MGLUY - Earnings call transcript Q4 2021

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Operator

Good afternoon, everyone. Thank you for waiting. Welcome to Magalu's Conference Call about the Fourth Quarter of 2021 Results [Operator Instructions]. We inform that this event is being recorded and will be available on the company's IR website at ir.magazineluiza.com.br, where you can also find the release and the presentation both in Portuguese and English. The English presentation link is also available at the chat [Operator Instructions]. will later writing team. the in received be by answered IR Questions

I the Fred, of turn like you to begin. Now to CEO floor would Frederico Trajano, may Magalu.

Frederico Trajano

in. talk and she in participate at our you Manager, and Q&A. Unfortunately, who XXXX all year will Brazil, the end the to answer my of will results. all as In the again, to about to to figures. many for the everybody. the the quarter finishing Once of of the in investments and as new the analog company XXXX, of our very construction any Magalu. whole merchants have solidarity base, world process we whole. be of what could on in you to And stepping entry well here objective, for strategic our the morning, him we transformation of and to the clients. after the terms knowledge fourth Vanessa retailers. our in most terms This presentation, the available these offering radical that presentation. revenues Thank digitalization, the creation Vanessa Brazil, participating of technology consider many Good the participating might And the also the questions hit many yesterday, in strategic things cycle also company will our our we in the well. the that Today, active based I'm a call a two so the and executive Rossini and successful conveyed end his about many also we gate CFO of died of family, strategy diversification have much as after years multi-channel of that with of father of be officers besides started IR million product cycle, and retailers, years be pandemic And the acquisitions, our we XX over and our we thousands three organic marketplace, that these We of with involved with world digital the the investments reach did did this the our of celebrate order in know-how, will made

what the have share We you do to a we we still all really and strategic years. are the few the the the And doing of figures these and next we talk. of lot cycle that with of progress walking to part implementation said, I'm for corroborate And are going some of that.

I And from XXXX growth. with GMV already First, in the We of of including online sale vis-à-vis we million items of physical as XXX% very that which again, a doubled And XXX We in presentation XX the over XX%, grew to had the online of XX% the X XXXX. in previous been even e-commerce the the of Marketplace the of a means or GMV at a that we pandemic. over of growth in Marketplace. XXXX. retailer to XXXX, that growth again, although delivering and had to and we tripled in as GMV, high first XX% prepared base years one this were we whole achieve was e-commerce XXXX, the adhoc XXXX our to grow extraordinary high reached base beginning of we being and and the has And system growth. drivers growth of growth were from in the vis-à-vis would we growth, two BRLXX XXXX able year, in focus, our we course, total pandemic to like what once the in had and we spite year twice And we've of despite in growth billion an GMV highlight line, on year Once the a whole. XXXX. in of XX% our our online, grew able the said, fourfold very Magalu participation the XXXX additional sold of an to I XX% exponential most of

digital see for and a figures, whole. figures very as So robust can important you are Brazilian world retail these very the for the

marketplace, terms to of historical fact. highlight I In a would like

competition -- spite in the than were we that able years, last -- than in month in years better fee, the February, overall with a Marketplace year. stores the GMV February sales five the Marketplace spite good Marketplace market, reach than much higher had of previous stores. of of not we some in the that a already was Now even already the in its prices higher of spite of a And very in fierce. exceeded higher in growth the in we stores. participation margins the GMV has had that is a very well, the than February, after physical repriced were physical launch, in change of to and where for charging that, was our we also the performance, were better than a was sales. And sellers. the fourth the sellers years, And The the And that of prices, physical platforms quarter

new doing a been as important on about strategy. evidence to I sellers generate good putting a very we sellers, the adequate who growth native is different a that, client. seller with XX,XXX details Magalu are on It's outstanding created but the this to technology outstanding totally reinforce that going the which platform, from the the we and a most about this product And This focus board, fourth so the have total, in which -- sellers we We been digital channel, for diversifying very quarter, XXX,XXX. have I also said, of the in in digital inventory million a correct in involving the offer focused XX a digitally. pandemic, [ph] average the will lines analog of this the ticket steep billing, is everything well. to into Parceiro offering So is million I important, of players the and created sellers analog It's are detail XX the which the very seller and as geography be growth of we And offerings very number the will which at of delivery the the totally strategy. sellers But over on platform in different management, into is from order Marketplace. from is very and be figures market. have we XXX,XXX. beginning to our XX,XXX is acquiring management, going on regarding that sellers, end-to-end online course,

their importance that the is from one Just they products whole One on sellers. interesting that which the of of point offer products figure mix. of Most grow. of give analog very two us not profile the that platform products are product tail we different is categories. have and main the fact board, already these have geographic base. And stores in attracting the sellers terms long different is The traditional wide that a in characteristics. Magalu. Parceiro And came acquired means are to by clients they about that who world. means the to give will coming by this sellers on the XX% an the from physical world will talk the These digital to of able idea, to sellers And I we of are last continue year are Marketplace, our a

ticket able sellers are going average because board in this you Southeast participation BRLXX be And We Brazilian in because also rails has locations. bringing in will to because logistics, platform, all to sellers Brazil, extremely the clients on a from Brazil will good reap it's of geographic rate on you the will we to deconcentrating the and high. are total never the be average to a the offer client revenue never BRLXX, Brazil. throughout de-concentrating the their this work, margin the Paolo And from ticket in And get on to that Magalu from costs that you concentrating are logistic Northeast, economic and low freight able order centralized will be GMV. ticket just, or to and the for if the have take over San negative scattered be

that, our is terms strategy our growth decentralized from will believe efficient the One So Magalu highlight came the clients of more it that new XX% important Marketplace of and and And marketplace. be is of economics. we sustainable. of in more

has helping were of So conquer clients the not company. that bought products clients that been to this the Magalu

we why the the investments XX% we sales Marketplace. the that of have most are significantly So marketplace, the to And the one able rate the the logistic come conversion from volume coming as platform, and of all reasons XXXX. made where of clients the been also of of that new improve to

made including the DCs in And Delivery, XXX X.X that acquisitions, already increasing increase area us we you square the DCs on on. higher coverage and to the the total in went cross-docking, was in order also and warehousing participation Entregas to own logistics. We the follow GMV. increase SODE going was gave three logistics. or And guidance total of So our to follow fleet the increased and our our with of on XX objective from a million fold. X.XXX Magalu the with Logbee much we than We also we Magalu in meters to the GFL, of follow own made

that Magalu XX% Magalu Magalu. all through share through our XP Now I orders Entregas. these figures went all would of you. network with own to went the orders some of like of Almost

important rely trucks. service generated And So party we have factors. this third postal to the two or on very don't

the when of XP. XX quite XP, a or quick market, up significant to a from already we website two last the representative delivery. XX% important And you not And But already Reclame this which the year, that rate in with good are surface days of would delivery good of company up to price platform, at XX average very of we instance. only is XP deliveries that delivered already And the we complaint part in further hours. the XP customer improving a than mix see XX% and higher -- have experience the The to we first they significant client do the mention that are we on one to XX% also have, XXXX. last increasing Aqui increased hours In the which can conversion very for in It's with have XX% is and to in lot XP XP. this increased was vis-à-vis XX% buy in I a that the year, increase. XP and we sale participation the very good level XP buys a of the buy delivery the the like much we product our

[ph] seller capitals a of are of the and a So developing also are of over in ship that already percentage ship XX X,XXX to XX the we investments up hour from made seller. had BFS delivery. and sellers the because XX growth Over participating ultrafast we we coverage from points with

Now a in our I physical XX% physical major XP our it is role important and XP. is important advantage. both who has marketplace. I clients is and It all once goes to resignified physical of why with marketplace. to our would it say growth stores. in This And extremely extremely has store And the through marketplace like and become the like would stores highlight two and very points. I again we everybody interacts the our of our And sellers leadership in competitive They important. been highlight for our our our multichannel. already are that

Magalu. shared the is can store latest from sellers the the one transformation some the with Agency Magalu. the in brings stories to Magalu we our first deliver system results of The into that the And sellers the the of local you. they And

their the sellers We also to this are cost point, of a XP main in have relation almost freight points. cost. traditional XX,XXX in with are postal a using drop that as Stores the growth pickup XXX%

are products, point importance pickup. doing the is and stores. but Even financial already the for that of And more Marketplace than is Magalu stores of we as And the sale. all stores the more X,XXX this to want leader will really made Besides we world. with The a we breakeven have have a XP transported to We the because It happy only the much POS selling store difference are logistic will not point than re-emphasize well. XP it only the is being much stores. over points. X,XXX benchmark if a be

very is to have stores. by it this important performed the So physical growth being

became XX,XXX the can service it very You the the see this by competitive delivered came that stores. big through and sellers our of advantage. a is evolution

Magalu you a company to So We're the about can little physical is attracting POS later. the a multichannel of stores, going company. this And importance bit sellers. see talk a not and

You even of XXXX. A important lot last to mention is grew years full from know I already point We -- -- and we the I referred we also the grown XX the that made a again play a of higher in and of categories under And acquisitions believe it's contribution a beginning, sales couple to revenue. than a quarter. which important generating moment, the But said and water keep I was very resilient. marketplace. second service mainly. able ecosystem. very year, X%, the we new quite the coming come course, this that board the business the streams, were had of the like vis-à-vis the the some over there X%. more about the of We store point, and And difficulty overall will acquisition, XXX be multichannel of It sales whole for year the bridge. on role revenue now, for now And back as a that diversification the talked would to lot And for to XXXX. I last in lines after whole very will new

we as AiQFome Netshoes clearly. this are [ph]. market very that, this sharing the with And and show such to before Some

XX% coming talking of with our durables, with categories Although Marketplace growing that we the in grocery, the took the good represented from performance of categories categories has are to company peripherals, it food new online that continue beauty, categories later. These all tail which you. sales the KaBuM! traditional And cheaply. home, categories, But had very diversification for the delivery, are accessories, and have that the as like result. And leaders, are very And six it's decades very the they coming to highlight I bit a we billion. successful. beside with to to the us group, very and good to we bottom line, the be be a give a BRLXX And well. line to we acquisitions not are important would little about top the the us long visibility become about to leaders. been contributing very contributing will

us to only group. So company the it balance to profitable. integrate we sheet one November we strategy KaBuM! the to and all July, would to collaborate in forecasts. in-line acquisition in like than this. each start a bearing numbers are that to just like very are KaBuM! or our bringing the and able mention the but And expand youngest they of help would mention successful in were in with And them illustrate. companies fruits the The GMV, will of XX. terms We acquisition be more the I Like the group announced higher already original to I is that into is help to that

bought growing It It And is never the totally that of in profit, results gaming. the a bring Magalu. X BRLX in XXXX. of gaming new will But like is It's of customer in million in is a base have be a more that customers, will is million complementary it leading Disneyland BRLXXX than KaBuM a that loyal. XX% integrated worldwide, site, active them more is company technology gamers. GMV, billion Magalu to category ecosystem. the different, e-commerce than and So

for these IT people And gaming. peripherals, also, accessories, We for buy buy mining. accessories things people are about Bitcoin that talking

So assortment. XX,XXX than items more

a a Magalu lifestyle universe acquisition a categories we acquisition we'll this this results. base celebrating of the be loyal acquisition. customer has is So Netshoes And be with lot that e-commerce. technology jointly doing Netshoes. in the to universe of gaming and very there's of well record as as added and to We're And particularly successful going

our had team of back we brands. e-commerce that jerseys. integrated not wonderful the in Brazil. BRLX XX million of more with million reduce highest and in store XXX,XXX integration, and customers, For Magalu than history, last base X a of marks advantages organic sports Netshoes management. soccer one X number to profit of it's Netshoes, billion, athletic logistics At sold active We main million shoes the the in record GMV some had of to be but and office channels alone proven loyal our items ecosystem, we were G&A we to did pickup BRLXXX year assortment, course one the Very pairs of able and integration, high million have main e-commerce access

are stores a there comes conjunction it for And Brazilian Zattini, -- stores club managing her and with of of the club expertise, with expertise we of channels with responsible came one We Brazil. lot to the main most Silvia soccer know-how. In the fashion joined with those. team e-commerce Netshoes, a fashion. help manage of in there

XX,XXX GMV So We I year-on-year brands XP growth, for available. to would like billion, GMV more year. XXX% categories. last Magalu was XXX BRLX the marketplace. of fashion than in XX% see was up sellers highlight the can And the fashion at fashion

the and Netshoes came Zattini. Some of with acquisition

sellers’ industrial and included the buyer hubs. also We hub. increased have base, We eight

to our We have e-commerce. a number of factories connected directly

So fashion continue confident very positive And will grown very also we the has a category that provide deliver and to are lot. we results.

the above and in market average. leaders will fashion one grow to are of continue We

growth in Época Another of XX% of profitable. billion it the year-on-year in points GMV, GMV year highlight XXXX, plus was percentage sharing last category. X BRLX the of is beauty category

added combination lot a XP to billion BRLX and in like remind line. assets and that together, total lifestyle ecosystem, bottom Magalu Brazil. a very XP with are potential penetrated sales the all of I'd All top of growth represent in under KaBuM! these forward. looking strong you categories Netshoes, to So to categories in Época, adding

about be groceries SaaS year, million retailers world. is like And only able gave for GMV announced us cities category. of a groceries of acquired of specialized e-commerce I billion. customers supermarkets. GMV to BRLXXX specialized the whole helps in SuperApp. to the our good These a platform soon talk an some VipCommerce, a in Now the the year-on-year, It supermarket XXX% to still XXX integrate analog our is should served. BRLX we This growth Last would ecosystem. to we'll join online is XXX of platform the more be This market. that have to products GMV particularly We ecosystem, million. of part items sold, these to you model. than to the news customers

We all will these able integrate all SaaS and customers, been has cities, of with these model. grow Vip a of to

groceries responsible food billion. But like also would growing the in customers terms items of has lot it a being share for total a BRLX highlight I So to delivery. in platform. Magalu the to our sales, bringing category relevant sold, our

Although, food Brazilian in in became the present cities, customers. billion it's of GMV player largest BRLX.X the the in second generated exit market delivery with total million not of the Magalu Eats. capital and X.X Uber

based We AiQFome. are a creating platform on

profitable. XX,XXX in I'd in restaurants always operated like that food delivery is to have highlight And AiQFome active We our way. profitable a delivery. has food

SuperApp growth. excited integration. like on are we’re AiQFome that reaping And services you remind with in so the we're to that fruits cities. cities, other year. to last And our we profile but of small, focused I’d potential we're of very We this kind the of expanding midsized integrated

bottom initiatives. would Another positive our the Magalu both successful to has highlight, ads in I also that to be like top proven line. and acquisition

for category And Brazil, Look, the the So home of Brazil. in content in The focused of ads, beauty, content Steal on the products Totally we channels one fashion, largest this content. Nerd. category. three don't most the you just in special you bought totally Magalu need channels one Canaltech, channels, Jovem need loved

advertising with ecosystem. of together, Magalu are to Brazil. we representative such functionalities with tie all Época very In the development with large Zattini, we Magalu -- sessions ads it's And key were with self-service, in in POS large year. million sellers across are XXXX of grow. significant specific very particularly we enjoy significant BRLXXX last the diversification advertise excited and Netshoes, of more in sellers. be want of December will acquisition inclusion across with to than And revenue. and with the revenue, audience, our new FinTech ecosystem we last launched Magalu which BRLXXX the Perhaps analog billion to highest to MagaluPay a channels. facilitate We're would the also that audience also million a KaBuM, ecosystem, the to accessed With Pagamentos platforms of many XXX all like we including continue platform. all to audience sell we machines Brazil offering. many had will of definitely in KaBuM!, for the more the will achieved on is advertising and We I of of focused with our sellers TPV the of three the for a able features highlight more BRLXX these in have year, the going ecosystem million of to our

simple. are of SuperApp, almost MagaluPay. MagaluPay that accounts and Magalu terms MagaluPay exclusive in And We a the have created and the digital in in lot the corporate promos. The account year. last to of us could enjoy The base We FinTech cash-in, was of we account. money is participation a for customers X sales had totally onboard use helped in launching million so of process profitable of integration also the

cards issued have with Geared it focus Card. SuperApp, on Magalu and X cashback. to to online totally some market. lot a additional than the more steps. credit in shoppers, the SuperApp It's accounts million a other digital XXXX And with in have new integrated the generates just You

ecosystem deal balance of in the a credit Magalu Brazil, neo billion for escalate to our year, last in our potential the a good business. SuperApp. totaled Luizacred look BRLXX.X banks You can the showing of portfolio the And your much than higher at number

clearly and well. of one card, is that FinTech the think see So GMV July Fintech, BRLXX With Hub year, of numbers here, be credit of indicate Banking-as-a-Service. prepayment the ecosystem. of omnichannel also our last of a And strategy, a of about the streams, it then we balanced platform, questions our features. the and handling new and breakdown Vanessa full you the [indiscernible] On billion the innovations speak billion, I we with billion be and of in acquisitions quarter progress for diversification together part approach, is and good a I'll year. that our BRLXX part. responsible revenue receivables, of highlights doing and categories very much. will of And completed BRLXX will of the financial now the quite back And with management. your to Thank little answer executive whole

Vanessa Rossini

you, you over joining the the full our call. year us financial in and day, Thank Thank will conference year. go for everyone. starting highlights Freddie. for with Good I QX, the

the marketplace some to stress mentioned important it growth, practically the for but XX%. Freddie is While of

the tripling of even in pre-pandemic year XXXX, are XX% BRLXX grew all only and macroeconomic billion, the in sales in at growing more And situation second to levels difficulties higher BRLXX we than had than stores, BRLX the of sales. in when almost doubled billion, e-commerce quarter X% and with of XXXX. than XX% billion total Our with physical size in the related

for highlight year. super a that's So the

in BRLXXX million in income. In accounting going to BRLX.X the EBITDA net net accounting year, was terms Magalu -- BRLXXX million the million BRLXXX a Adjusted margin reached year, billion of of adjusted income X.X%. results,

over quarter. more average the XX%, a for of have of grew concentration rates, of e-commerce BRLXXX XXXX, the we margin higher to up income slide stores total higher equivalent stores had in as net adjusted and next and accounting Total physical Again, given and events. the higher X.X%. QX the income in resulting grew net highlights And BRLX QX million, negative Adjusted the posted sales billion. greater than Brick X% in a billion considering ‘XX a BRLXX interest XX% in inflation On an with ticket sales. we of retraction BRLXX.X million billion total our of And XX% EBITDA BRLXX.X sales retraction quarter. Marketplace million we BRLXX mortar have non-recurring mentioned. of EBITDA

it mortar greater On the with is a our and because see expenses We we margin lower next company in expenses, On expenses, how sales as margin, working share lower mentioned the contribution gross slide, evolution, we and compared positive our have performed selling agenda of terms EBITDA expansions stores XP because of the services on QX revenues. make of have operation profitable. an The goods administrative brick durable before. of to dilution of more ‘XX.

are gradual also quarters, of along costs been costs. year. pass-through the inflation the month had the We increasing an We reflect a first on recent doing working of this and in interest to higher rates. We've of

term. a In the in first that been of is slide, working efficient had the lot to highlight we our level important On BRLX Again, that we contributing turnover more the we it we turnover. months have so the we of capital have working inventory can structure. next billion reduction a here XXXX, inventory capital to work capital with structure the to improve in a of And short had of inventory company. the

terms Fred we flow. capital of with our highlight BRLX.X history with aiming look year our ended million year. Practically see XXXX the four-five ended million. the at quarter we up a BRLXXX BRLX.X too, billion CapEx invested BRLX we In X.X had but the cards. ended year BRLXX.X billion billion portfolio, structures reinforce in the barrel. ended next highest million billion. maturity, that in captured with And the spoke the mention slide, X.X with cash little In long And a we have to at cards XXXX. ended net important and structure, our debentures, more in the issued X And cash, we see million to in we years that's we in with capital receivables We it's bit whether ended December we maturity, we we even than BRLX we can to more. of about I our when the billion. think there cash And

the card. complementing Cards launched highlight successful. in And million to we reached launch and have April cards Here Magalu issued. X was we Visa We very it

terms XX% XX is year year last Magalu for outside of over the and In TPV, stores. of TPV this growing TPV XX%

the Card. XX% both the inside this by use our Magalu was our also customers our So Magalu. TPV outside with BRLXX billion. In quarter Cards grew And e-commerce stores Magalu in driven the and

Lastly, quarter the one lowest default about of speaking we indicators the bit the card, levels. little the ended of a with

was our loan lower higher, showing more card with which growth but little portfolio, growth, our levels, that X.X%, in more and the base of much credit portfolio still pre-pandemic NPL the very solid relationship long healthy Our been clients. a has improves has growth our how very solid, our of the bit than our been,

Well, growth And of question-and-answer In according practically BRLXXX to highlights. sales. income of indicators in remain our is the the the session. IFRS, related the the terms see the card in base terms you begin and year were the net this Card, results now low. methodology Bank. portfolio And And these numbers. of in of can fairly to the of Central growth delinquency the million we financial can And Visa

Operator

Now start [Operator session. Q&A the we will Instructions].

Unidentified Analyst

two much Fred, JP questions. you I for thank Morgan. Good morning, very the have everybody. Vanessa, call.

the strategy point and you down you change some you're And a one up front. accelerate I a short And is other first well? you has some because the others, And could for changes are setting Will maybe know to store what do you ecosystem. talk some in categories? really there would evolution going to like working slow company? demand challenges, decelerate. of the initiatives company the and whole The priorities? are do accelerate attention. long-term term that Will of about is the to How this the see with the of Fred,

Frederico Trajano

Thank maybe call, way was only change, macro-economy headwinds like being the talked almost is a of in lot you very from to talk that length the for question. in in significantly the not that. the at terms I I had. macro are time going about what for morning. in of the In to our And about is same. Nothing surprising, a term that on quarter your want we short the I The prepared intensity Good do changed the talking second is the much the last last of The it. about now. situation spent difference a rather year, statement call last economist. of financial quite we

So to were more read that some profitable here news. in inflation. prepared. to short has in that managers portfolios. I what important the of is adapt Vanessa in relation situation everybody in And nobody term had face are was hedge and fund demand. even And Brazil thing of their happened make believe changed nothing you in not adjustments only the very terms already it prepared And that to revise the the size we of to order about prepared, the operation And the ourselves the mentioned to

the the is of quite In strategy, terms it opposite.

don't a since As I Brazil come everybody diversification XXXX, pandemic. as smartphone is my What that And message not the say well, in strategies, here to I had to as from to had said buy in during buy diversify. happened is durables. to want the a management presentation, to or I also, of refrigerator. going categories. this we was

became and the Of in the well terms average. six in we of durables. much pandemic, this never do -- is be are leaders about happy but to into already of headwind we were very tap course, course, better decades, that. We there we the we And that. in the market. of than And positioned would we were will category very some order After

be the most GMV, participation to economist to well. quarter. very an one economist, will not So have we successful BRLXX And this All acquisitions about for period. are we wait streams. call. contributing prepared to I XX% to face very But categories an want in and a well I'm business. don't Very in performing new were billion was good. the revenue all very our And different online, adding they're strategy maybe

We will is the strategy the of these connection companies. the and all implementation happening. among just KaBuM! accelerate between and

We can are BRLXXX million, we doing much but more. do

are on that already that going sellers course Basically, we on all of plan, XXXX And and from is doing, we did which multichannel is focusing continue. well. everything over So execute a analog will special is focus that with very sellers. we from bringing very the have ’XX Brazil to we something to

strategy. change So going our not we are to

to and traditional discipline will implement know with categories. the continuing continue with are it that We cycles. there We

before. many through have we cycles been So

difficult category. point it's be So in everybody very because at certain a the wants to

Operator

Sgarz next Go with Goldman from Sachs. is ahead. Irma Our question

Irma Sgarz

Hello. the taking the about know I Thank for like logistics Freddie, more you question. of would my network. to design

approach you that a an in players the have other think I little than different some market.

know So delivery XP trends that to for evolved sellers? XX%. could be you time average good stand? you're that to It grow to I it you focusing you more. And What know a be this from are through you increased have please going year, will XX% elaborate lot. hear I work on was where managing the

So the to improve brought you physical perhaps acquisition? be what in algorithms forward you new analog you some Well, be be Any opening will other are on focusing working inventory the be of the Or assortment, working more this you onboarding on on Or right places the work routing? stores. Or right locate technology will will the fronts, and assets? you expanding will sellers? year?

what in are short I Even these would rates hear like the to improve even faster? to more? So hurdles term delivery the

Frederico Trajano

thank Irma much frequently investors. for very from a question. you this this we that question Because get Well, is

we're numbers. that think important I some disclosing

of Logistics our our clarify XX highlight and the I docking We network. important. XXX to is year. DCs to last cross would Now very like from capacity strategy. to increased stations expansion

Our the you focus all on points logistics mentioned. is based that on of practically

program. to able the decentralized have Magalu were hunting by Partner sellers stores all First, a efforts do Brazil. you over decentralized We mortar our through and present have I and have to in to base catalog. through brick our seller and bring this

sellers have that's So in outside the Rio more Paulo Sao area. of and more more people But we and the we Because Paulo where now from are have the more and XX% around sellers. bringing and Rio Sao and we Midwest and store their sellers stored And stores. Northeast, their is own goods already from having sellers even necessarily directly the and because stations, network, in without without can we the ship our in goods collect have to the catalog expanding. docking cross

So flow for. local logistics the and aiming having a logistics with we're a that's of inventory lot

as the and Franca, you in Sao is ship the in a or Franca, we travel said, in goods the that transportation. Paulo, Paolo customer buying Our want Sao a from of an of countryside the goods in make analog little is fulfillment seller in distance. product which a focus, Franca to seller avoiding is available to in the If City long distance

freight Now increasing cost and with a main the is of prices costs. e-commerce fuel shipping

smaller So to sale the is it ticket the good goods profitable a about lower less better. speak a we BRLXX tickets if selling small lot. and impossible the have are travel travel I have When the BRLXX, tickets, to making

So we’re XXX, increasing helped the and to off logistics drop that base shipping.

we local pickup. searching to local off that customer, data using the monumental. with just goods. in already off More total We stores From serve drop drop change reduction are logistics reengineering XX% drop the available cost. customer standpoint local economically agencies sellers. It's AiQFome structure structural have brings like tickets. our all points, to off experience, a are making to to store for This this feasible local the is stores of that for prepared it's -- And sellers, and lower customers make their have, all as of To became categories. our of is X,XXX we a algorithms XX,XXX in Magalu work point the products sellers and customers. than the make XX% Magalu

of in change local in geo sounds. it solid better. work. hunt to buys a products to in the believe team local location. more the we IT of have the than It's But to more logistics complex sellers And very we very products. we local sure customer is lot the and for make active are have list very, continue So course, working that our Because sellers, complex, on holistic a from the a

with area space. durable in area it also space goods practically that create all made more that our the in had, consumed had storage to investment idle the and XP of all DC, we storage fact and the with that tends Now

We the buy. will fulfillment use that idle space for

And good. together fulfillment to as us improve will like It's customers, these And to not to And sellers. market prefers that U.S. want. what all XP. was Amazon XP possibilities XP. the the we for do or don't believe or ultrafast whether XP. already are is We to buy you you And the add delivery. Brazil we deliveries has we from for customers have And the what said you year. actually fast. the XP last believe don't factors to of same do see it's that very very going that also customers product, our it's not good, share help you XP prefer buy fast The In improvement an We wants, XP. XP. of When our available improve buy In delivered is XP XP will the significant XP. market it's

in sellers the more working And We will are advertise going agencies have can as Magalu to that even ads, Magalu ads we customers. stores so improve Magalu and local features we algorithm. have to

highlight labs. continue this that with evolve to is And indicator of looking teams, by that So shared I'm we our a sure business going forward. in being will to all

Operator

much. very you Thank

Maria from Clara from Maria Our next comes question Itaú. Clara.

Maria Clara

questions. Hello, two Fred, Vanessa. I my Thank you questions. Well, have for

inventory And the the has to one stores. the company. When finish about has the with the to with the expect work do one physical The to of do dynamic do process? first you gets second

the and expect stores, exceeding in evolution? the ones ecosystem we physical this terms sales multichannel of in the what you the through could Thank very platform With the much.

Vanessa Rossini

then will December, About beginning we December, the the of the of result and inventories, to inventories KaBuM! at these in I -- answer. about the and XX, at of close days. will start had December Fred December was end

So prepares sale. And also to big means inventory nominal our of this the sell by impacts in Magalu order figure. itself

this ourselves prepare period. to during have we So

of was during for important in do This But quarter turnover. we continued had this sell into already had year. of the months to the months, first our operation. we as the improvement our the us was there the ourselves the few had was very about the first that Over very for to reduction inventory At BRLX for level inventory turnover. significant very inventories. the was the We sale billion in proposed important this bringing more storage. in that consider adequate beginning this. We the the the It an intense. we In

Frederico Trajano

question. the for you Thank

products the and emphasized to strategic XP, fundamental already the I future meaning importance reinforce And this a And and is to the have store stores the well. adaptation some pick for I terms new physical of talk well very as in in our successful the And of fundamental as have for nowadays. about of of stores stores, post the level. them physical terms will In I and already the very financial this have a we give talked will at order to of in XP channel product, sale is up. order the this points.

and we And much point physical very and a merchandise. also than we And in where more becomes stores. do is a in for products we very of support for more big it good fundamental. have sellers. is more, financial sale it sell This So a discipline what

are stores lean. very Our

small stores. we ones. the have is is lower cost costs than similar And square are And The per of that square variable. We extremely have per cost meter most meter a low.

they very, If the what to So generating is it stay it's we very breakeven, to of in good. adapt are able on terms revenue.

I to talking Fabrício? are add already Fabrício like aircraft said. we We our call to -- would system. have But of about points I what to what service X,XXX in

Fabrício Bittar Garcia

a stores. for There Fred the role of talked big improve therefore for be about right Magalu And is the now. and XP. But are stores. well. this played to a as And physical in question. you Thank we are going we is the morning. found in the ecosystem the the in going complex stores regard core in products has support our these to very last Good years already to of two improve concentration this situation as in physical they

of pilots very been categories little of core stores, placing have new the pilot. the in categories some and concentration a We should product. We bit with remove be some in working successful

with And open this in store brings profitable lot quite a a back cost down a with can usually very the people. We investing to have able area, so And productivity, technology support new very to operate in cost. the the less order improve low the were been at our we operation. office, stores we

income of and needs income in physical of stores, -- stores credit. get low the brackets So the are credit where population these come the people the brackets the lower and can population

adding to So what just already had Fred said.

Operator

America with Lynch. Bank sir. Go question next from Our of Ford is Bob Merrill ahead,

Bob Ford

Good Vanessa. on day, structure? could about should EBITDA evolution the And elaborate you, we Freddie, think how your you year? Thank cost this everyone. margin

Frederico Trajano

the repeat sorry, please? you Bob. question, Could I'm

Bob Ford

cost Hello. of the And EBITDA structure? evolution you about should we margin think speak the the Could this year? how about

Frederico Trajano

We did have not No. have not reversals. We reductions. did

Bob Ford

understood. I'm have I not sorry.

Frederico Trajano

Bob. Okay,

think adjust think below of in QX -- sales and and of second size volume to We that our particularly QX. expectations. expectations. performance were had we the these the it I given all we sales that in I the the year, for numbers clear half posted becomes volume The had capacity the aspects. were in brick capacity mortar below did a And and not materialize in that

a volume So structure words, of contracts, the the our the to In we're capacity. adjustments right supporting adapt is making provision, we that team to fixed costs other costs, that service now. adjusting are involve variable market number

very working we So, hard. are

mentioned Shipping, know that. of logistics people Fabrício You little productivity, bit a optimization. France,

our share are we of teams itineraries, gross marketing, to focused the reduce on to are shipping routing, revenue. logistics ROE as an have the We -- we marketing. improve of cost a effort options making optimizing In

market competitive is more the of or regardless increasing. it So being not,

what were slowdown. working processes like not said, And to economic work I to we are we and derive sophisticated we that in successful So all had And make results. and in fronts better our vis-à-vis absolutely we've databases been QX, more Bob, last year. expecting

we Now what's happening. know

for we now quarter the that. are in prepared first So

the in year margins will gradually. my improve view this So

implementing some still is words, homework our quarter in of of to to improvement, quarter, we what to as to that month well, successful happened March. And in and in to our economy bearing Of initiatives will significant number done continue inventory along the In the are were and course, doing Vanessa we But continue have adjustments the we optimize first sales. improve to improve for core. this believe the share improve just of already XXXX. like see we capacity the If QX, of initiatives is Part make. the adjustments the to in of not house. particularly company to year, of the rationalize, have improvement efficiency. compared interest are adapt first said, we that other have a improve do as is we our There try going

initiatives, to well the we know, very showed new in are terms to you and the doing macroeconomic you top line of As scenario. the as of need line. new adjust But bottom I size company

to to number plan executing the we our and this them So are initiatives very year, a clear and schedule. will results. we in have of become ongoing Along according

Operator

question. the Ruben you from Couto Ruben, Santander. may you for proceed. Thank

Ruben Couto

relevance of Adding be XXXX? that generation? cash be that? for in everybody. generation in are and how vis-à-vis the about Could the cash so you And the and the cash improving of generation? Do about What important to it will Is go XP question, talk that just could XXXX. drivers to result the these impacting actions what the Good morning, previous you previous also or you you XXXX? for generation and of other cash make us back of you terms XP can of second recovery half margin terms marketplace XP have that tell believe and mentioned

Frederico Trajano

you start will Vanessa much. and Thank Good join morning. will me. very I

involved. In many terms there aspects of generation, cash are

Ruben. working the capital The is first one

As said, very have that. I vocal we about been

We capital. have our been adapting working

good generating We planning for market a and you in reading. in inventory of for have a good good is and discipline management always cash P. and good you had It have capital of working a terms when lot very of also have sales

lower there last is than a year, So year. unpredictability this

been the that. focused back on in have on capital Because are next do of Magalu, having cycle to to working positive going we We're adjustment the company, much quarter the natural a the past. to very because this an of of We levels normal still working it We levels consumes of working still go cash. to traditional capital. working back of have the

we So locations, become And because that cash. discount. many it and have, assets. will did other cash of last a assets, monetization is let's In year there not of say, of be course,

We are will positive company. things the do only that for

the it good would may case result. never anything do working monetize as could to we prefer that good And that only We more we And Marketplace last We assets, very hinder on our be. generation, are have I if opportunities. take was because rate cash. many also not having generated free benefits. as and freight, the year cash than was whole see cash for market consumed zero

we it is should have generation is always we So economic rational what because this more a now And changed be, cash or the now. model now in positive February positive it and contribution. market a

is has like juggling good is generator and So But XP would more you we that makes physical is to spectacular. and I team. store But as these it and bad very team It this they think your have I'm XP. in physical a saying No, with do very have very things a stores our difficult. in And to go I a well. good scenario to our with are back the a very team, good one. very not depends. XP good is not good a cash positive. that can XP a in it Because that

great a have culture. We

we competitive work And who and Brazil. the clients. and the not or people that deliver must a of thousands have to motivated difference very there and this results have and team they give has as advantage, the the sellers that We most area deliver stores you forget the service in goods in big physical to

Operator

Our next question Go UBS. Vinicius is by Strano ahead. with

Vinicius Strano

previous Hello. my question. for Friday. taking call, Black In premium you earnings mentioned Thank a the you

now. if traffic a you is product Could about landscape? Thank the bit on what to is what general ask more may the competitive Do is And you the premium speak little And the intend competition you company? the in thinking organic initiatives I right know mix? to core like for regarding the more aggressive another company categories? Perhaps much. Freddie? to very question, increase I'd focus So products

Frederico Trajano

And X,XXX And of in family because let question. of classes but the income low income. on the I’ll Brazil, not situation purchasing profile brick the the in speak buyers macroeconomics, mention power, stories economic I'm given the stores then mortar we of average inflation. going the feel you unfortunately the inflation And course, have Well, to Brazil very to in thank this. on lost that issues. I'll a answer our at are about huge Ed the In presence Well, answer and just is the We second question. first much. a had is impact in people. few physical for of which

the impact items of who food people of the for less, of power, feel of fuel. Just inflation inflation

But bad ticket customers. categories for premium the that we Black It's economy. in resilient There of to all remained low for focused happened retailers want So everyone. it few bad are and Brazilian to sell But categories. this are Friday Magalu than more is on did. for premium course, the exclusively very as Brazil. practically

bring have Magalu sellers. small We to bring the to consumers, passion to of digitalization for products income low

We are inclusive.

So The situation. Friday this can go be will Ed makes situation distribute I Black macroeconomic income the of question. was quickly many just the to for me to a as Brazil continue not hope for of audience inflation And we what our it few. sad. and controlling to will regards was that And so because characteristic back that again answer

Eduardo Galanternick

Galanternick. Edu

are question. to by reliance have XXXX we that two Magalu the and of This standpoint, frequency adding CRM makes particularly SEO our sales to a what better new reduced, second can we organic observing, traffic recommendation to recurrence the customers categories but marketing in reducing is there we adjacent our of up or the the year base share brands. We the traffic. our year. dimension. that that choosing these aspects. growing brands our more what more specifically saw difference, mix of traffic improve a disclose, organic enrich we paid though, or But end that and in work not lot data more strategy. are CRM is technical and the the in increases customer was and makes the on half second technical strategic app, about a in answer evolve half we and add increase whenever the From algorithm investments, Continuous One do Speaking dimensions is

these year, that. you of And we're because Freddie completing we remind like the category as KaBuM! in added. app but have the the at we new last integration Magalu reduction of stage new And completed is Now as marketplace. we this investment. completed for fully mentioned Magalu. And incipient and to customers will still we growth the VipCommerce already in forward, the integrated categories need convert as AiQFome into higher and we frequency our I'd to of integration new in move is an Magalu services

an It's form This but not. for is investment. discretion in aggregated see we'll categories reduced the for a a happened. to we invest So choose strategy or diversification And our can us. need of this what is

Operator

Daniella XP. from

Danniela Eiger

the have for you Thank questions. question. two Hello. I

you used one, already The provision expect? has much to in speakers]. could Remaining much this we first has inventory quarter. your how [multiple of third been do quarter M&A on speakers] strategy. How you that have smaller us believe used with an follow [multiple because speakers] update for the could [multiple future give or will maybe To mind M&A I so reframe M&As. about And

Vanessa Rossini

of I sale, They at the the during as this continued additional XXXX, beginning direction. started quarter. the the we said before. About step the of beginning one fourth a the in gave significant quarter of inventories part with provision, we fantastic The that at used

was more in adequate. the So level February, much

So sale, fantastic it. the the it but later you will fourth as we used quarter, was And details in call in also on. I give further

Frederico Trajano

work acquisitions the we in for XX we two that. question. M&A, digest to And about our a you lot hands. have of Thank years. in And now all And have still the will

order team these do to acquisitions. fruit a all all the to lot Our for reap us integration has from in

because the us well, acquisitions. here due not all making already that execution these and are are focus on that of reasons, these assets to right with performing more we going evaluating the all all acquisitions Although among very now, connections are the believe the to possibilities all macroeconomic but and scenario, we

going are halt and for with while this already a possible on are we system. inside So have we to our best focus doing we what to going the

Operator

Next João, question with Soares ahead. comes from go Citibank. João

João Soares

Hello, I points brief everyone. raise. for couple Thank my you to taking of a questions. have

was more elaborate And new on on that services it legacy you the color quarter. XP the to to other are of First, sellers main I'd us and XP selling a of XP Fred, or what that lot you drivers this understand Ads Is give also, months? you recent we of the you Could the offering. providing, this growth, growth? agencies When positive you very arrival of maturing a in that in I'd Magalu which at are are growth? some like hunted sellers? more Is you like are look have Magalu selling advertising. seller

a that stories know saw lately, this don't I whole an short charging the term, I But the service we and you being evolving So offering? some you're insist improvement take share lot little Could may, the you're commission the of in last Freddie. reflect a a How unpredictable. the don't sector want if this I rate that foot in optimism. regarding in February, point you're you optimistic. know the more to your from does share if sellers? and lot traffic is And what this in I thinking?

Frederico Trajano

you the for Thank first question. back more would that. our Leandro to responsible I Soares come like can to on your He the color And rest. answer give questions, then Marketplace answer João. I'll for you

Leandro Soares

a to cohorts. amount an old mentioned. you They the in component large accelerated the year. for months, started sellers new of added after components, slow, but selling at component a We over much pace Marketplace as new thank a of Hello, they're few cohorts. question. the There's Well, very you refers of

there's our new partners. I shipping accelerated across were so think our start free up can for selling that of We discount costs. we process. September, had can we from that Brazil the in In a shipping we this and free at factors, this to affordable that sellers both. decentralization for little And sellers see that old the growth offering stems also policy XXX% both

in updated up we to offering costs. February, in starting Now shipping discount XX%

So that changed a little.

BRLX of partners adjusted long-term. So We feasible from our the a serve added we sustain growth make for economically We it of standpoint all the to percentage. billing, maintained to and to fee. shipping

I sustainability think the component that this is of that in course coming the explains the main QX for growth had and we quarters. that

Vanessa Rossini

ending session. turn final I Frederico go his ahead. Trajano would floor to now Q&A Freddie, to are the statements. the like We for

Frederico Trajano

Well, I too think Vanessa’s early. came that recording

me QX are with. second scenario differences scenario answer like macroeconomic XXXX. I see cope João’s we QX this the question. of didn't significant with in new Well, Let part change to initially, we're more dealing from prepared the to that ’XX said, The I

we happen opinion, significant of XXXX. believe more second half the So in in will improvement my the

think I of last year. the opposite it's

a half little harder. First be will

I I before expecting from might a along but But the that get half not standpoint, future. is prepared should surprises, better what more I This little operation though. crystal macroeconomic say. our great Things scenario, can the will the Second envision again, But be anything for improving ball. don't for have the a better company's challenging happen, I’m quarters.

Vanessa Rossini

Thank you.

We are Freddie. Q&A closing now the session,

statements. move Let's to your final

Frederico Trajano

Well, I joining all for like this us to in would conference earnings thank call. you of

scenarios, and a very film. our that have to to hard and would like on us. snapshot, looking the I excited like And than is We And photo. ad a the I strategy. who execute working but would we short all all thank employees absolutely of at to the better A challenges execute to say with film our management here all we at much. term management. Magalu I motivated look to an like are we strategy. to want instead Thank would understand thank are you of obviously

Vanessa Rossini

earnings Magalu conference ended. is call

Thank And will questions Investor Our have available to your team day. very answer remain doubts. for participation. a you Relations and further much good

Magazine Luiza (MGLUY) 15 Mar 222021 Q4 Earnings call transcript