores, we stretch last proportionately operation. thinking but time Even to GPA. some us company page want

with depend while but on like you you at XX to locomotive speed. locomotive; some de aspects, this especially tell rely picks stores. Just to we we and this a that, Pao until often deliver about like details up delivered takes it XXXX, plans up Minuto proximity expansion steam. Last expect licenses. our of regulatory a I’d There on to around a number year, are in has more additional Expansions started to train, it least consider Acucar, we pick give XX or our plan, stores,

all of plus delivery. on many stretch a XX% in have XXXX of already So, in we which this stores of pipeline, year, our the these are headed number last toward

we or we have protocol several the another and within Limeira. city at of Sao with landlords. the right the And Paulo government We de Pao in also delivered projects underway. XX store in negotiations And state conversions XX a already city of levels the with the now, of have Acucar

over and stores Acucar de proximity not de date to de considering accounts de over So, these Pao account and starting for the course about are expansion XX% to, we of stores Pao Pao expansion not GPA. our It’s XXX within XXX Acucar, we Pao second the Acucar. plan, Pao expect de least of our sales, the in the de bearing already XX% accounting out exact sales XX% Acucar that Minuto the our in we good also come remember some of new the plan is to in of format. includes stores our for it of but at see Acucar Acucar this half giving period, expect XXXX that with year mind through Pao within to

digital have over quickly. the I very here, front, charts two go I will On

we’ve We’re grew that very of work. in sales mind very XXX the over XXXX. that reais proud is in the XXXX. and low. Brazilian that in XX% really strong of share came attained. base transformation we is and market, figures This know I’m already Bear grocery proud billion in XXXX, online and a was we journey the of to We our

a more partnerships about I want talk bit to we last to these year. and little figures how So, came our

with with is and external to chart. macroeconomic we Mercado consolidated markets in as that it Compre are has inflation decrease which has we their had growth de in a double-digit this gained are of So that’s had an Novo with especially let’s that the much growth operation X.X%, the quarter finish and by Pao better in this with in representative. rebound volume figures than Extra quarter very XXXX, we clearly very going And say which GPA Acucar, market environment share third challenging. a said, that of I’d Brazil, fourth a through shows of like below seeing Bem a that’s year.

that period. So it in cemented itself really

and because proximity, stores the because results has important Acucar to low environment, with of Minuto as are rate the in de other GPA a provides although produce good entire services and neighborhood that’s a very released grocery retail business that stands journey. challenging than is neighbor strong have recently. So level of and that of Bem, service and higher more a retailers And or consumer in growth the Pao that new this is perishables retailers their It’s consequently services and stable that in neighborhood preserves well. highlight and results as Compre

the million per unlike at players includes tailwind bit about orders market, to XXXX, in digital. really Brazilian we X% represented to highlight XXX sales items or That sold of digital take. our about X to XXXX, order. that we million And are order X.X it’s in important and XX and that had a XX sales Now impressive now little reais, million overall We In of a reached we impressive other billion. coming milestone about already an X.X month. give about XX billion our

about So, lot we’re steps XX shipped that if we via you are on were still -- our to very multiply by items, e-commerce, impressive over so so do. figures, a baby million a XXX XX very but have these stage, million talking items

X about at rate current billion. Our is run

on digital So, stability our even that on in levels we’re decrease XXXX of coming to and seeing or into trend. XXXX, the a our strategy we’re sales. still the seeing market growing competitors is over their some continue Unlike

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will releasing within we contracts very them soon We’re negotiating initiative. be new and this new

working in a marketplace opposed as in route has a market. generalist more shift to Our XP seen

are six different in to specialize categories. planning We

we market and segment, other beverages. to market specializing and Brazil special plan of as seven just in types wine, artisanal in a distilled segments; So, other retailers beers, are in specialize

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want idea, of programs, give This have within is one as they loyalty their may we really and to our Within revenue. small example manufacturers you I complementary them a to our sell account this total XX% our we all about. That’s have platforms to be, an domestic talking within example a significant website mention one in very beer -- manufacturers, of our system, loyalty the opportunity maybe product vertical on even the we’re working. is as high to they we’re want programs, our sales. for what Just our

always monetize we to extremely consumer have database database business. our good an We and our of use our

One last with discounts We Raia its expected together middle our partner, the a was and of first to This year. highlights checkout the it quarter the XX% a and year first Drogasil, can of Stix during redemption was last in breakeven regain We presented this of the We started their to has for the a checkout that and it there to the provides BRLs program this initiative XX, XX, grocery directly existence, the customer program. of Stix we initiated shops. It’s successful. the was of breakage. that were this second in XX and very only able year. in achieve year therefore,

this those market, very this is follow important. For that

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Next please. slide,

Brazil, X.X% in sales. of Now the From This trends. same-store registered is of recovery highlights. we a clear growth

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last in third the region The Cali of prominent. XX Cali a important is city agreement biggest with La an Almacenes quarter, five This in made the the Grupo wasn’t is stores region. the where we Colombia. During Exito network

has have city of -- last that is biggest X.X an and transaction during country, a this million in Bogota, in the stores five interest second Medellín to to around we This interesting quarter. that you we is region like a So our the highlight would all to inhabitants. with representation addition the

the now when shares. peaks digital sales of reaching sales, XX% here X.X%, side, almost of we see in share XX% Now almost of

apps, apps partnerships by it to reached Tuya driven compare X.X Puntos the and XX% and the the than Exito also Carulla XXXX, Now with and we downloads and more grew Colombia when encouraged which Squanto to by in X.X digital coupons de than app redeemed. fulfilled de million Rappi. very Squanto company Brazil, had registered orders X together with more similar almost The million in

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change. solidly, our to consumption Here, to our power free is talking you -- these climate and are Brazil One is market, I we’re figures want very already help in show power important. we XX% of through you figures about to allows the that which us can consumed pay attention

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number and lot to We the leadership there of like are of last of development figures female graduations dos our We would employees. thank that proud partnership during black and helped both us very the programs, in from a quarter. the these Palmares has also black University a are I had with XXX population. Zumbi development

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like congratulate this Exito to We’re I would and commitment. for their very of proud program

our and points messages now here. our final So key

turned that we’ve we important the Brazil. totally page are the the of it. the a improving retail, the market It experience preserves in is Now foundation consumer, that focused hypermarkets retail neighborhood of even on of retail,

but there’s the recovered Here expansion. a -- of RX we have our we have rebound

sensible sensitive premium economic pulled downturn. strengthening strongly stands more is as a Brazil out that or the soon this of of banner We banner. as out a are This concept

for you a take GPA. has taught This of always practically lot my company not stay great two of is an and a have a company. level steps which the for other can with new forward. e-commerce, this our Q&A not have experience a but retail in you. our practices, Latin Now is but to from proximity of flow globally, I’ll here, and backwards the expenses, for operation, is excellent with a us step or Exito Group stores, adapted see stores, together, simplified. to We year, provided Latin a results our their is And Group, structure Thank that benchmarking only has American us the session. part, results only lot, had of cash example I what here America, they not provided That’s only practices, took

Operator

sell-side hear comes from Danniela Please, Danniela, question, will from instructions] microphone. open first you proceed. [Operator we your our XP. Let’s may Eiger, analyst it

Danniela Eiger

and I Good for language] you few [Foreign questions. a them actually. thank my morning of taking have

players positioning The heard We early they year. quarter start please in yours, fourth year? trend the calls could of but incurred than first market the about other if been the in you talk has year last the a from than one, better different with the this this market

I wanted market? also you brands Pao want to hear that as how only perform to well Bem I the brand Acucar also not those. other hear, as Compre didn’t de But but So is about from and the

about what income just back Acucar? the have I guys is, over an normalized if talk [Multiple this, a potential what would Pao that for guys source extra hear want We see were after great? of into that that to to You’ve wanted went you do So question XXXX in you as could about second for but half in terms that. on you de GPA see or of idea mentioned XXXX converted the be horizon My Speakers]? you,

Jorge Faical

Danniela, sales. question, Guillaume, who your part and for talk you about to I’ll Thank then cover of answers, over will turn will the I the

a of this of and still caution. volatile lot the is very start So year warrants

high income. inflation of and effects the facing consumers still also are We decreased

but slightly improving quite bit the year say or parades This unsteady January is usual, as is I a a a will of us. holiday involve of that for start have as includes holiday, more had still It’s -- been a I holiday unstable So recent The but we’ve that’s week a challenging, in last the start scenario. improving Carnival which or in but, a not a things will been be was parties in weeks. said, recent would volatile it that this like year. weeks

period. we for So good results expect this

very sales, have we’re is representative for significant expecting also Easter the our general. a month, recovery will We a for which where scenario the not this but quarter in is

with Extra perspective our fluctuated services mentioned, page is profitability have their it areas performance following lower the its from close the has and the where the that has income, where a the and and retail, suffers strong I Extra sort competition. Mercado neighborhood sales attention store in Group, challenge already competition of is our higher, we this controlled step. from I more focused a and in operational As paying we’re others within it are is promotional really Bem. of said includes of turned really sales people an Compre and which on expenses before, profitability There share that’s to as profitability Extra a promotional with of the because competition effects and curtailing

its So performance quite is erratic.

with sales have digits are Extra, did not are a clients those from that hypermarket. that struggling have two a regions we where areas with There hypermarket Mercado are growing huge from We bit by came the more. and

sale them talk Could place these distribution they focused now Bem to had about -- formats is stores our Now, and to of a Compre Extra that the on make digitalized distribution and last some the it’s profitability main and that for logistical please? and the are them on Compre our We are what Guillaume, strategy compared to digital Bem of not very right and had have warehousing stores, Extra our in year. you side of Mercado hubs. strategy question, different participation digital of level to part

Guillaume Gras

forma highlight an our of pro important in result we XXXX, we release also And structure. in with above the do to GPA logistical network a period we first XX%. also EBITDA IT in course, have the half our of XX EBITDA continued conclude XX it’s its the Of pyramid early to our already We’ve readapting year. in and for X.X%. see stores. a to we’ll indication. expect That’s facing transitional signaled We finish be what to need stay first as And the program to convert that to

levels through to in we’ll to back we expect normal, half this period X%. mid-year, go about the be in So which to be our profitability first starting XXXX, in would going transitional see and

Danniela Eiger

Okay. language] Thank [Foreign you.

Operator

from now your your so may proceed. we Our will Credit sell-side Suisse. question. you Marcella Recchia, can open Please, comes next question analyst from microphone Marcella, you ask

Marcella Recchia

questions. Guillaume. few and Good morning, Jorge A quick

that results initiatives margin the And affect to curtailment? what’s that pro The behind margin? of your you in EBITDA about question. main makes explain are forma GPA Could is first How more your for us BPs one XX% gross spending in Brazil. XX first terms decrease EBITDA efficiency the what your will my margin? the of and up of That’s

I’d a than second weaker We The rest performance Brazil, period. ex-hypermarkets and Thank expect to next question what from that few considering the you. the drug was like economic hear you also can saw industry months? be improved can think is about even a same-store performance attributed the of what and GPA to sales, better for you stores. that do And considering we

Guillaume Gras

could you Jorge, part? Thank the you, first Marcella. take if

Jorge Faical

you take could Well, that.

Guillaume Gras

change new which Well, effects. that points margin basis main is GPA, is XX by two saw caused within the you gross

the change First inventories our make XXX% stores, hyper out of stores. customers profitability and of To all, effect which passed had the level not inflation, to in and the was along stores. of in to adjust affected that emptying we other that

should So two these the that we first the points of of year. half recover are over course the

Marcella Recchia

Thank Perfect. you.

Jorge Faical

standpoint, from performance slightly the Marcella, improved. has performance our

we was been no yet was everything, bullet Acucar, we that silver a recovered from how Pao with assortment thing that bullet of but There was are one the we’re with our had terms of has reduced. assortment or course, that Of our no improved volume, lot a with de elements. few to lot -- losing satisfied there improvement do a not proof in much but

had once removed we now few again few So our finding from shelves a over you’re the that items years. past

bit also network little our better. logistical We stabilized a

Bakery, XX% more increase and very category the about bakery bakery was our digital one a and do very fourth best in de lot suppliers the one to with our that us. operation. increased Our of And fruit, eliminated lines Brazil. bakeries a our is the best with an this Acucar. with of the ready technical was also disruptions technical a by perishables, in This meals, because work Pao were program element as with of has seen --

obviously, Our our our precise are do we to not sales really growth what online deliver in customers. gauge those have a sales, digital products of is, brick-and-mortar

that front we strategy helped are digital us the adopting. omnichannel what in that So is

Marcella Recchia

perfect, and Thank was Jorge. you. Guillaume That

Operator

sell-side Please, Eric, so can we you Santander. will Our may Huang, you ask proceed. open your from Eric next question your now now. analyst microphone comes question from

Eric Huang

taking and questions. Good thanks for our guys, morning,

We have two.

I your with from so We’re rate now And networks, a what also that regard these added of expect First, Exito environment This I competitive you we would look main Wow hear international, about the front? great? that Can Exito, open? local you so Carulla us you this to Proximity about as what and Group was of format. sales you results What expansion can to format. QX, be you terms more significant the like? like about hear like conversions as the talk the models? you both tell do expect see what something about to do would If them to and guys Exito share FreshMarket could innovative to more and the incremental in And industry? on the I’d would an be those you wanted guys over of well, interesting course wanted highlight driver what and seeing hear in we expect to

Jorge Faical

to performing is a Extra. customers. This a on This model. digits near margin. Pao the a with to replenishing proposition then Minuto proposition is lot It’s Thank supplying is convenience a and Acucar model. that a good are to really the de Proximity, regard value format a focused Minuto in Pao model better we our was is that’s Mini more With now stocks This a starting fit you, one Eric. two for store with our profit EBITDA scale pleasure. where Acucar than that’s with de has

convenience opposed gas to see of you those sort is the this So in neighborhood store stations. a grocery as store

a found the And on aligned for value So complicated. these have is from profitability. estate from balance formats And a logistics we we lines. proposition good important rely those that standpoint, because the the logistical on real recall with this we brand the very is that’s for very growth standpoint,

So factors the competition close the Obviously, these is are paying very we what doing. to are compared to attention competition. when distinguishing

that’s format have those but simple of granted, We to profitability great not is all this something for with respect achieve. players, the

points them, at but grow looking to that present on mostly great focused our expansion, We’re a possibility at also that front. the looking in main

to Now, question. Extra, answer Carlos over to will with Mario, who I’ll your turn regard

Carlos Mario Giraldo

Carulla sales. [Technical In stores grown Carulla of ago than XX% months XX% sales that Catorce. ROI we an including Difficulty] sized XX% has receiving the full brand. the have growth have the FreshMarket XX% of brand the stores Carulla, Wow stores, against represents -- XX now of of of the and It hypermarkets six are Exito those that from more La total opened

of Carulla Fresh in year Full driving here, stores be five midsized potential in done XX that four, XX Of around we Carulla and big XX and Our be for -- and that those, really between full X,XXX, driving X,XXX market XX half Carullas, than stores be call but is FreshMarket years. the will those we doing other and would are growth Colombia. is that share also we will include are of around and the more meters this

Eric Huang

clear. Very language] [Foreign

Operator

he is we analyst from Joao, your question your question. from enable so will Our you Joao an Soares, next microphone Citibank. pose can

on. You go may

Joao Soares

for elaborate of your Could now you how believe after about mid a selling you’re which and there the significant Well, the You CIC. channel, you evolution on profitability your in is will be front? see that dark representative have we you now accelerate on clicks? fresh the How of of stores. hypermarkets, you good what digital run, channel channel the will that number see this elaborate I morning. partnerships, When Faical, will the extremely funds this are invest could that things And the the involving higher and you on investment in you do the this? number channel? on in

Jorge Faical

of digital market. and take. for in currently. times, around share. five in we one, grocery nine-point-something Number XX% in does we am five how that Brazil, do in times represents share doubt represents question. US, four be than is And the X.X the the more approximately, asked, to give or in or or I account years, still similar the sale X The to in for X.X% X%. of our exactly this Well, your no take many US not this GPA? business There know Brazil, that future for accounts in grocery Brazil will know Nonetheless, much you of share around Thank give and that our billion our but Brazilian

will fourfold not it’s So this or fivefold. market by chance. Well,

-- We that companies investors many there to multiplication embark a this course, see part in mile want we grocery. or are pie. have here, to last of of But of that want

It’s short easy logistics. expiration Now, products this easy not is work that mile to groceries, to last day. the easy It’s logistics. to do a manage fresh not Joao, have not with

that infrastructure of is And close of the picking centers to picking work to consumer product are important three, a is with very the simple the distribution consumer. an need not science. You for

Now, we technology. are investing strongly in

mile cost cost. an for being to last The us, is see a goes physical in cost the I stores is of there front of the we when acquisition there brick-and-mortar of share platform and are one are ahead is that assumed times, way. to complex productive time -- Well, companies management our always a already strongly costs. all simple ourselves times this. we in be in multiplication Brazil, where assets, dynamic with taken so Many are picking, the Many fixed our that become country we Point so of differentiate with have of is good part dark create in the distribution us technology, step are profitability. acquisition by number things the three goes GPA is [indiscernible]. an these have investing totally partnership to in acquisition we prepared that of location entire these two, and way, a these -- way, there We and are stores the logic. done to cost is we centers agile by -- we and companies, When acquisition providing of the the assets because growing the in that in

is is an there’s profitability which digit, incremental is Our This reason scale. not why one no is in e-commerce. profit. to This high

within authority, food, will scalability we I’ve of mentioned course, points right? through scale, past, that digital in the go will boundaries be and the our Our rapidly all would that

Joao Soares

thank Faical. you, So,

creating platforms capabilities? last-mile of on coming you follow-up quick from as you Brazil, a stores number the a dark the accelerate M&As bearing -- in mind multiplication Just their some to aren’t operations and recognize abroad you don’t question, in of

Jorge Faical

also we learning right, James. us James, to applied revenue, would and James because in applied and market, curve the purchased "a strategic this to we James in And is our James is like have for that be and important segment, we is have our an Okay, platform reserve" this XP in platform.

are example, for as we’re a creating on sound as GPA are these advantageous have, stores we milers. that – is companies with what dark potatoes what leasings service spoil Now, what their strategic our doing our more or we’re doing, use M&As, spending last partnerships It inventory. end with a and instead retailer, to for these in money of

their as platform have in the to and through of interesting a of an HomeRefil. example logistics as charge sell for they a sells also with product the is HomeRefil, consumer our to the HomeRefil by partnership This We is service. operation retailer, GPA, positioning

we’re or M&As. of partnerships So path the following instead of more strategic less

Joao Soares

Thank you, Faical, for answer. your

Operator

Morgan. to your JP pose microphone your going Giordano from Joseph from enable you can question Joseph, so next we’re Our question.

may go you So on, Joseph.

Joseph Giordano

the would one alternatives a three So you are relevant Group, question. the be would Guillaume, morning, blocks purchaser my seen good Thank to morning, Jorge. the with together operations. that Carlos These order Good movement in Number for from simplify strategic the explore Mario. to we’ve certain I taking like of within you.

have I’m are Exito, have and but about GPA. side on by crossed we that CX we a Exito announced buyback under an one talking a So operations,

on I sense the makes the as Assai? was from concern within Another the do here what that that that has Assai. all leverage from know context holding question expect about would well. be, a you receive the now you been if approached like had, by and So Brazilian to market receivable that the will cash changes, which it the the consolidation would of entire

an is carry know So know to in of understand profitability stores, I to would migrating would Sao this of like how are that You’ve apps more mostly so would would long apps, customers more? competition, the loyal the but have to know are that sense platforms talked lots it we banners. I your business these focused you M&A longer to sense because becomes make consolidators no going and more operation? like accelerate to and about if the the I they if to see run And Paulo. in like a back to make and out operation M&A to I would national an

believe Although how to see companies be shrinkage of have that I have would this? that good could a like margin. assortment, you a your know I there we

Jorge Faical

the answer would Guillaume, side? and you like talk about to simplification

Guillaume Gras

you important to question. it thank is your one, here. Joseph, order in Number for answer

hyper of the the and transaction currently, the will upcoming to exit Our Group QX, -- and Therefore, the format first to movement to steps. this that and we this this. all by us prepares stage of end this would be end expect for we’re the focused after deleverage on end of this at end

have share we, you. obviously, nothing today, with to Now,

We hyper sell the projects have the we Cnova. our future. think at first with a these of sell stage intention actions, market to We share but have share foundation share continue better to our timeline about of But We no to Cnova, sell in and conditions announce. for good do this price. waiting a to are a not as regarding want to our matter we is fact, the

nothing Exito, regarding this we can’t well, but communicate Now, actions a point. in future but now possibility anything -- right there disclose our regarding is or of share,

already Assai? rates Jorge, in I that analyzed have been the Now, anticipation this recognize result question question expansion. Joseph, of and in agreed we interest here, captured accounts upon this didn’t possibility, that installments posted regarding you I of understand for you, a with Pao’s the our -- like would Thank the impact the you of results, again, what financial regarding have the receivables remind about we to of rates interest transaction. so how Assai, we’ve financial your

M&A. to national You Sao if operation set expensive. do we We M&As, for our be focused organic is aside but the mind format Paulo. bear and a not view has is in to but know Currently, more on more strongly This in like sense through an premium are there and in more This returns a are is organic guarantees that slow capitalized nothing but it accelerate path properly to located with this to properties are horizon. is more would would and I point from solid pathway, following are growth. neighborhoods of financial premium expansion that the the make

of We are organically, going our projects be to I outside Sao expansion to the of not grow the main Paulo. as only in saturate would the said, of area state Paulo, number are existing of Sao state a nonetheless, cities. There

on We simpler, front, we now of with could four conversation M&A with on advance of that We networks networks major talks currently. sometimes in stores. or type believe three, small are but two, not be regional are the and this could part

within golden of we or future. you have e-commerce when will business the part in Now, over one review even companies. revise interesting are looking and into our rules. These now these all, our example, service unlike where the business last rules no and What because for of are is, that’s e-commerce with one we do business, service. These high-level a first of every country, year two believe regard and with Two high-level adopt to six we on XX profitability assumptions. less. the within or a e-commerce, profitability are One golden the are -- years working of ago, essentially, mile years plan them other is was six within

we to alongside question. is increasing, when players. competition Well, your how play profitability will So have was these which

game well have of large or industry customer our we the COGS to high P&L consolidation the these with generate very process. we’ve which -- We undergo sustainable with will work them plan our companies them. so playing but a challenging partnership and they we’re companies to a through proposal. the in platforms that been the rates, But a very with have know but will many with venture a of key switch These because month-by-month are successful these their a is plays them, game very as currently, into P&L, positive playing then once capital, base

Operator

next you analyst Vinicius, your Our from with ask question. question Strano, activate we comes your microphone now UBS. sell-side will Vinicius can so

You may proceed.

Vinicius Strano

the accelerated us sales do you Hi. were about thank productivity, stores Could taking guys GX Good that model? How converted details the more meter, everyone, store give economics Exito, and of think you the with and margins for see how morning, models? to perhaps low- And this for for thinking trend model by my square moving more question. their to the narrow growth to you about models? can for about margins compared margin margin forward, other regard or we the

Jorge Faical

question, Thank an GX, to Once for our to seven points over six convert Vinicius. your you we increase stores a comparable base. see they by

sales for a the essentially standpoint, sales reflects from square base use meter, we -- the two. obviously, by mirrors or Speaking, that the that same

perspective, a margins are category a has share a higher which with it from Now, of average. that is above perishables, margin

expenses So gross in an their points in virtually higher one it but about category had by two terms, two also the than before, margins brings are same increase higher what one to points. to

cash. it it sales, obviously points it stabilizes. to terms, of seven because But in seven points five gains So in percentage in six gains sort to

So us and answer the Carlos I’ll this is really down helps on return something quite it rest. to that has let really corporative investment. costs bring stimulates us and fast

Carlos Mario Giraldo

in trend our a That of good speak real estate our only is the to the ones. contribution which financial conversion best complementary and margin of Wow two very and about But Difficulty] which strong our have most Tuya of we business businesses, improvement. plan on Fresh [Technical we other the is of and brands, positive a in side, have business have the the very also important

Vinicius Strano

perfect, you. guys. was That Thank

Operator

please question Our sell-side Bob, will so with comes activate of microphone Bank proceed. analyst next America. from your Ford, we Bob

Bob Ford

also as could Livre Jorge, the benefits and also with level any at figures your to translate work? the your talk competition outside channel caused your of that could talk you that effects of construction about elasticity and language] [Foreign about seeing operations well? you’re And Mercado the by that the you

Jorge Faical

one rest each Thank for you to is That and competition the your Extra Pao of XX%. levels. Pao In Both de market. speaking about past, in share for which had stable we current de in the for XX% market. businesses, and the a share promo of healthy XX% you. the time share rate a is period with stability work significant a now promo with these levels Brazilian Acucar we of question, Well, our the seeing with more pleasure It’s Bob. levels Acucar, are relatively than

with now broader prices portfolio about interesting view working to And work We are and about It’s My but Acucar Discount, around an But customers which self-service call of in and we we with incremental competitiveness has XX%. a level always its our our at versus because to regular thinking XXX% a have de generosity regular it’s what to sales, we level. promotional toward customers, Pao adds have our discount. XXX%. loyal XXX% most competitiveness

on the Acucar, and more those receive, example, loyal to are they the more have. Pao sticks purchases. discounts So reverted more for The loyal into customer de is discounts are, they the tickets higher the the they

level have who help buyers -- The to more or them of occasional this say to competitiveness loyal of only XXX% to that our which more loyal a also of I’d is significant discounts, our level customers most about continue So brand. are customers serves product. to at be

Mercado about one Now, is with. this very happy Livre, we’re partnership satisfied, very

working still grocery in a dry We’re with environment foods.

to very products We X,XXX fresh SKUs we well. poised to have are soon them, include as about and start a movement with X,XXX to our

of a the I where in our to the started this. of months, have one about city Mercado take example But and sales Belo exactly is XX% as food outside fresh of things next We well, is, interesting have plan One about few Livre well areas some selling run are we as when. them place there can’t few we stores; Horizonte. with pilots to you start our tell over with

We have no sales have a Acucar de of in Pao very Horizonte, interesting we where level Belo stores.

partnership. So, learning much a learning is and this very of curve mutual proving in case, be it’s a but win-win a this to

Bob Ford

Jorge. interesting, very Thank you. That’s

Operator

proceed. Gustavo Our Gustavo, Sachs. Fratini, next with question Goldman from analyst sell-side comes may you

Gustavo Fratini

taking Good for question. morning, my guys. Thank you

the margin a has as compared your me And forward? to working this address issue, effect capital And scale quarter also could pressured how Just power it at your how looking was about you. you the how near-term, especially question, prospects that like this moving affect can your we growth up margin that understand one-off, accounts think your Thank you I’d moving your previous bargaining to was on payable? following your lower competition maybe but gross clear working if over capital, see a the in could to forward? that

Jorge Faical

our with transaction. question, Obviously, very we a we’re prospects, compared close to change lot power, we’ve when was might about comes sales. still announcing That company it Well, $XX when keeping are but interesting this to Things a our Thank eye that. million Gustavo. you. our a regard to before bargaining a on talked

bigger the are of our than retail main side We competitor.

We bigger X Brazilian Number are much the the incomparably market in than regional and talk competitors. bigger about we when

a arguments we all power. trade very will sales of We more product high more and so it’s work believe we more bargaining this of category, categories, a one in with across structured, not modern is volumes lose So speak. or why commoditized whether to a the

groceries competitors Pao trend before, accounts today flagship for you Brazil. showed in Another customers. add for important and Pao XX% Acucar sort brand of as huge Acucar, consumer the and our in is, and It brand if you goods, the Acucar, de over Minuto factor business Pao de our de of branding in a is is Acucar Pao setter our a de I

So brands to we’ve helped that a not new launch expect in the and of change. we do number market

So with our suppliers de categories. Pao of which some share up, even with the strength our going is in increase may bargaining power some Acucar

something partnership period. many of relationship a I’m and we that during is for. very we’re this suppliers, close close very a This I’m building thankful this our partnership had. -- We’re thankful their with in very result transition for one-off

business the we and we Our partners accepted can going our offers, really interesting into know future. build very

categories in understand a and non-food from capital, out billion electronics, Now, had impact negative earnings working XXX stock. that the about we XXXX, we’re to our cover in textile to feel end to a XX categories, especially a we on category, very comfortable very capital, of it’s our few and have our billion company to working fashion of interesting moved the the although generated where XXX XX position at major reduced days we that, we

when know working XX% our what than don’t anything lower reduced So, comfortable although more before have had of Guillaume? XX% but a about inventories than capital, revenue, smaller we that to than terms or level not we’ve us allows in are what negotiating working comfortable of our add, previously, -- we I about have if capital which more certainly XX% suppliers. comfortable, with you

Guillaume Gras

side, terms on same. with no to payment payment terms Well, remain We’ve suppliers. to course. deterioration regard our they food to Of suppliers, seen in the the

million. will Now, which now we started to our inventory on levels our of million level, the about minus their working had, in capital we XXX hypermarkets have impact and are because inventory XXX demobilization, XXXX the and we be expected working concluding on it is readjust our thanks positive to minus so the capital about

Gustavo Fratini

you. was very That Thank clear.

Operator

from you Andrade, Bradesco with comes Joao question. analyst you question so next Our ask Paulo, we may proceed. your Please, your BBI. sell-side Joao a Paulo can microphone will activate

Joao Paulo Andrade

very a When we and us experience expansion what question. the main challenges customer your taking Could outside you for logistics and what or regarding quantitative expectation give Paulo, is numbers This the thank of even numbers, and quick my qualitative and is are think about simple here? margins? morning, you Sao question. Good

Jorge Faical

-- thank lot going there’s question. a not you are a things because in a Joao, of for our your there mention Quantitatively, I’m to lot lot pipeline. of

have Our therefore, expansion strategy. Paulo where first saturations, have interesting operations, cities in this Sao already Brasilia. we operations of outside we our The is in

We also Rio. in good operations have

in network the and in would logistic about second thinking and be centers main to where We this start as do is say operation we opened already of regions. Fortaleza, network would a where a increase have these have our still we Recife, I and this actually, a operations these of have will that distribution this cities we complex, more now is XXXX. to open cities amount strategy logistic not stage, in

this if know do apologize. I your please. is did, I I missed basically, if it. question; of don’t part So I

Joao Paulo Andrade

excellent. right. you. Thank It’s You’re

Operator

to has The Q&A come an end. session

to it final I company. Now, remarks for our over like from the would hand

Jorge Faical

and thank to We you had once conversations. again, hour all attention. I Well, of for an would like your half of

business. I are is we through recovery it attention. our as business or complex, rebound. thank you your sales time going do low Our comment, a more a and scenario right, for your Brazilian Well, Brief it and therefore, multinational is despite

The income our recovering We scenario are presents GPA. reacting population inflation steps. baby is new high. continues The of inflation. The as macroeconomic more a

We have electoral us. presidential year. is full can the of This of race interpret until we a ahead year volatility

oscillations. our short around XX%, would also are challenging in factors rates high interest run. debt that environment Therefore, hinder among There interest with continue factors selling are the a We are that these be rates, will XX%.

for Now, entire is this for only valid affects market. market. is something GPA and that not This the the us. This affects

stores first year. of through the to the Now, The intend external undergoing a we XX still delivery we and we company, had our and internal the We and Therefore, internally, our reducing excellent until go be challenges moment XX through to we half but network of challenges. Extra, closed the going converted are we represents transition, possible. quickest from team when internally. are of the transition, a this the an transition, re-dimensioning logistic have

where absolutely all we Now, to clear behind semester, the about population the second run, with start the thank much. that or in on. economy where fair. the electoral to and mid I and and as as more robust, will am is lot profitable and would foundations, rebound income, our are thinking proposition, to in will on have valued we focused with the from This of shareholders. do Together our everyone, all a reassured business, partners launch GPA situation value efforts the is which team. like that of left something for we we building together focused consider with here recovers, we forefront. will thank in model, recovery we are our there your when transition a GPA of a the our business we’re consumers, still you is value be is very I and sure soon Thank and well, grateful itself

Operator

disposal any you the has conference come much questions Our to answer your further to and an have may have. call attendees The day. an IR end. you very video at to Thank department is excellent

Companhia Brasileira de Distribuição (CBDBY) 27 Feb 222021 Q4 Earnings call transcript