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

Good morning, everyone, and welcome to Group Carrefour Brasil's Q4 2024 Earnings Conference. We are joined today by the company's CEO, Stephane Maquaire; CFO, Eric Alencar, and IRO, Marcela Bretas, who will lead today's presentation. Please note that this conference is being recorded and will be available for replay on the company's Investor Relations website, where the corresponding slide deck can also be downloaded. For those who require simultaneous translation, the service is available by the interpretation button located at the bottom side of your Zoom screen. After clicking on it, you'll be able to choose your preferred language, Portuguese or English from the pull-up menu. If you were listening to the English translation, you can also mute the original Portuguese audio by clicking on mute original audio. [Operator Instructions]. We'd like to remind everyone that the information shared during this presentation as well as any statements regarding the company's business outlook, operational and financial projections or targets reflect its management's current beliefs and assumptions and the information available at the time. Forward-looking statements are no guarantee of future performance. They involve risks, uncertainties and assumptions seeing as they pertain to future events and rely on circumstances that may or may not materialize. Investors should note the general economic conditions, market trends and operational factors could have a significant impact on group Carrefour Brasil's performance potentially leading to outcomes that could vary significantly from those anticipated in these forward-looking statements. I will now like to hand the floor over to CEO, Stephane Maquaire, to begin the presentation. Mr. Maquaire, please proceed.

Thank you. Good morning, everyone. Thank you for joining us again for the presentation of our fourth quarter and full year 2024 results. This quarter, we maintained our strong sales growth achieving like-for-like market share gains at Atacadao for the third consecutive quarter and also in retail. We added 5 new Atacadao stores this quarter, completing 19 new stores for the year. In 2024, we also opened seven Sam's Club stores driving double-digit growth in the club format sales footprint. Throughout the year, we completed the conversion of 22 retail stores as part of our portfolio optimization plan. On the digital front, our GMV reached BRL 3.4 billion for the quarter, up 19% year-over-year driven by a 43% increase in 1P food sales. Group Carrefour Brasil's gross sales grew 5.5% in Q4, led primarily by Atacadao's performance which posted 9.6% year-over-year sales growth with a 6.3% like-for-like increase, again, outperforming the market average. This reflects the success of our initiatives to better serve our customers which is what we do always offering bakery, butcher and daily services in 157 stores. Self-checkouts in 182 stores and 3x no interest installment payments on credit cards across all locations. In retail, like-for-like sales growth maintained its recovery pace reaching 5.9% year-over-year, showing that our store portfolio adjustments and new competitive pricing strategy are paying off. Sam's Club revenue grew 14% year-over-year, marking another quarter of investment and format expansion. Our bank, Banco Carrefour also delivered solid performance with billing up 16% compared to last year, subdued delinquency levels and a maturing credit portfolio. However, this quarter marked the first time our entire portfolio operated under the new credit card interest capitals, which has impacted EBITDA. And speaking of EBITDA, consolidated EBITDA for the quarter totaled BRL 1.9 billion with a 6.5% consolidated margin a slight decline from last year, mainly due to Banco Carrefour results. Regarding our ESG strategy, we reaffirm our commitment to ambitious improvement targets and adherence to rigorous standards. On diversity and inclusion, we launched the Mulheridades or women hoods program with 1,000 openings to empower women and develop our employees. We ended the year with women holding 33% of our leadership roles and 22% of our executive roles. This was slightly below our targets, but it shows our commitment to progress. In racial equity, we exceeded our goal with PBOC employees in 35% of our leadership positions and 14% of them in our executive positions. I'd like to emphasize that we will not step back from our inclusion and diversity policies. Inclusion precedes all 4 pillars, all 4 pillars of our culture. I4Cs, which we talk about continuously and we continuously strive to involve. I know we also need to evolve as we continue to do, but I'd like to reinforce our commitment to diversity and inclusion. Now when it comes to environmental protection and biodiversity protection. In 2024, we reduced Scope 1 and Scope 2 emissions by 47% compared to our 2019 baseline. That's 9% above our yearly target, which is 38% reduction. So for the second consecutive year, the group was included in B3's efficient carbon index, which lists companies on the -- at the forefront of carbon reduction. In addition to that, we were also placed on the CDP Climate Change A List being recognized as Brazil's highest rated food retailer. In finding hunger and inequality. In 2024, we donated over 6,500 tons of food almost 50% more than in 2023. With that, I will now hand it over to Eric to discuss our financial performance. Eric? Please.

Thank you, Stephane, and good morning, everyone. It's a pleasure to be here with you again. Over the next few slides, I will go quickly over the slides you had access to yet last night. Slide 3 covers our consolidated business results for the quarter. Our Q4 2024 gross sales totaled BRL 32.8 billion, growing 5.5% year-over-year, led by strong performance at Atacadao. Gross margin was 19.3%, 70 basis points lower than in Q3 2023 given the larger share held by Atacadao, which has narrower gross margins and the impact of new regulation capping bank interest rates. SG&A rose just 1.8% below inflation despite our network expansion, reducing 50 basis points as a percentage of net sales. We maintain cost discipline and efficiency gains which has guided our efforts throughout the year. Adjusted EBITDA reached BRL 1.9 billion, with a 6.5% margin, slightly down from last year, especially due to Banco Carrefour's performance. Lastly, we ended the year with adjusted net income of BRL 1.8 billion, a strong increase driven mainly by the recognition of BRL 1 billion in deferred tax assets from accumulated losses at Group BIG. This corresponds to the gains we expected to realize over the next 5 years. Slide 4 covers our consolidated full year results. You'll see this is not a different story from what we see with the results for the quarter. Total 2024 sales reached BRL 120.6 billion, up 4.4% from 2023, again, led by Atacadao. Gross margin was 19.4%, down 52 basis points from 2023 due to the same factors as in Q4 and our ongoing retail price repositioning which has been underway since late 2023. SG&A fell 1.8% year-over-year, dropping 100 basis points as a percentage of net revenue. This makes us very proud and convinced that our operational simplification efforts are on the path to success. EBITDA grew 13.4% to BRL 5.9 billion, up 43 basis points year-over-year, driven by our cost discipline, store conversions, portfolio optimization, and captured synergies, which totaled BRL 2.9 billion by year-end. Adjusted net income for the year was BRL 2.4 billion, over 6x result for 2023, reflecting operational growth, slightly lower financial expenses, and tax [ benefits ] from goodwill and deferred tax asset recognition from the acquisition of the Group BIG. Now on Slide 6, we highlight our Cash & Carry segment. We ended the quarter with 379 Atacadao stores, adding 5 new stores to the network. In 2024, we opened 19 new Atacadao stores, including 18 converted from retail and one new organic store. Gross sales in the segment reached BRL 23.3 billion in Q4 2024, up 9.6% year-over-year with a 6.3% like-for-like increase, outpacing the market for the third consecutive year. Full year sales reached BRL 86 billion, up 8.7% from 2023. Converted Group BIG stores performed well and once again showed solid performance with 14.3% like-for-like growth in Q4 on top of last year's already strong 16.8% growth. In December, these stores had net sales of BRL 28,800 per square meter, achieving 82% of the mature sales target with EBITDA margins exceeding 6% in December. Gross margin declined slightly by 43 basis points, which is natural over the course of business, mirroring product and customer mix changes as well as successful sales campaigns like Black Friday and Dia de Parcero. Full year gross margin was 15.4%, stable compared to what we had in 2023 and our historical record, again, showing the stability and resilience of our business model. SG&A as a percentage of net sales dropped 63 basis points in Q4 2023 due to maturing converted stores and efficiency initiatives, especially in labor. Full year SG&A dropped 48 basis points for the same reasons we presented for the quarter. Q4 adjusted EBITDA was BRL 1.6 billion, up 12.7% year-over-year with a 7.4% margin gaining 18 basis points versus last year. Full year adjusted EBITDA reached BRL 6.2 billion, up 15.9% with a 6.7% margin, 37 basis points versus what we had in 2023. Now on retail, moving over to Slide 8. Gross sales totaled BRL 7.3 billion in Q4 2024. Like-for-like sales growth remained strong at 5.9%, reflecting portfolio adjustments and pricing strategy revisions. As you all know, our decrease -- 8% decrease in revenue is explained by sales area reductions from store closures and conversions in this segment. Full year gross sales were BRL 27.2 billion. Q4 gross margin evolved differently, expanding 81 basis points year-over-year. And this was, first of all, because of improved supplier terms and reduced losses. This offset last year's early competitive pricing adjustments. We saw a reduction by 70 basis points versus '23. In 2024, full year gross margin was 23%, down 81 basis points, mirroring our more competitive pricing strategy. SG&A fell 6.4% in Q4, with a slight 27 basis point increase as a percentage of sales. Here, what happens was the baseline for Q4 2023 was already affected by a reversal in our provisions for some expenses, mostly because of bonus payments. This year, we are already working with adjusted provisions. Full year SG&A in 2024 dropped 14.2%, contracting 131 basis points as a percentage of sales. We'll continue to work to increase efficiency and lower costs over the next few quarters, so as to make this a more agile and competitive format. As a result, adjusted EBITDA for retail was BRL 220 million in Q4, up 10.5% year-over-year with a 3.4% margin expanding 50 basis points versus 1 year earlier. Now moving over to Slide 10. Gross sales in Sam's Club were BRL 2.3 billion in Q4, up 13.9% year-over-year, with 2.1% like-for-like growth and 7 new stores. Active membership grew 14.1%, maintaining a strong pace of new members. Full year sales reached BRL 7.3 billion, up 16.8% over 2023. 2024 saw investments in store and membership growth. As we've said earlier, this investment can be seen in both gross profit and SG&A. Q4 gross profit was BRL 396 million with a 20.1% margin down 172 basis points year-over-year due to promotional efforts at new stores, partially offset by the higher private label penetration as well as imported products. Full year gross margin was 20.9%, up 34 basis points from 2023. SG&A totaled BRL 312 in Q4, up 16.2% year-over-year. In 2024, full year SG&A grew by 29.4%, mostly -- and this is both for the quarter and the full year was the new store additions. Adjusted Q4 EBITDA was BRL 84 million with a 4.3% margin. And over the year, BRL 238 million with a 3.7% margin. Now on Slide 12, we highlight Banco Carrefour's performance. Our credit portfolio reached BRL 28.4 billion, up 17% year-over-year, driving a 15.8% increase in billing supported by a very successful capture of new customers from converted stores. Delinquency rates continue to improve year-over-year, reflecting our more conservative credit policies. The bank's financial margin dropped 7% points due to the fact that in Q4, 100% of our portfolio already mirrored the effect of loans adhering to the new interest cap regulation. SG&A, one of the most important pillars that mirrors the effect of the new regulation rose just 1.2%, showing our cost discipline. Once again, our efficiency ratio, which is the cost of serving and the lower the better, fell to 28%, which is a market-leading level. Q4 EBITDA came to BRL 214 million, down 15.1% year-over-year due to the regulatory changes. Now moving over to Slide 13, we cover Banco Carrefour's full year performance with EBITDA growing 20.1% year-over-year with strong expense control and portfolio diversification. Slide 15 details our adjusted net income of BRL 1.8 billion for the quarter, more than tripling what we had last year. Operating income after taxes and depreciation reached BRL 1.9 billion, up 2% year-over-year. Financial expenses were BRL 624 million reflecting savings from the new intercompany loan rates. Adjusted tax revenue was BRL 947 million, driven by legal entity consolidation and deferred tax asset recognition totaling BRL 1 billion plus goodwill amortization impacts. Slide 16 shows our full year cash generation. Gross operational cash flow after taxes totaled BRL 5.8 billion, up 22.6% year-over-year. Working capital impacted cash by $1.1 billion. CapEx was BRL 2.5 billion, down 30% from last year, reflecting lower cost growth through conversions throughout the year. It's important to note that in 2024, we saw less cash coming in because of assets, which is why this line is similar in both years. Cash outflows for debt and dividends were BRL 502 million, EUR 2.1 billion less than last year due to increased receivables financing and no dividend payments. As a result, our full year cash -- free cash flow totaled $3.2 billion. Slide 17 covers leverage. This quarter, net debt, including discounted receivables, was BRL 10.1 billion. That's BRL 1.7 billion higher than in December 2023 due to higher discounted receivables. It's important to note that the annual comparison between our debt levels actually show that the increase we saw in Q3 was a one-off caused by the unusual working capital dynamics during that period. This quarter, we came back to regulated levels and lower impact for the quarter with [ 1.7 ] impact. Our leverage ratio ended at 1.56x net debt-to-EBITDA, consistent with 2023. With that, I conclude the financial highlights and hand the conference back to Stephane. Please go ahead.

Thank you, Eric. As you can see, in 2024, we executed exactly what we had planned for and also what we shared with you at the end of 2023 and November to be precise. In Cash & Carry, we continue to expand our store network and enhanced our services to attract individual customers. And that's our focus. Converted stores continue to mature as expected, achieving target productivity and profitability. We focused on maintaining cost discipline and price leadership, which is key to customer satisfaction. As a result, Segment revenue grew nearly 9% and EBITDA margin expanded nearly 40 basis points. In retail, we simplified operations and closed unprofitable stores, reducing the number of brands we were operating from 8 to 3 and either closing or selling 213 non-core stores. We resumed like-for-like sales growth in retail and grew its EBITDA by 10%. In Sam's Club, we invested heavily to solidify our leadership, expanding our sales footprint by 11% and growing our active membership base by 14%. Lastly, in our bank, we faced regulatory headwinds from the new interest cap, but responded with innovation, product development and disciplined credit and expense management. This drove a 20% profit increase in such a challenging year. That being said, I'd like to profusely thank our teams for their dedication and who made this a reality and also our customers for their loyalty continue to buy on our stores and digital channels and also our shareholders for their support throughout this journey. Finally, I'd like to address the news that you are all aware of that Carrefour France, our parent company has made an offer to acquire all of Carrefour Brazil's shares. Both Boards, both in Brazil and France have approved bringing the offer to a shareholder vote, which will be convened soon. We will keep the market informed of any developments on this topic. Thank you all for your presence. And we will now open the floor for your questions. Thank you.

We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Joseph Giordano, sell-side analyst with JPMorgan.

Hello. Good morning, everyone. I would like to explore the dynamics in Cash & Carry we saw a company adding just over 150 stores. So I just wanted to look at the dynamics on both cases. What's the checkout percentage for these new stores. Is this affecting -- affected by these new services, how has the traffic in B2C stores responded to these changes? And when we look at the gross margins, especially on the product mix, again, focused heavily on prices. As Stephane mentioned, touching upon the leadership, how can we talk about the product mix between B2B and B2C? And the focus on your pricing strategy? How could we think about the competitive environment moving forward?

Thank you for your question. The gross margin with Atacadao is always the combination of many things. On B2B, B2C and also the dynamics in the trade market during that time. I'm going to focus on Q4. We've concluded our plan to offer new services. both with self-checkouts and bakery, butcher and deli services. We have fully completed our introduction of these new services. Over 160 stores, plus 180 with the new SKUs. Traffic has increased, so more customers and larger volumes in these B2B stores -- or B2C stores actually. So we continue to develop and offer these services in our stores, focusing on B2C, which is what we do always. Over the quarter, we also saw a gradual increase in food inflation, which drove B2B sales up. We know that these sales always face narrower margins than what we have in B2C sales. So it was essentially a combination of these 2 different trends. And lastly, as Eric mentioned, we had a very successful Black Friday sale on the B2B side and also the Dia de Parcero sales which on the B2B side, also gave us a big boost. These 2 activities very focused on the products that have a narrower gross margin. Now looking at the year in full or only Q4, we had some gains in gross margin just as we had last year when we look at Q4 2023 comparing it to Q4 2024. So as always, I will answer the same thing. It's a gross margin range that we enjoy in Atacadao and we might have a little bit less or a little bit more than that baseline. Now with regard to the pricing trend, we always saw more or less the same level as our competitors. And we did not invest any more during this quarter in addition to the specific points I've already mentioned. So we actually focused very heavily on our new price repositioning for vis-a-vis competition. Anything else to add? All right.

Good morning, Joseph, I just wanted to corroborate what Stephane said. And other than that, I just wanted to mention 2 items. As you said on the new services, even though they enjoy a slightly wider margin, they account for only 3% of the store sales we have many of them. So in 40% of those, it will increase 2% or 3% depending on how you calculate it. So it's a small change in our gross margin. The main drivers we saw in this quarter specifically was the successful Dia de Parcero and Black Friday deals and another very important aspect was the basket of products that we work on. There was a slight change, and we can go into detail of that offline if you'd like, but there was a slight change in this quarter, especially with beer, meats and kibe, which also contributed.

Our next question comes from Danni Eiger, sell-side analyst with XP.

Good morning, everyone. My first one is actually following up on what you said. If you could please give us a bit more color on the seasonal changes because I believe this shouldn't impact our year-over-year changes. I don't know in a few categories, you see a stronger trade down. But if you could please add a bit more color on how consumers have behaved when it comes to the mix of product and perhaps looking not only to this quarter, but to the overall trend moving forward, if you're still seeing a trade down by consumers. And another thing that picks up on Stephane's answer, but how do you see the room for you to pass over inflation to consumer prices and also, how will you be positioning your price strategy in Atacadao versus other Cash & Carry brands and also other formats. We've had some feedback from your competition saying that both you and another competitor are positioning yourselves a bit higher than that. So I just wanted to hear about that pricing strategy versus other formats and other Cash & Carry stores and as well how much of the inflation increase you've been able to pass over the final prices.

All right. Thank you for your question. I will answer your first part and then turn it over to Eric for the feedback that you asked. Well, as to food inflation, as always, we're trying to hold prices still and wait until we can pass over those prices. And Cash & Carry is actually simpler whenever we see some increase in food inflation, we can buy more products in anticipation of the wave of inflation. This is a trading work that's something our Atacadao team has developed really well. And that allows us to hold back a little bit from the waves of food inflation in our stores. That's also something that our competition on the Cash & Carry side can do, but we can also do a little bit more holding back on increasing prices and keeping them slightly lower than our competition in Cash & Carry. Now on retail is a different story. We had some efforts at the end of last year, repositioning our Carrefour hypermarkets, for example, and we continue to follow the same trend. Speaking more generally, we try to hold back a little bit from passing over food inflation to prices, but our more basic products are facing those increases in all our competitors. So we can't really hold it back for very long. So we'll continue to see high food inflation. And I believe this should be a hallmark of this year. So we're unlikely to keep prices at the current level. But we'll be able to hold it for some time to offer consumers some relief. I will now turn it over to Eric.

Keeping things very simple. When we talk about consumer trends and seasonal changes, we could compare year-over-year. This is a year because of the calendar and temperature saw fewer less beer sales and items such as rice saw a surge in demand. So we believe that this is a one-off effect. And we're always working with similar margins that range from quarter-to-quarter, there's nothing that we could consider a structural trend.

Yes. Just following up on that, Eric, that you saw it's a little bit of mix and a little bit of volume. How do you see these consumers evolving when it comes to the mix of product? And thinking about the end customer, you mentioned B2B improving. But what about B2C? How do you see the trend in volume and quality of product mix?

Well, we see volume remaining unchanged. And considering prices at large with our traders, we were able to hold back a little bit from inflation. So our customers don't really get all of inflation. A few items, and this is natural has been for a few years. Obviously, we begin to see on the shelves a higher rate of returns, but these are exceptions. There will always be one product with prices going up more than the average.

Our next question comes from Felipe Rached sell-side analyst with Goldman Sachs.

Good morning, everyone. Actually, I have 2 questions. And I apologize for sticking with the gross margin issue. I just wanted maybe a bit more color with regard to your balance considering the data purchase and payment dates, I wanted to see if there was any general trend or whether you see just an attempt to hold back inflation on a few categories or if you see that as a trend? And could that have contributed to your gross margin results, that would be great. And then a second question is we're hearing from the market some feedback that they're struggling to hire new personnel considering that this is an industry with a slightly high turnover rate. I wanted to hear from you if you're feeling -- if you're struggling the same way, and whether you're working on a few formats with fewer employees than average and whether that has had any impact on your performance in this current quarter? And whether this has contributed over the quarter with some savings on the labor line? And should we expect that to come back over the course of 2025?

Thank you, Felipe. I will take your second question and then turn over to Eric for him to take your first point. Yes, we also experienced the shortage of manpower in many areas of the country. It is a vacation period. So many people are enjoying the beach and also taking the opportunity to work on the beach. So we're seeing more significant shortage of labor this start of the year through February. I was talking about Atacadao in the South with 15 people being called to be hired only 3 showed up -- or showed up for the interview. So indeed, this is a time of greater manpower shortage across the country. And we're trying to pinpoint how we can address this issue. I believe things will get a little bit better after the Carnival holiday, which is what usually happens. But this is something that's -- this is a hot topic right now at the association, but we'll see what we can do.

Well, with regard to the relationship between gross margin and payables, if you see 0.3 to 0.4 changes between Q3 and Q4, that's absolutely natural. Over the year, this has remained extremely steady. So that's what it is. Now in retail, we see some gains coming from that, but I -- there's nothing pointing to them being structural. It's much more about the product mix, and this tends to be normalized going back to historical levels over time.

Our next question comes from Rodrigo Gastim, sell-side analyst with IBBA.

I have 2 questions. The first of them about your expansion since last year, we've heard from the industry that there have been fewer store openings. So I just wanted to hear from you what's your expectation? You haven't disclosed any guidance, but considering what's going on in the industry and the interest rates, what's your forecast when it comes to expansion? Has there been any change? And then my second question, I'm not looking for details about the quarter, but your sales performance over time is also important for us to understand what's going on with the country's economy at large. So we're seeing an advance across every segment in December. And we wanted to hear whether that was the case for you and what was the magnitude of it? And if you could also talk a little bit in any measure about the start of the year, that would be great for us to sort of get a feeling about where the economy is?

Well, thank you so much for your company. About expansion, we continue to focus on leverage. Our purpose is to deleverage the company. So yes, with the higher interest rate across the country we have to secure our cash flow. So we are looking more carefully at the conversions and store openings we can work with. So we tend to have fewer store openings this year both in the Atacadao and the Sam's Club formats. So we had 19 Atacadao stores last year and 16 for the Sam's Club format, we should see much less than that in 2025. I think this is in line with what all our competitors are doing in the country. So 2025 might be a year with fewer store openings in the Cash & Carry format. We've had about 100 new stores in the country according to Nielsen, which is similar to what we had in 2023 and 2022. It's the regular level, but we should see much fewer than that in 2025. As for sales, granted, we saw much lower in December than what we saw in the previous 2 months. We have to say that Black Friday between November 22 and 23 in 2023 and November 29, 2024, sort of went into the start of December, but still, this was not a very exciting December when it comes to sales volume. It was lukewarm, so to speak. So we are seeing a much better January and February reflecting the celebrations at the end of the year in December and also a better February. But now we'll have to look into the sales in the first 4 months of the year, much like you because we do not have Carnival in February, like we had last year, but we will have Carnival in March, but not Easter unlike last year. So we're seeing very strong effects in February, March and April of this year. But in addition to that, we expect a better trend in early 2025, especially because of December.

Outstanding. That was very clear. I just have another quick question. We tend to look at the full inflation, which is what we saw at the end of 2024, but you're having slightly different mix. When you look at inflation, the IPCA rate for your average basket, how different is that for the headline IPCA that we're seeing. Just in order of magnitude, I think it's important to start looking at that, comparing it with what your actual basket of products is?

Of course, in Atacadao, we have a slightly lower internal inflation than the country's overall headline inflation. It's around 1% to 2% depending on how quickly inflation is going up month by month? For example, it's been 4 months where we stand at about 8% of food inflation around the country. So the gap is sort of narrowing. So when inflation begins to go up more quickly, and we are much lower than overall food inflation in the country, we come very close to that to the same level. And when inflation is steady, we widened that margin. Meaning when inflation is going up, your basket is a little bit lower than that. So it's probably at around 6% or 7%. But when inflation levels off, your basket of products will see prices very close to what we see in the country.

Our next question comes from Gustavo [ Gastin ] sell-side analyst with Bank of America.

We have 2 main questions. When it comes to your debt, after the potential deal listing was announced, how have discussions move forward to renegotiate your debt with Carrefour France. Do you have anything that you could report about how you could renegotiate that debt? And next about your contingencies, how much have you invested in? Is there any possibility for any agreement?

Well, thank you for your question. I'll turn it over to Eric for this one.

Well, we haven't even started discussions around the debt with our parent company because we have a natural renegotiation every year, but we start talks 1 month earlier and volatility is so dramatic. We try to start negotiations as soon as close to the date as possible. Last year, we started talking about interest rates at 9% and end of the year talking about rates much higher than that. So we haven't even started. And these talks are in no way connected with the possibility that they will acquire the company. With regards to contingency those [ BRL 248 million ] in 2024 -- that we saw in 2024 is a very similar amount to what we expect in 2024. Considering that from a labor perspective, there were many lawsuits with regard to the store closures. And then you have the 2-year period. So we're coming to the end of that period for the first conversion. So we might see a slightly lower figure about [ BRL 100 million ] less if our calculations are correct this year.

Our next question comes from Joao Pedro Soares sell-side analyst with Citi. Our next question comes from Ruben Couto sell-side analyst with Santander.

Two quick questions. More of a curiosity on the Atacadao side. We had a discussion here earlier. Have you seen any significant change across different regions of the country, maybe North and Northeast being more competitive than the South and Southeast. And I'd also like to ask on the retail side, we heard a question about how the gross margin has performed. And we saw the significant decrease losing 70 bps year-over-year, which helped to justify the wider gross margin year-over-year. So the reduced losses, is this structural? Should we continue to see these gains in the next few quarters at a level between 23.5%, 24%? Is that a level that we can expect for 2025 at large?

Thank you for your question, Ruben. Well, your first question about Cash & Carry around the country, we always see a more competitive environment in the Northeast. We see more players in the field trying to make the most of the area and get a larger slice of the cake, so to speak. So we're seeing many store openings in 2024. And I'd also like to add the state of Sao Paulo. So between the state of Parana and the inside of the state of Sao Paulo, we see higher competition with new players coming in, in the state of Sao Paulo, including the city of Sao Paulo. So these 2 regions and now in this case, more focused in Sao Paulo. Eric?

Well, it's very good news with wholesale because when you widen your margins because your losses are decreasing, we're talking about things that were being thrown away. So what we did was rework in retail or in wholesale that led to more adequate losses which during this period of opening and closing stores has really improved. So it's a structural improvement. Now you asked 2 questions. One, if this was a structural improvement, and we believe it is and whether that will reflect on a 23.8% margin in wholesale. And we believe no, not. Of course, we should have gains, both for us and our customers, but we still understand that we need to lower our wholesale SG&A even more, gain a competitive edge and transfer part of that to our sales prices so that customers will choose us and we begin a positive cycle. So we believe that part of this 0.7% gain will be turned into better prices and not necessarily in margin gains.

Our next question comes from Joao Pedro Soares sell-side analyst with Citi.

I have 2 very quick questions. First of all, Eric, with regard to the new tax situation, how should we see that over time? And how much of the cash should that aid into? And is there any opportunity that you guys see that you can unlock in term -- those terms, maybe with regard to big or even in Atacadao. And I have a challenge for you, what would you believe would change in your strategy and capital allocation system now that we see Atacadao becoming -- and Carrefour becoming a private company, again, we will be focusing on market shares or more expansions you've already said, this will be a tougher year because of the higher interest rates. So within Carrefour, where is your mind at? Eric?

Let's talk about the DTA. So as we said, we have a company called Walmart S, which was WMS that was seen losses. We had a restructuring where every unit with BIG had a different structure. So we had every Atacadao in a different wholesale package. And that unlocked a sum that we recognized, which was one of [ BRL 88 billion ] for the next 5 years. Now why did we do that? That's because the standard says that once you have a very clear result moving forward and Atacadao, obviously, was a lucrative attitude and you have mature stores, you needed to forecast that into the future as far as it was comfortable. So how will this behave moving forward? I'd like to split that into 2, first in accounting recognition. We had this recognition now. This will turn into cash. So it's not just an accounting move. We are advancing a sum that will be realized by the company. And every year, we'll be able to see 5 years ahead. Now because we've already recognized 4 years, we will begin to move forward 1 year every year. And now recognizing now 5 years, but 1 year at a time at about BRL 250,000. As for the cash impact, that will depend on the trend in results store-by-store. We believe there will be significant cash recognition in 2025, upwards of BRL 1 billion. That is if our plan materializes in from then on, we'll see a drastic reduction from at about BRL 230 million, BRL 210 million. We have a note that talks about that more specifically, but that's essentially what I'm addressing. So the opportunities we see for the future with regards to that is that this is a 5-year recognition, but we'll have that again year-over-year. There is a pool that will have the possibility to recognize every year. Anything to add?

On our strategy, we began to delist -- well, we already had our parent company doing that so not much is expected to change in our strategy. Well, we will see a high interest rate environment, which should remain unchanged. We might become more agile seeing as our parent company has a longer-term view. We also have a short-term view, which is expected to disappear, which will expedite our plans for expansions in the next few years. But we don't expect to see deeper changes, okay?

With no further questions, this concludes our Q&A session. We will now turn the conference back to the company for their final remarks.

Thank you so much for your questions. For everyone, 2024 was a year of many accomplishments, a year of many challenges. And we moved away from the integration year, which was 2023 with a lot to take care of. And now in the second part of 2024, we already began to reap the rewards of that. As you can see with the results of Q4 2024. And I feel like we can enjoy even more of the results of the efforts we had in 2024 and 2025. We have a very positive outlook for 2025 as we continue to reap those benefits. Thank you so much.

This concludes Group Carrefour Brasil's Q4 2024 Earnings Conference. The company's Investor Relations department is available to address any further questions. Thank you all for joining us, and have a great day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]