Atacadão S.A. (CRFB3) Earnings Call Transcript & Summary

Good morning, and welcome to Grupo Carrefour Brazil's video conference to discuss in greater detail the material fact about its acquisition of the BIG Group. This conference is being recorded and simultaneously streamed online at ri.grupocarrefourbrasil.com.br, where the respective presentation is also available. During the conference, slide selection will be controlled individually by each participant. [Operator Instructions] Before we proceed, it should be noted that any statement during this current regarding business outlooks, projections, the operating and financial targets are mere forecasts based on management's expectations for the future of the company. These expectations are closely linked to market conditions and the overall performance of the country, the industry and the markets where the company operates and are, therefore, susceptible to change. I will now turn the floor over to our CEO, Mr. Noël Prioux, who will open our video conference. Please, Mr. Prioux, you may proceed.

Good morning, everyone, and thank you once again for being with us on this call. Here with me are our CFO, Sébastien Durchon; and our Investor Relations Director, Natalia Lacava. This moment represents a BIG leap for the group. And I am very pleased with the completion of this transformative transaction for Carrefour. This investment at such a challenging time for many also improves our commitment to the future of the country. I'm very happy to talk to you about the acquisition of the BIG Group. This is a unique opportunity for our group to improve and expand our ecosystem. The 2 companies complement each other to a high degree and combined, create a group that operates nearly 900 stores and employs over 155,000 people in the region. The strategic rationale behind the operation is very convincing. The BIG Group stores are highly complementary to ours geographically, especially Northeast and South of Brazil, where we have a limited footprint. In addition to that, we are adding a unique format, Sam's Club, a new format that we have not yet operated and which offers great potential for growth. This is an operation that will benefit all our stakeholders. We will be able to offer a wider variety of products and services at even more competitive prices and to reach a larger number of customers. We will also make additional investments in expanding and converting stores, which will create jobs in the country, both directly and indirectly. The enterprise has been valued at a very attractive BRL 7 billion, with annual synergies that reach up to BRL 1.7 billion by year 3, which is something Sebastian will share more details about later. This is certainly a very important milestone in the history of the Carrefour Brazil Group and will greatly accelerate our growth in the coming years. So we are very pleased to welcome the BIG Group teams who have successfully started our turnaround. And we're counting on them to step into the future. I now turn it over to Sebastian, who will give more details about the transaction.

Thank you, Noel, and thanks, everyone. We truly believe we'll have the ability to accelerate the group's ecosystem by adding highly complementary and synergistic pieces. First of all, I think it's worth remembering who the BIG Group is. As you can see in the slide, BIG Group is a multi-format group that has a footprint in several regions of Brazil and a remarkable presence in the Northeast and South regions with gross sales of nearly BRL 25 billion in 2020 and more than 40,000 employees. Its diversity of formats that are widely recognized by customers, including both formats we already operate and know very well, such as the soft discount format and other formats with the everyday brand, and the premium club format, which is Sam's Club, which makes BIG an extremely strategic and complementary asset. And it also opens new growth levers for the group. In Slide 9, we explore a little bit better the active Sam's Club. We understand this is a unique model with a premium value proposition focused on higher-income classes, and it could unlock a very promising growth lever. This is a club model with 2 million members already identified and engaged in a brand with an impeccable reputation. This format has the characteristic of engaging through a unique assortment with unique imported items and high level on brand. This is a profile to attract customers they call treasury hunters because the assortment changes over time, and this ends up generating a high level of recurrence of visits. We see the potential to expand this brand, which today is only 35 stores and is very well located, and we believe this format will be a new source of growth that is very relevant to the group. Moving on to Slide 10, I think we should mention here that the turnaround process had started in 2018 by Advent and the current management team, and it is already bearing fruit. The adjusted EBITDA, which was negative early in the process, has turned positive and neared BRL 1 billion in 2020. Its stores, in particular, have already been completely restructured by closing unprofitable stores, transforming several Maxxi stores and remodeling all hypermarket stores. On Slide 11, we're talking about well-located stores. Many of them renovated, and more than half of which are owned by the group and which are valued at an estimated BRL 7 billion, according to an outside consulting firm. In addition to that, there are 38 pieces of land ready for future expansion. It's important to emphasize that this is well aligned with our strategy of owning part of the assets and guarantees an additional valuation potential. Following the presentation, I would now like to go a little bit into more detail about the complementarity of these businesses and their synergistic potential. On Slide 13, you can see that many stores in the Northeast and the South regions, which is where our footprint is more limited. With BIG stores, our gross sales will come to BRL 100 billion, and our bank's revenue should reach BRL 50 billion. Slide 14 shows the multiplier effect to our ecosystem, which involves several business verticals and enables much greater monetization of our relationship with customers. This privileged relationship is borne with our unique experience in selling through and extends through our digital platforms. From that point on, we will be able to offer more products and services to our over 45 million customers, such as the financial services of our bank, and the start-ups we've purchased in recent years, including Ewally, Cyber Cook and CotaBest. Here, we see no limit to the development of our ecosystem. On Slide 16, we illustrate the power of this increased revenue. For example, a customer who buys at 1 of our hyper stores becomes loyal, thanks to our super app and is then monetized when they use our card or make purchases at galleries and shopping malls or fills their tank at a gas station using the loyalty program, which opens the door to rewards, both online and in the physical world and so on. That's what makes it exponential. And BIG's more than 15 million customers create a spectacular opportunity to build even more on this ecosystem. That's why we believe so much in the potential of this enterprise, which we've summarized on Slide 16. It's clear that the potential synergies go far beyond what the figures show today. It is much more than simply the sum of 2 groups. Moving on to the next section, let's now talk about these numerous benefits this transaction will provide to all our stakeholders. On Slide 18, I would like to underscore that the transaction will benefit, first of all, millions of customers. The interesting thing to realize is that we have the lowest price compared to other players, which clearly demonstrates that this transaction could expand the purchasing power of the BIG Group customers at a very challenging time for many Brazilian families. In addition to this increment in their purchasing power, customers will have access to the high-quality service of our Carrefour and Atacadão models, as well as our omnichannel experience. On Slide 19, I'd like to stress that this transaction will significantly increase our investment, bearing in mind that since 2019, this transaction has -- this transaction included, we have invested a record BRL 15 billion. We will generate thousands of new jobs. Last year alone, despite COVID, we created more than 7,000 additional jobs. And the future expansion of Sam's as well as our existing stores will intensify this trend, not to mention the indirect jobs managed by our suppliers. Finally, let's not forget our important role in tax collection. Last year, we collected about 10 billion in ICMS and PIS/COFINS. So the growth of our business will also benefit the public coffers. We've identified a significant synergy potential to be launched from year 1 that will gradually increase to represent a net addition to our EBITDA of BRL 1.7 billion a year, 3 years after we conclude the operation. This -- or there is an opportunity to increase the volume of our sales in the various formats with significant gains by rolling over our credit through our financial arm with credit offerings and other services for our B2B and B2C customers through the BIG Group, plus greater acceleration in e-commerce. On the cost side, we see opportunities to validate our direct and indirect cost structure and to realize our synergies in the logistics chain by optimizing existing distribution centers. Slide 21 shows that there's a huge upside in selling per square meter, especially in hypermarket and cash and carry as well as in diluting costs, which would lead to significant EBITDA growth. In Slide 22, we see our integration plans that involves the evolution of various brands and the conversion of some hypermarkets to the Atacadão and Sam's Club brands. As a result, we believe the power of our ecosystem as evidenced in Slide 23 is great in addition to complementing our already well-developed ecosystem, especially with the Sam's Club model, this transaction will give us access to BIG's 15 million customers, increasing our share of wallet. Finally, let's recap the main technical details of the transaction. You had access to everything through our material fact documents, so I'll try to be quick here going over Slides 25 to 27. We're buying 100% of the BIG Group for an EV of BRL 7 billion with a positive impact on our net profit, starting in the first year. Payment will be 70% cash and 30% in new shares of the Carrefour Brazil Group. The payment and shares is evidence of the confidence our sellers have in the valuation of the Carrefour Brazil Group as well as the rapid realization of our synergies. These new shares, which will be transferred on closing day, will have a 6-month lockup. There will also be a price add-on based on the performance of our shares between their issue and the end of lockup. Transaction will be concluded in the coming months, and we will use available cash in conjunction with new funding lines. This transaction structure generates an alignment of mutual interest between sellers and buyers, as we show on Slide 26. After closing Advent and Walmart, through its affiliates, will own together 5.6% of the company. We are very honored in the confidence that that translates. We should remember that -- or remind you that the transaction is subject to CADE's approval. So with that, I would like to turn the floor over back to Noel, who will make his final remarks.

Thank you, Sébastien. I'd like to emphasize once again the strategic importance of this acquisition and say that the value we see in this transaction goes far beyond what the numbers can show. The opportunity we have to accelerate engagement with the BIG Group customers through our ecosystem makes this transaction a huge opportunity to catalyze growth for many years to come. I'd like to end by drawing your attention to a very promising parallel. 14 years ago, we bought a small 30-store company, which became 1 of the largest companies in Brazil. The company is called Atacadão. Today, with this transaction, we are entering a unique model of about 30 stores, which are named Sam's Club. And I suspect that once again, this will be a success story. Now thank you very much for being with us, and we are available for any question you may have.

[Operator Instructions] Our first question comes from Thiago Macruz from the Itaú Bank.

Congratulations on the presentation. Well, I'd like to know a little bit of this asset. There are a few accumulated credits as we saw in your presentation. So my first question has to do with that. Do you believe you will be able to reap those benefits? And is that being allowed for in the company's business plan? And the second question, which has more to do with your operation, does it make sense to think that Maxxi was already ventured into a smaller-sized stores with Atacadão. And is that of benchmark for smaller cities is an advantage that this transaction offers? Thinking of the Maxxi brand, does that make sense?

Well, Thiago, let's start with the more technical question about credit. You're absolutely right. I mean, for last year, we saw many fiscal or tax credits. Here are -- we have 3 types of credits. We have credits with the PIS/Cofins duty, which is a result of the Supreme Court's decision to reduce our ICMS taxes. So they have -- in PIS/Cofins tax credit, they have about BRL 2 billion -- BRL 2.5 billion in ICMS credits. And so a lot of accumulated tax credits. And as you can imagine, in a transaction such as this one, we cannot make a more -- a very granular analysis of the situation. What I can tell you is that in our valuation, we considered part of the accumulated losses because this has a lot to do with our synergies. We're talking about a significant amount -- a significant figure in synergies. So that alone will accelerate a lot the way we use these accumulated losses. So yes, we do consider part of that in our valuation. In terms of PIS/Cofins tax credits, we considered part of that. And ICMS, we had no material to evaluate. So we have nothing in terms of ICMS tax credits. Well, with regard to Maxxi, we do have Atacadao models now even more so with compact more than 400 -- maybe 500. We've made the decision over 3 years ago to invest with -- in a more compact model of stores, which was a very fruitful decision. And we've had the same payback. And that sounds very relevant to us. And I think that Maxxi could be a catalyzer. Obviously, the Atacadão brand is also very significant, which allows us to accelerate sales. And more than anything, I think that, and maybe this is not clear to everyone, but I think the Atacadao is, first of all, a B2B and B2C model, whereas Maxxi is much more B2C-focused model. So sales are much faster than in B2B. And B2B is very important because it helps small business entrepreneurs. So we can't sell that much more per square meter because the Atacadao experience in that sense is exceptional, and that will help our Maxxi stores to sell a lot more a lot faster.

Our next question comes from Mr. Ruben Couto from Santander.

Congratulations on the acquisition. Now with regard to the synergies, you've mentioned 4 major ones. Could you guys give us a rough idea of each of these 4 assets? And what types of synergies do you expect to realize? And my second question, is about the conversion from Maxxi to Atacadao, and how that will go about in the next few months in terms of regions? What -- do you think that will go as you expected before the transaction? Did you understand the first question?

Yes, of course, it was about the synergies. So BRL 1.7 billion a year here were mentioned in a more qualitative way the synergies, trying to sum them up. I think there's a very clear synergy that comes from the difference in efficiencies between BIG's operations and ours. And that's true for the intensity of their sales and ours. We provided some figures to help you see that in Slide 21. There's a difference both in hyper and cash and carry, which is very significant. Of course, our plan here is by converting to our brands to have the same performance as we've always had. And it's true for the rest of the structure as well. We can reduce costs significantly, and we will use our conditions to buy merchandise as well. And the idea is to take BIG stores to the same accounting level we have in our stores, both in Maxxi and Atacadão. The second great synergy that we mentioned in this BRL 1.7 billion figure has to do with the banking service. You know that with Carrefour, we have a very interesting peculiarity. We control this bank with 51% of capital. And as a result, we were able to perfectly align our strategies on both sides. Both the commercial strategy and the banking strategy and now adding Sam's Club to that as well. So our plan here is very simple. We will leverage our banking services even more. Our bank has been growing steadily and strongly already. And the BIG Group is certainly a very interesting source of revenue for our bank. I'd also like to mention e-commerce. As you know, this is something we've invested a lot in the last few years, and we will now we are now seeing a strong revenue coming from food e -- and nonfood e-service. All our 400 BIG stores, each one of them is another or creates another opportunity to be in touch with our customers, an opportunity to strengthen our e-commerce operations. We will connect this entire set of stores to our ecosystem, consolidating our digital partnerships. So all of that will contribute to growing our online operations. On the cost side, as I mentioned, for our stores, we have the merchandise costs, and we also see synergies in terms of logistics. Not to mention the purchases of indirect products, there are also opportunities to optimizing streamline services. Well, we also have to imagine that this is not in the figures that we're showing, but we're connecting over 50 million customers. Our revenue expectation is obviously spectacular unquestionably. But we'll also have physical units to deliver the products to our customers. That's obviously part of our strategy. Now with regard to expansion, first of all, our intention was already to accelerate that. When I came in, our pace was about 10 or 20 stores. And this year, we're going to open 45 or 46 stores. So our plan was to keep the pace of 40 stores a year, but we're now expecting to grow and expand, increase the number of stores we want to open every year. That's part of the pace of acceleration of our ecosystem. We want to expand not only physically, but also digitally, so as to offer higher purchasing power to our customers. And we plan to keep that pace of acquisitions. Our plan is to accelerate even further. As something we saw with Makro, for example, they took their experience and turning their stores every 5 or 6 months. So we have an experience and integration that's already spectacular. Machines work very well, and we're seeing growth. So this is yet another experience for us to be able to open even more stores. Whenever we talk to you guys, I think that the importance of opening new stores is limitless. It's huge this importance of opening new stores in Brazil. It has an impact on the market, but that's part of the issue. But nothing changes. The acceleration is just another opportunity, and that was our decision to accelerate. Now the good news in addition to that is Sam's Club, which will allow us to go into a new market, stepping to new water, so to speak.

Our next question comes from Mr. Guilherme Assis from Banco Safra.

I have 2 questions actually. This presentation really helps us to price and quantify everything, but I'd like to know about your capital structure. You showed in your slide presentation that your capital structure is made up of the 70% and 30% that you guys negotiated as payment. Now my question is, do you see more opportunities or more acquisition opportunities moving forward? And does that mean you may require strengthening your capital structure? And second question, is about CADE's approval, the economic authority, or the antitrust authority. We see that your assets are very complementary, yours and BIG's. But my question is about the fact that in the Southeast, do you anticipate questions or recommendations of remedies on CADE's part because of the analysis that you've already made. Do you expect to see something in those terms? Or do you believe there will be a 100% approval? Do you expect any recommendation on CADE's part?

Sebastian?

Thank you, Guilherme. I'll start talking about the structure of the transaction. As you said, yes, we're paying 70% (sic) [ 30% ] in new shares of Atacadão S.A. This was an idea that came up during the negotiation, and all parties thought that was very interesting. So it was a way to sort of divide or take a slice of the synergy of those synergies with buyers. So they will benefit from the increase in value that the group will acquire and also from a strong alignment of interest. It has a little to do with your second question. We expect 100% approval, which may take a few months to come out. But during this period, the sellers will be exposed to some degree, but that helps us to align our interests with everyone involved. So obviously, on both sides, we were on the same page regarding this component of issuing shares. Now with regard to the future, the need on our side was not so much to limit the impact of the group's debt, and I'll give you some numbers. At the end of last year, we had a net cash position that was full of leverage, BRL 5 billion to BRL 5.5 billion in cash, which is 1x EBITDA from last year. So for us, even with this transaction, the balance is still -- the bottom line is still very healthy. And that leaves us with room to maneuver moving forward and to make moves with the ones we started doing last year. We've invested in start-ups and technology companies. So I think that in the future, we may see similar moves. With regard to the antitrust authority, you're absolutely right. I think the key point here is complementarity. Our companies, as we said, is almost perfectly compatible and complementary, especially in the Northeast -- the North, where we have stores, but once again, a limited footprint. There's an issue in the Southeast, which we have analyzed, obviously, and the antitrust authority has been using a specific methodology. So we have our models here. And we've looked into them very closely with our lawyers. And we will be in full cooperation with CADE, the antitrust authority, and we'll see where that goes. But we're confident that we will be able to convince them that this is a very -- a highly complementary transaction that will not have any impact on our competitors from the standpoint of customers. As I said in my comment about the presentation, we are absolutely confident that this will help consumers and help them a lot. In the hypermarket segment, we have the lower prices. And then in retail, we have the lowest prices with Atacadão. Yes, especially in São Paulo, I do not have the numbers on me, but I do not see any major barrier to us being able to acquire that share.

Our next question comes from Ms. Danniela Eiger from XP Investments.

Congratulations on the acquisition. I have a few questions here also regarding the statement that you guys released. In a way, it's understood that the Sam's Club will be maintained and that the other brands will be converted into Carrefour's brands. In that case, I think Atacadao. And I would like to understand that and understand the timing that you guys see for that moving forward. Do you guys believe you would be able to have that conversion through 2024? Or do you think that will take a little bit longer? I'd also like to know your stance with regard to the grocery store format. You guys mentioned that this is not a format that you guys operate very well. So you're always looking for partnerships. So have you guys invested in talking to partners in those terms? I'd like to -- and understand you guys' thought about that model. Also, I do not see an upside in terms of expansion. What do you see for those synergies, as you commented, to even acquire new formats? If you guys could take my last question as well with regard to the metrics of Grupo BIG, what -- how do you guys see the -- your customer retention?

Well, with regard to our brands in general, we consider that we have the #1 model for atacarejo or retail wholesale stores, which is Atacadão. Our hypermarket is Carrefour. So we're not calling our supermarkets Carrefour. Now the premium club model is Sam's Club. So we're keeping Sam's Club. Now we have ideas for the expansion of Sam's Club, but it's very clear for us that we may have a few exceptions here and there, but this is very clear. For supermarkets, we consider that there are interesting brands which are very well known such as Bompreço., but we will see that with clients. But we already see -- or we already have communication with our partners in terms of how can we combine, how can we meld our operations with theirs. And I think we'll be able to do that with Carrefour without any major issue. Also now with supermarkets, we have several Bompreço stores, and I think they have a very interesting model. We will have to see our partnerships, but that is still to be seen. We see thousands of supermarkets within our group that are for sale. I think it's a matter of opportunity, but the intention is to keep their structure, especially concerning their locations, keeping the supermarket model, but I really want to keep the local customers, the local products, the local relationships, that's what's most important here, I think. Whatever we can maintain that has a value to our customers, we're keeping that. Sébastien?

Well, with regard to your other questions, I hope that I was able to get everything. And if I forget anything, you can raise your hand, so to speak. Now with regards to the timing of our conversions, we're expecting everything to take place in the first 12 or 18 months after the transaction has concluded. We then have the conversion of Makro we took -- it took us 6 months to open all Makro stores. Now with Maxxi, we have nearly 50 stores. So it will all depend on the pace at which the Atacadão team would be able to convert everything. Now with regard to Sam's, the expansion of Sam's, you're absolutely right. Here, we have BRL 1.7 billion in synergies. We're not counting on synergies in Sam's Club, especially, but that was already in BIG's plan to expand Sam's Club. So we added a few figures to our presentation. We see a potential for opening new stores that is very significant. And with regard to your last question about management, I think they already have a number of things in place, they have a stock options plan for several executives. And that will be maintained until we conclude the transaction. Those executives with a stock option, if they participate, they will take 70% cash and 30% in Carrefour. And in addition to those executives, BIG has, just as every several other major companies, a plan in those terms. We're not concerned about that in the near term. And I'd like to state that we are very happy with the prospect of having 41,000 new employees from BIG with us. After we conclude the transaction, we expect to rely on them a lot.

Our next question comes from Joe Giordano from JPMorgan.

I'd like to talk a little bit more about the synergies. It seems clear, but I'd like to know a little bit more. I'd like to understand what do you guys see in terms of costs. You talked about the conversion, that you expect it could be accelerated. Now I want to know what are the costs inherent to that. And I'd also like to understand a little bit about the capillarity of your potential to deliver your products, which is expected to increase. How are you guys working in those terms with your aggregators with Rappi and other delivery companies? And how does that play into Carrefour's platforms? With this greater capillarity, both for food products and nonfood products. How will that affect your operations as they stand?

Well, with regard to our cost synergies, here, again, the plan is very simple, is to use our own models in both supermarket and cash and carry. So we see synergies that we saw very quickly. And our purchase conditions when we're purchasing, obviously, we're putting everything on the same level, and that will improve purchasing conditions for BIG. Especially in Atacadao, we see a and efficient -- the most efficient model in the market in terms of costs. Our distribution costs, our G&A with Atacadao accounts for about 8% or 9% of our net sales. So it's very, very low. So it complements our model, and we will absolutely realize those benefits. We have purchases of indirect products and to see that -- or looking at that, we can see that the only cost we'll have is the ones to convert their stores. So in Atacadão, it will be very similar to what we had with -- when we purchased Atacadão. And I think in hypermarket, it will be even lower, considering that BIG has conducted a number of renovations with their hypermarkets. So we see a large CapEx line. Now with regard to Rappi, Cornershop and other delivery platforms, it's the same thing, which is why we talk about the ecosystem all the time. We already have all the pieces available in our ecosystem. Of course, we will make good use of them and make all of that available to BIG's customers. So for example, BIG's customers in hypermarket stores that were converted to the Carrefour brand, they will have access to the myCarrefour app, the e-commerce offerings that Carrefour brings. So we already have the partnerships with Rappi and Cornershop, all of that already available, that will be made available to these stores that we've acquired as well.

Our next question comes from Mr. Gustavo Oliveira from UBS.

Congratulations on the transaction. If you could clarify something. I'd like to know about the CapEx. You mentioned that as one of the largest lines. If I'm not mistaken, it was said that the incremental cost of transactions was about BRL 600 million. I don't know if that figure makes any sense to you. And you also mentioned that to convert your cash and carries, you're likely to see a similar figure than the ones you saw to convert Makro. If you could talk to us about what you expect in terms of converting stores? What's the figure you expect for that? And also, of these 49 stores that are coming from Maxxi, will you convert all of them? Or will some of them be closed or converted into other formats? Clearly, their performance is not as good as what you guys have with Atacadao, but I don't know if converting them to Atacadao would improve them in terms of productivity so much. You also mentioned that some of these BIG stores that will be converted may be converted into Atacadão. I don't know how many of them will be converted into the Atacadão brand. So if you could clarify that, that would be great.

Well, with regard to our CapEx, when we converted Makro to Atacadao stores, we spent BRL 10 million to BRL 12 million, and we expect something similar in this transaction. Now for hypermarkets, BRL 12 million per store, right? Yes, exactly. So with 50 stores, about BRL 500 million? Yes, exactly. Now with hypermarkets, we see a lower CapEx. BIG has just completed the full renovation of 12 hypermarkets. So in that case, we believe the CapEx will be about half of that, about BRL 5 million to BRL 6 million per store. Now with regard to distribution, Gustavo, I do not want to go into details about that right now. We have our plan, we chose not to disclose that with the material fact. We have time even to refine all of them. So obviously, the plan is to convert part of the hypermarkets to the cash and carry format. It's a very simple logic for us. Once again, I think the interesting point here is the strength we will have in the future with 3 different winning models in our hands. The Carrefour hypermarket in the hypermarket model, Sam's Club in the premium club segment and Atacadão in the cash and carry model. So logic is very simple. Let's analyze their point-of-sale, what type of customers are around the store. And the name of the game for us is to choose the most appropriate format. That's how we will address this plan and make our choices. In the long term, I believe our strategy is different than what's been employed by other groups. And just as it was when we bought Atacadao in 2007, 14 years ago, I mean nobody knew the huge success this cash and carry model would have. I think our predecessors at Carrefour had an inkling, but I don't think they could have imagined the success that we'll have. Nobody did. So the same way today, it's very difficult to tell what will be the successful model 10 or 15 years from now. So with these 3 very strong formats, winning formats, we expect over time to expect to have a very significant plasticity to adjust depending on how consumers evolve.

That was very clear. I have 2 questions about your partnerships. What happens with BIG partnership has with Hipercard, is there an out clause? Is there any outlay that you guys would have to make once this partnership no longer exists and it migrates to the Carrefour bank? And my second question has to do with Sam's Club. Is there any -- a store growth metric that you have to reach over time? Or will you have to sign an agreement with Walmart for the right to use Sam's Club? Or is that not the same?

Well, starting with Sam's, our license agreement is a classic one. So we do not have a target for new store openings. None of that. That's all at our discretion. We obviously have a royalty to pay to Walmart, but we do not have specific KPIs that we have to meet. Now with regard to Hipercard, currently, BIG has a contract with Hipercard until our date of closing, and that is their responsibility. Now after closing, obviously, I'm not interfering with that until then, but after closing, our plan is to use our bank. The thing is the partner we have with our bank is Itaú. I believe that will be a conversation we'll have to have, and it will be in the interest of both partners to negotiate any of, but we do not see any problems coming from that. I think it will be a very peaceful conversation.

Our next question comes from Ms. Irma Sgarz from Goldman Sachs.

This is Vivian speaking. So I had to comment on a few technical aspects, but I'd like to hear from the impact of the discount format. If you could talk a little bit about growth in that format. It wasn't clear to me how you guys see and what do you guys think this will grow moving forward? I know that the owned brands could make a huge difference so I'd like to hear from you guys a little bit about that.

I apologize, but the audio was really bad.

She would like to know what we think about the potential of growth with the soft discount with Todo Dia brand. In the past, we had a few positions at that format, what do we see moving forward and what's the differential that that brings to the company?

Well, I think we have to rethink our current concept. And that's also a BIG's view about that. It does not have to do with BIG -- with BIG, it was Maxxi and hypermarket and now, the supermarket segment. So the deal was not a priority. I think there's a lot more potential to be explored with that. But we have ideas to recompose and to increment sales in an exponential way. And then we'll see if we want to expand that. That's a different story.

Our next question comes from Mr. Robert Ford from Bank of America.

Congratulations. So picking up these discussions about Sam's Club, could you possibly talk -- could you talk a little bit more or in more -- give us more details about this discussion with Walmart about the terms in which you will operate Sam's Club?

Yes, of course, we could go into more details about that. We had a few conversations with Walmart before signing the license agreement. I think both sides agree that on how we will work. We're all happy to have Carrefour as a franchisee of Sam's Club. And we are very happy. As we said, we see huge potential in that format. And we already have a number of ideas to improve their model and I think that we will refine even more those ideas over the coming months so that everything is ready for closing day. But we see huge potential and Walmart is supporting us. It's in their interest that we grow, and we expect to see a huge growth with Sam's. In addition to that, after closing, we will have an unprecedented situation in that we will have Walmart as a shareholder or a stakeholder in Carrefour. And it's an honor for us. We have a huge respect for Walmart. And once again, we are very happy about the situation. I don't know if you have anything to add, Noel.

Yes. I've talked about this before. As I said, I have a huge -- a very good idea of Sam's Club. I think they have huge potential in Brazil. And I think we will continue to share ideas. We will visit the new Sam's in South America and in the United States so that we can join forces -- join our heads in thinking how we can update and modernize. And these ideas, obviously, will be in terms of where we will be able to make more money and how we can best expand. This is all very interesting. Whenever you sell -- the more you sell, the more profitable it is, obviously. This is very interesting. I want to be part of this connection with Sam's Club in the United States to understand the connection with producers because here, it's a huge importance in nonfood, and we've been talking about that for a long time. Nonfood is limitless here, and we have to be aware of that. With the platform of Sam's Club and with Carrefour, there's huge potential. And we want to make the best of this partnership with Sam's Club just to show that the potential of this new model is, as we said, virtually limitless.

Do you have the intention of taking Sam's Club beyond Brazil right now?

Well, if the partnership works well with Sam's, we can think about whatever we want. But that's not part of the discussion right now. Our focus right now is Brazil, and we must show that -- well, obviously, the environment is very positive, but we have to show that together, we can really think of an attractive and profitable model. And after that, it will be a different discussion. That may be an expectation, but it's not part of the plan right now.

Our next question comes from Andrew Ruben from Morgan Stanley.

I was curious on the real estate. You mentioned significant value there. So if you could, please, talk a little bit more about the strategy, perhaps for monetizing some of the real estate.

[Foreign Language]

He would like to know a little bit more about the real estate strategy and how to monetize that.

Well, our real estate strategy is no different from the one we have employed before. So let me start with the situation we have right now with Carrefour's assets. We own a large share of our stores, about 70% of our hypermarket stores and 85% of our Atacadão stores. So for us, that's an upside that's very significant over time. Going to the point-of-sale and purchasing that property and over time, we generate a large traffic of -- that purchases and the city -- as the city grows around the store after 10, 15, 20 years, the value of that property changes dramatically. One example of that, a project that we've launched recently in partnership with WTorre here in São Paulo, and we're talking about the first store that Carrefour opened in 1975 in Brazil, this is a large plot of land with the store at that time was built right at the center of the plot, and it was 100% horizontal. And let's say that this is a very inefficient use of space. At that time, evidently, that was not a concern. The property was outside the city, the major part of the city. But now it's valued at a very high sum, which is why we have this project, which is to remodel the store, actually building a new store on the side of the property without ever closing our operations. So a large new store would be built. And besides that, we would have a large property built by WTorre, and we will receive a share of their earnings with that commercial building. So that was our plan to continue our operations and even reinforce it. Because if you think of that example, think about the thousands of more people we will have right beside the store after the project is completed. So that would increase the traffic in the store even more. It will increase our sales in the store. And in addition to that, we would receive some real estate assets that we would be able to monetize and sell and use the money to invest in other projects. So that's the type of project that we developed that the Carrefour property team is mapping out a number of other potential projects, and this is something we will expand with our assets today or with the assets that BIG is offering.

Our next question is from Mr. Eric Huang from Eleven Financial.

Congratulations on your new acquisition. Now within your synergies, with regard to your financial products, we would like to understand the synergies that you see there. And looking at the Carrefour Bank, what do you guys see in terms of capturing revenues? We would like to understand how that plays into those BRL 1.7 billion in synergies that you guys presented.

Well, concerning penetration at BIG, that's their figure, so I can't share them with you. Now, what I can tell you is our strategy. What we want with the bank business that we operate, with Carrefour, we have something around 25% penetration. With Atacadão, it is a smaller share or a smaller percentage, around 12% or 13%. Bear in mind that with Atacadao, we have 2 types of clients and each type accounts for about 50% of sales. We have individuals who have access to credit card. And we have companies that do not have credit cards. In Atacadao, we have a similar scenario. We have 12% with individuals who account for 50% of the business. So it's very close to what we see with Carrefour. So obviously, the plan is to go about it the same way with BIG with the same models of Carrefour Card and Atacadão Card. We also have that opportunity with Sam's Club to build a custom-made product to support Sam's Club customers. We see great opportunity there. And let us not forget that the bank started 2 years ago a very ambitious movement to diversify. We launched 2 new projects, making machines for businesses. And we have other projects to release new products in the next few months. And with all of that, we will also be doing -- and all of that, we will also be doing with BIG. The same things we had in Carrefour and Atacadão. So we can also think about that as an upside in terms of synergy. Yes, it's one of the synergies we considered.

We are now ending our Q&A session. I would like to turn the floor over to Mr. Noël Prioux. Mr. Prioux, you may proceed.

I, too, would like to thank everyone. Once again, this is a very significant time for us, as you can see, our synergies. I'm convinced that there are many more synergies than we can see today. We have ideas to value these companies even more, even beyond their potential for growth in a format such as Sam's Club. I think Brazil is the only country that I know with 3 huge types of different wholesale. And that gives us a lot more opportunity to increase potential to serve our customers and also supermarkets. All of that is part of our strategy to get closer to our customers. And that then, obviously, our banking services will be a catalyst of this movement. We're seeing the Carrefour bank grow exponentially and that's what differentiates us from the competition. And all of that within this unique system, and in the next few months, we will do everything we want to do, and I think that we are about to see good moments for Carrefour and for the market as a whole. Thank you very much, and I expect to see you all shortly.

Thank you. The video conference with Carrefour Brazil has now concluded. We'd like to thank everyone, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]