Azzas 2154 S.A. (AZZA3) Earnings Call Transcript & Summary

Good afternoon, everybody. Welcome to the 13th edition of the Arezzo&Co Day. Welcome. We are very happy to welcome you in the Anacapri station. It's good that you could visit and understand what we propose with the new environment. So we have this agenda until 6:30 p.m. Brazil time. So I'll cover the agenda. We'll begin speaking about Alexandre's message. It's the leader's message, and then we'll discuss the strategy. We always begin the day discussing the strategy, where we came from, where we are heading towards and the pillars. Then we're going to talk about the brands. Luciana, she is in charge of the brands. She's going to discuss the strategy for each of the key brands. Then Rony will talk about the Arezzo&Co telling us about the project. And then we have a quick break a 30-minute break. So I kindly ask you right now, so please help us so that so we go to the break and come back on time. And at 4:40 p.m., we'll begin talking about the support to the business. We'll discuss logistics, supply, finance, e-commerce, IT, the structure that supports us. People as well. So we'll be discussing how we provide support for the business. Then 30 minutes for Q&A. And then we close the day downstairs. We'll have interactions. You'll have the chance to talk to the executives. You can talk to them individually. I wish you all a great day.

Good afternoon, everybody Yes, I want to see you guys interacting. It's a full house. I know that we are a bit clustered here, but I hope we got it right. We made a point of welcoming you here to visit in person this Anacapri station. Anacapri was founded in 2008 because of Andersons will to create a more affordable, more democratic brand with a good positioning, not only about price. So we created the flat footwear. So we have different kinds of footwear, flat footwear, accounting for 50% off via sellout. It's a very large addressable market. So we began. So ideally, we wanted to have a space like this. It began at [indiscernible] Street, didn't work fine there. We adapted and then it took us 4 years for Anacapri to become profitable. So we invested from the launch in 2008 to 2012, BRL 30 billion in that brand. So if we check the VPL investing in this organic brand, the VPL is very high. And now as of this investment, this is the tipping point of Anacapri. So we are investing capital properly. We invest at the right time. We invest heavily, and we make it happen. And Anacapri, as you saw in the results, average growth of 30% a year. So this investment goes beyond the point of sale. So we tried to show you the tour. I'll summarize and explain to you. On the left, we have a 24 square meter shop, 140,000 inventory. It's a rollout standard, so the cost per square meter is 25% lower, and then we have the flagship shop with the entire collection and the special additions that are made for this space. And to make it even more appealing, we had the idea of inviting other brands that have the affinity with Anacapri. They have both positioning and price. The coffee, we have more than 200 franchises scale that's a beauty brand, the [indiscernible] , then [indiscernible] that's a jewelry brand and the [indiscernible] brand like beauty and salon. So we could fill up the space. It looks very nice. So we have the flower shop as well. So next week, take note of that we're going to have the craftsmen and women. So you have the sole and you can make your shoes right away on the very same day, craft-made. And we have the omnistation. We have a CDA. We do 50 deliveries a day for the e-commerce. It works super fine. So it's a multi-use space. We train the franchisees. We train the team with a culture space. On the upper floor, we have the showroom. We have a very nice experience for the franchisees. Our sales grew a lot as compared to last year. And the team for the brand has moved to work here. So this is why we decided to hold this event here. It is the 13th Investors Day. So it's not a rule for the AP Metro. We made a point of holding this Investor Day meeting. It goes beyond complying with a rule. It goes beyond complying with the governance rule. It's a moment of learning. So we prepare the Investors Day as a preparation for the year of 2024. We always do late November, early December. So it's an immersion meeting. It's virtually a self analysis of our business. And we want to hear from you. We want to see the external perspective because you hear from so many other companies, so feel free to interact with our team to ask your questions. Investors Day is a very important moment to build our legacy. Speaking of legacy, I seize the opportunity to pay a tribute to -- well, I would like to thank him because on November 10 in Iguatemi, we launched -- the Iguatemi Shopping Mall, we launched this work of art. It's a book. You're going to get this book on the way out, In Every Step. That's the name of the book. So we would like to thank our founder, under some Anderson Birman. That's a tribute to Anderson Birman. So my father had this idea. Yes, that's a tribute to you to make you day more beautiful, a life full of achievements. We have more than 8,000 employees, and we are grateful for your legacy. Thank you very much, my dear father. So it is a memoir book showing the many events, the many personal moments, the building of the Arezzo&Co in every step. That's the ideal name of the book because we've built this company by every step. So I opened up on Saturday at random, the book, and this paragraph shows how much we appreciate the governance of being a publicly held company. So let me read the paragraph. I just opened up at a random page, and this is what I read. If I were to find Mr. IPO, I would not kill him as many people would like to, I would build to statue to pay a tribute to Mr. IPO because I believe that the marketing positions like publishing a quarterly results and acting transparently are positive factors for any company. A publicly held company moves towards perpetuating the business. This doesn't mean that we do not face challenge as a publicly held company. The path is not always straight or easy, there have been and there will be a difficult moment. And these are situations that we learn from. So thank you for everything, dad. I love you. I recommend you read the book. There's a great deal of learnings and I appreciate being the son of this man. So speaking of our day here and the agenda, so at the end of the day, there will be a survey and you tell us, please, if we have met our expectations. So we are going to show the consistency of our track record. It's a long history. You're going to understand the different eras, the transformational areas, especially in the last 4 years, from 2019 to 2023. You're going to be close to the management. We're going to discuss the habits of our management, our strategic view for the forthcoming years. We are going to understand about our differential -- the differential of our business model. And then we're going to have more time to listen to your questions in the end. So during the pandemic, 1 of the toughest moments in April, May 2020, people were asking me, what was the key attribute that would enable us to cross that tough moment. And I've always said that what supports us are our principles. And it has everything to do with what you read in the book. And amongst them, I highlight flexibility. We are quite agile. We have shifted very quickly, when we envisage the need to change, we are very good in making the right decisions at the right moment and adjust and adapt. Being flexible, being prepared constantly for change. Humility to acknowledge that we have a good positioning. That's our virtue, our success. And the challenges, they are a reality to us. We hit the targets, and this is the basis for the next target to be hit. And everything that we do, we do with passion. So speaking of our historic evolution, it's a quite interesting scenario. First line, we have gross revenue. It took us 6 years between 2011 and 2017 to double our size. And then it took us just 4 years to double our size again. And then it took us 3 years to double again our size. So this is book by calling the From Good to Great, and we have the 10 Xers. We're not there yet, but we are a 7x. So we grew sevenfold in the last 12 years in terms of revenue. The CAGR in the last 4 years from 43 -- that's 43%. Net growth is very sound. And then a consistency in paying dividends. We've always had a great capability of generating cash. So prepandemic, before the acquisition, we had a positive net cash flow. And our ratio for dividends to net profit, it has always been 50%, 60%. And in the years of less growth, okay, but we paid more dividends because we had a lower working capital and more capability to generate cash and distribute to the shareholders. So our historical curve is highly resilient. And we do have the capability of perpetuating such behavior. The eras, so when we explain it seems to be planned, right? It seems that Anderson, when he was 18, well, you saw the footwear salesperson, he decided to produce himself footwear, and then he made the plan. But this was not the case. This pathway had very important decisions, actual transformations of our company. In the first 10 years, we had the foundation, the learning. We learned about the business. And as of the '80s, in last 10 years, we were a major industry. So we closed the first 20 years of our company. That was in 1992 with more than 1,500 employees. So that was distributed in 1989 on the newspaper. So in 1989, we hit the record. So we were a major verticalized industry. This was the industrial era. We were in Belo Horizonte. So we had to verticalize. And we had to learn development of [indiscernible] , the weather, the injection of the [indiscernible] . So today, we master technology, and this has great value to us. But we could have stopped there. The financial conditions were great. He had a helicopter and mansion and everything else. But now he wanted to cause a disruption in the model. Just being a manufacturer was not what he wanted. And there was this article that was fundamental. So we opened up the flagship shop in Sao Paulo in 1991. So we closed our sales to some shop owners. And then there is a paragraph that says. Arezzo adopts a suicidal strategy. They invest more to sell less Well, nobody got it, but that was a reality. So at the time in dollars, the shop cost $1 million and he knew with this flagship shop that would be branding and the value for the brand. Overnight, it was a big success. So many multi-brands wanted to convert their multi-brand shop to an Arezzo shop. And then in order to develop the franchise system, that is the basis of our business today. So we went from industry to retail. And then we closed our plant in belo horizonte in 1995. I leased the plant and then I created Schutz. So as of them, I was flying along with Schutz. I moved to the south of Brazil and then between 2000 -- era of the 2000 corporate area. Well, in 2007, as you can see in the article, you see the valuation, BRL 76 million. Well, we cannot do that, not even the Black Friday. So we made major investments. And then as of then, we really created our corporate governance, the budget management system, the 5-year business plan, the strategic view, meritocracy. So we wanted to be the category killer. We were ranking like 8 in Brazil. Well, we didn't have not even 5% of market share. So we wanted to boost. We had 160 shops. So we wanted to turn Schutz into Arezzo focusing on product, opening POSes, multichannel and developing new brands. So we have Anacapri as an example. Here we are. So in the 2010 to 2019, this is when we consolidated the business. This article is from 2015. So these are articles, they really illustrate the 5 decades or the many decades. The most important moment is right now. When we opened up the flagship shop, we didn't know that we're going to have a franchise network, an asset-light model? Well, in 1991, we were doing things intuitively. We knew where we wanted to get, but it wasn't a straight path. So when you are a amidst an era, we go adjusting and fixing according to the events. But the important thing is having a north and never changing that north. So we built the brand platform in this time line. Our first stress test was our capability of integrating a brand without being concerned about creating new products or creating marketing, but using the heavy assets. Well, it's not that easy. There are many companies that struggle to deliver the systems and the logistics. Well, in a few months, we had the logistics platform. We were operating the e-commerce, pandemic hit. And then it took us 90 days to work in the M&A strategy. We didn't use a single dollar from our cash flow. And there was a difficult moment in my personal life. I lost a child, as you know, at the time. So I met a brother of life. He came from as to this new dream and then there was this major transformation. Rony joined us. So we have this picture from October 2020. Well, how -- it sounds like 2010 because it seems that I've known him for so long. And then we grew and we grew steadily. We've made many acquisitions. We consolidated our capability of being a sound company, and then we closed 2022 with BRL 5 billion in sales. And then 2023 kicked off. We knew about the challenges. January 8, we read in the newspaper, there was the attack in the Congress with the new administration in Brazil. Perhaps it was a year of adjustment we thought. Perhaps our budget to really reach the bottom line, we're going to have to make harsh decisions. Well, there's no use making decisions in October. We were agile. We were flexible. We decided to close some business units that were in their maturing curve. We closed some business support areas because in the future, they could generate value. But at that moment, they were just expensive. So we took harsh decisions in the first quarter. M&A was in our parking lot. We focused on the cash cow, the multi-brand, the franchise channels, the key brands, Arezzo, Anacapri, Schutz, Vans off the wall. So we were very disciplined in our budget. And then good news, we were not reaching the budget. But we made a forecast in March that is going to be 100% met and our EBITDA is going to be met according to the target. So 2023 is another year that shows the capability of reacting fast. In 2024, we'll begin with our company in good control, prepared for everything that comes our way. So we were preparing our budget meeting for late September. And then I had this insight out of the blue. It's not that I was researching already. So I remember this book that I had read like long ago, and that's the operational efficiency we want to have for 2024. It's Profit From The Core, that's the book. The same authors. It's a book that my father gave me in 2019. So this book shows a quite simple view. The title itself is explanatory, but they mention that the companies, they build resilience over time, but they never give up their essence, their core. So you need to always find adjacent pathways to the core, but you should never give up on your assets because in tougher moments focusing on the core is more critical than ever. So that's my bedside book. I've given it to all executive directors. So we have this book system for reading. It's like reading club. And this is what governs us making the company very well prepared to face adversities. This is quite interesting study from the book. This is actual data. They show that in 1998, well, companies with more than $500 million in revenue in the S&P 500 just 75% existed in 2008. I mean 10 years later, 24% had a CAGR of 5.5% and just 17% of the companies had a CAGR of 5.45% and maintaining their profitability. And just 12% of these companies have had a return on capital above than the market's average. So here, you see Arezzo&Co. data from our IPO. The average return for the investors in the 12 years is 14.4%. So this is Arezzo&Co. This is our legacy. So we have the adaptation capability. We have the humility to acknowledge that we can always do better. We have great passion. And this is what makes me sure that every day we're going to take a step, a step towards 2154. So let's make it happen.

Thank you, Alexandre. Congratulations Anderson. It's very nice tribute the work of your life and well-deserved tribute. Well, continuing with the presentation, we'll cover the strategy now. And we always begin with the strategic Mandala. As Alexandre said, our core is right in the center. The brands, this is where everything began, our highest revenue, our highest EBITDA, our highest profit, they are essential to our business. We have to keep an eye on that core, and it must evolve continuously. The continuous evolution is needed so that we gain more market share. So we're going to talk about the market study here. Well, around this, we have new segments. We have Troc and Brizza, excellent organic initiatives created in-house. They are yielding good results. We've had the new acquisitions, they are generating value. The AR&CO is the key example, because AR&CO was turned into Arezzo&Co. Our international business Paris and Texas embryonic investments, but very well done, quite carefully done. So we are tracking the evolution of our business and the licensing pillar, which is highly relevant. We're going to talk about this today. All of that permeated by data, technology, people, culture and sustainability, which is the basis of our business. So let's take a deep dive in this strategic view. Our North has always been the spider web. Much before the IPO, this management model for channels, segments, positioning in brands, this was well defined at Arezzo&Co. It's a strategic guide. It's a tactical plan to earn more market share. We know where we are doing better by doing this. That's a snapshot for 2019. Look at 2023, has changed a lot. So we added so many other channels. We have expanded substantially the digital penetration. It has gained major relevance. Our acquisitions have changed our positioning in terms of the social brackets. We have advanced the MYSHOES and also the channels with more on stores, and we're going to talk about these items. But based on what Alexandre said in the many eras, we are constantly building and we are taking steps by using the spider web. This is our north, our strategic compass. So we're going to talk about the market share study. I talked to many of you, and I've been telling you about the in-depth market study and how we develop this study. It's a quite big proprietary material done in-house. It's based on a methodology that is used year-on-year. So we cross database, demographic database, Euromonitor, for example, and we compile the data having a deep dive in product category, gender, social brackets, region, city, we can locate the shops within the shopping malls, and then we can map where the opportunities for growth are, where we are performing better or worse year-on-year, and we can track the evolution. I'm not going to show to you the entire material. It's a lot of information but I'll provide you with some data, summary data. So our national market, social brackets, A and B, footwear and bags, encompassing all social brackets, in this case, that's BRL 149 billion. That's the entire market. Then we break down the market, footwear and casual tennis shoes. So the entire footwear market amounts to BRL 47 billion. But then we have mail, women's and men's and casual and formal, so we understand the segmentation. And here, we have the bag and accessory market. That's an addressable market, because here we have BRL 2.4 billion. And then we have apparel that's a very consolidated market, BRL 97 billion, and it's also an addressable market. So if we put together men's and women's and children's, it is an addressable market of BRL 65 billion. So we crossed the data and how do we match this with our performance because we were talking about the market. This can be done by any company. Here, we are talking about our revenue, our performance, the commercial information that we have. And today, our market share in the addressable market is 10.4%. Well, from the bottom of the pyramid, 149, we hold 10.4%, and it includes footwear, apparel and bags. So our penetration potential is just 2.9 because we are still building this era. Because apparel is going to be more consolidated. Within footwear and bags, the market share is much more relevant, as you can see here. So this chart is extremely relevant because we show the earning of the market share. So we show historical data here. Up until here, we were building and consolidating this tool in the last 6 years. we have control and management now. We can open up the data and show how much market share we have gained. Men's, Reserva and Vans were included. And footwear and bag market, we reached 37% and 38% when we consolidate bags and accessories. So see the evolution from 2018 from 23% to 38% and today. So we can really demonstrate the good performance. And it's not only about the consolidated figures. Let's see it by brand. We have footwear, bags, put together, we have just footwear and apparel. It doesn't apply to some of the brands, but whenever we have a good market share, we show the percentage number here for each of the group brands. Dipping even deeper here. So we have bags and footwear. So we have the market share per state, and we can drill down to the level of the cities or the region, if you will. So it's important to show the robustness of the methodology that we use to develop the budget system. With the size of our revenue, that's the only way we found to really attain consistent gains in market share. Likewise, for Schutz here, likewise for Anacapri. And then we're going to be showing some examples of a granular analysis and the information that we capture with the study. For Arezzo, just with the footwear business, we have here the market share per region. And then within each state, the worst performance in a compared basis, 2020 against 2023, where we see the opportunities where we have to improve. So we see a state in which we are losing market share. We lost 0.1%. And then the worst median as well, we need to act more actively in that region. And then we dive even deeper. We talk about the tiers in the cities. So you can see the capillarity of Arezzo&Co. Regardless of having a physical shop or not, a brick-and-mortar shop or not, in all of the city tiers, we have a quite relevant market share going from 15% to 17.6%. We're talking here about sell-out and e-commerce together. So it's the brick-and-mortar plus e-commerce. And then as Alexandre said, we took this very specific example. So Fortaleza city the Arezzo brand, so what is the market share, 25.2%. So when we break it down and there's very specific there are 5 brick-and-mortar shops. They've been there for a long time for more than 15 years. And then my breakdown of revenue is highly concentrated on the franchise channel, but I have a high market share in the e-commerce as well. And there is no multi-brand here as we have the franchise shops, so we prioritize selling to the franchisees. So that's the kind of analysis that we can do. And based on this, we can actually build the avenues of growth identifying whether we should grow with the multi-brand, with the franchise, with the e-commerce and then we set the priorities. So the goal here was to explain our methodology. We want you to understand, what is our strategic vision for the growth of our core business. Of course, we use this also to support the growth of the companies we acquired. So even before an acquisition, we run the study in order to understand what opportunities we have. Okay. That was a market share study. Let's now look at the avenues for Arezzo&Co's avenues for growth. Here, we have some major figures. This is what we call the macro growth avenues. Well, BRL 50 billion. This is for categories we don't reach currently. I'm going to talk more about this. This is segments within the AB target audience. Apparel, these are things that people have in their closets and we don't sell yet. So we are not tackling this market. Then we have BRL 74 billion. This is the delta of the whole AB market we are not capturing. The total less what we already have in terms of market share. Well, as for channels, we are focusing on e-commerce, BRL 19 billion is the total e-commerce in Brazil. AB audience less our current brands and then our international operations, of course, there's a lot of room for growth here. This is a slower or a slow paced growth maybe when compared to the others. Looking at different segments, AB, target audience, we have apparel and footwear. BRL 50 billion are still not cover. Fitness, beachwear, underwear and kids, women, kids. So this is a market opportunity. It's not something we're going to do right away, but it's something we want to build step by step. So that little by little, we get some of this market share. In terms of positioning, I wanted to highlight something we always say. Our focus is the AB target audience or income bracket. That's where we want to keep on growing. We already have 10% of market share here, and we can add and leverage more with our brands, so that we have even a bigger slice of this market share. Looking at channels, it's a big figure. So our focus is on the strategy for each channel. It is important to keep on expanding brick-and-mortar stores. All our brick-and-mortar stores have excellent performance as well as e-commerce, where we gain a lot of market share. And we are creating amazing experiences for our consumers. Mauricio is going to talk about this. Our e-commerce is a platform to create experiences that go beyond our brick and mortar stores. It's a huge online flagship stores. Looking at the international market now, and I believe there will be some questions about this. These are our main messages. This is an important process, and we are constantly reassessing it. In the last 2 years, we've gone through different experiences. We had a positive experience in '21, '22. Our income went from $39 million to over $90 million. So a huge growth. And it's not just revenue growth, it is revenue plus healthy gross margin. You have this information because we make it public in our forms. It's a virtual cycle. However, in 2023, we see more challenges, not just for Arezzo&Co, but for all brands in the U.S. market. That's why we're constantly reassessing and readjusting. Alexandre mentioned the flexibility and agility we must have to adjust course in order to search for efficiency and improve our business. That's what we are doing right now. We are adjusting course to preserve what we have that is good in the U.S. market, and we want to reach the breakeven point or even become profitable. Here, you see more information about colors or channels, sorry. Wholesale and e-commerce are profitable. They generate EBITDA, cash and a little bit of unefficiency in retail, which hinders our profitability. Of course, we also have the corporate structure that is being reassessed, so that we can look at EBITDA and reach a breakeven in 2024. We want to plan to preserve what we already have and reach EBITDA for 2024. This is an important point here. We want to shut down 2 nonprofitable stores. These are the stores that bring down our figures. So the company believes that these 2 stores should be finished in late 2023 or early 2024. Now for Paris Texas. It's our largest revenue in Europe. A little bit of context. We acquired it this year, a couple of entrepreneurs who created an amazing brand. In 10 years, they reached EUR 14 million in revenue, with profitability, cash generation, and amazing story. They are great partners, and we are looking at the long term. This is our first international M&A. Within this perspective, the proposal for 2024 is to keep on leveraging Paris Texas. We want to gain more synergy with the U.S. operations. We already have a showroom in New York structure, a sales team that shares connections. Paris Texas has an e-commerce operating together with our U.S. operations. So this is a path we have to pay in the appropriate pace for the size of the business. We cannot give it too much guess. Otherwise, we will not have the appropriate structure in 2024. So we want to keep on integrating and leveraging Paris Texas. The last chapter is inorganic growth. We wanted to set it aside or apart. This is a year when we want to look inside, but we have a structure constantly looking outside. We want to support acquisitions or licensing and that also keeps us looking at the market at our competitors. We really want to gather information, bring it internally, and maybe the core team is not seeing that. So we keep on the strategy. We keep on the dynamics of being close in conversation with the market, even if we decide not to go on. This is our track record. I know there's a lot of data here. So this is a time line. So these are the results I wanted to show you, the CAGR of revenue. There's a KPI that's always important for Arezzo&Co. The secret sauce for our success in an M&A operation is revenue growth, revenue synergies. Of course, all possible synergies are important, but growth in revenue for our multichannel model is a driver that makes us decide to go on with an M&A. So this is the Vans CAGR, 41%, AR&CO 60%, Troc, Baw and the latest acquisitions, all of them with excellent revenue CAGR performance. We believe in profitable businesses. So when we say it's growing revenue, it is generating excellent leveraging -- operational leveraging and value for all of you, all of us and our shareholders, of course. What is the strategic way we think of licensing and M&A? We want to strengthen our [indiscernible] brand platform focusing at the AB audience. Whenever it doesn't fit this, it is not a priority for us. We have a strategic perspective, and then we make decisions and we build our action plan. For any acquisition, we have a decision matrix. We analyze the power of the brand, and that's how we then reach negotiations. That's when we decide to go on with a deal or not. Where can inorganic growth come from? Well, shoes, of course, footwear. We are leaders, but there's more market. There are no larger companies to acquire in Brazil, but we could acquire smaller companies. Also the closet, as what we call, women's apparel, man's apparel, apparel items. Then we have international expansion, which is a long-term vision. We want to improve what we already have. And in licensing, we have strength Arezzo&Co has some attributes that led Vans to be a major success. So the engagement, we need to understand the consumers, the power of supply chain. You cannot have a $1 billion business [indiscernible] if you don't have working supply chain. We also need the strength, and we need to dilute costs. We need technology, IT for 1 brand. We can decrease this cost of innovation and bring tools and technologies at a level our competitors cannot follow. This is really important for us. Brazil is a country of continental dimensions with a complex tax system. Working with own stores, multi-brand, franchises, having the best systems and support, that's how we can leverage a brand in our country and results come. We have the revenue we've achieved, and we've seen a growth and the appetite of international brands to come back to Brazil to open operations here, that can be an interesting leverage for the next few months. We don't have names, but in the apparel and footwear segments in Brazil, we mapped all the companies, the main companies that have a connection that are in conversation with our consumers and that we could search for in order to sign new deals. And we have a proven track record that we have knowledge, we know how to build this bridge for licensing and M&A cases and building long-term value together for our shareholders. That's the end of my presentation, and I give the floor back to you.

Thank you, Sachete. Good afternoon, everyone. Thank you, for being here. This is the 13th edition of Arezzo Day. I know this is a packed room, but we like crowds. The space here at Anacapri, the way we are gathered here, I think it is very much connected to our way of working. And we will work in 2024 focusing on efficiency, on work, and that's what will resume or summarize our story. Let's start with Arezzo. [Presentation]

My name is Luciana Wodzik, I'm leader of Vans. Here, we see a retrospective. I know you're very much connected to finance matters, but the finance comes from our brands and from our capacity to generate value. That's what happened with the Arezzo brand since the pandemic. We made an amazing work to place the brand in a new spotlight in the -- we've been having 2-digit growth for the last 3 years. And mind you, this is a 50-year-old brand, 51 years old brand. It's the most desired brand in Brazil. We have a growth in share per channel. For digital, of course, we have the whole transformation that happened from the pandemic until today, but we have our franchising channel that represents more than 50% of our results. Well, important highlights for 2023. Sustainable growth in all channels, franchises, our own stores, multi-brand e-commerce. For franchising, this is the most important strategic project for the company currently. We want to sustain this business model for the next 10 or 20 years. We want to be even closer to our franchisees, improved management, improved KPI performance, improved trust, and that will lead to sustainable growth for the Arezzo brand. We've also had surprising performance. We really became a desirable brand. Our summer collection has had a growth of 46%. So this is more profitable stores. Franchisees are happier. We increased our full price. We have less sales, and our brand has such an important sustainable growth for the next few years. We've also improved on-site training. You probably heard or know our conventions that take place in Sao Paulo, but we stream them remotely throughout Brazil. This year, we've changed focus. Besides in-person conventions, we had conventions in Sao Paulo. We've had over 2,300 people trained inside in our regional conventions. We want to prepare people or we want to prepare our brand, our results, the most important time of the year, which is the holidays. So we want our commercial team to be connected to that. Arezzo has a senior leadership team, seasoned people managing the brand. And this helps us keep on relying in the sustainable development growth of our brand. You probably saw our amazing results. Arezzo is a case when it comes to influenced revenue, the highest percentage of our results come from omnichannel. But we know that the use mindset of franchisees can be improved. This was very important during the pandemic. The only tool we had was digital. Now with stores open, more people circulating, the mindset of use decreases, and we want to focus on that in 2024. And we also have the cruise collection transition. Priorities for 2024. Franchises, the longevity of such an important channel that is in constant contact with end consumers. This will be strategic for the company. We have a new architectural project for the Arezzo brand, and it has been approved. We've improved communication and digital tools. The product brand experience will now be taken to the architectural project of our stores. Our first store will be inaugurated in March. The flagship at Iguatemi Shopping Mall, you are all invited. This will certainly help us fund part of the reform of franchisees coming from there. This is a new avenue for growth. Well, Bags, also another important avenue for growth at Arezzo. This category is already good, but we know there's room to grow even more. We have more popularity. And let's talk about our brand Schutz now. [Presentation]

It's pronounced Schutz, right? I believe we're going to have questions. Arezzo is our beloved democratic giant that owns the hearts of consumers for 51 years. Schutz is our young brand. It's the desired brand for the new generation that is looking for disruption. I've been with the brand in 2018 as Brand Director. And now I'm in a different position, but I'm working together with the team. We are really excited with the work that's going to be done with Schutz. Our revenues for the Schutz brand in the last 3 years, it shows the consistent results always also above 2 digits. We are more representative in the digital and multi-brand channels. Some highlights that happened with Schutz in 2023. It's a brand that grew a lot in the sneaker category. And we know how important this category is for young people. We have a new best seller, ST-01. It is sold out. Over 3 people are in the waiting line, of course, we are flexible and we are swift. We want to meet this demand, but this is a huge best seller. And it's an important category of the Schutz brand. We've also restructured the product team. We have a new head. And we are also working on our product pyramid. Schutz grew a lot in the multi-brand channel, results have been very significant. Almost 15% growth in the last year. And in 2022, we already had considerable growth, but we thought it was important to do similar work at Vans. It's the product pyramid. We want to limit the percentage of logos in the Schutz brand. We want to work for specific store owners. They cannot have too many logos, which is similar to what Vans does, and you see the results. Our winter collection for 2024, Schutz had an amazing growth, 32%, even with this limited percentage of logos. Because we know that in multi-brand, logos in multi-brands has huge sellout. This is a new pyramid positioning, and it was very well accepted. Results are amazing. We have inaugurated our pop-up store at Iguatemi Shopping Mall. It will be open until the 31st and it gives you a taste of what is to come for the Schutz brand. As for opportunities, there is a growth in e-commerce. It grew in the pandemic, of course. And now we have the challenge of having a more consistent base of clients in e-commerce. With stronger work in terms of experience and loyalty for Schutz brand clients and also new clients, we want to attract. So this is an interesting opportunity. And some small advancements in the Schutz Lifestyle project, as Alexandre mentioned. It's a project in its early stages.

[Technical Difficulty] The speakers microphone is not working. We apologize for that. The interpreters have no audio. Please bear with us. We're back.

You see the results of Anacapri, Arezzo brand. In 2018, we did an important job in turning around Schutz results. So with a lot of work and a well-prepared team, we rely on 2024 results. So we have been working in a brand project with this agency. This agency made this a very important work with Paris, Texas. So we're going to be doing the same with the Schutz brand. We also have a new architecture office located in Milan, so they've done the architectural design for the brand and Schutz is inspired in those. And I'm sure that there will be many disruptive designs because that Schutz' DNA, right? And these are the moments when Schutz most leverages. That's when it brings something that is innovative, and that's the proposition for 2024, renewing the experience in the digital channel, increasing the loyalty as well as the number of consumers that come to our current base. So now with you the uncomplicated brand, the brand that most grows in footwear in Arezzo & Co, Anacapri. [Presentation]

That's it. That's Anacapri. Wow. In the last 3 years, the average growth was 20%, a special highlight for 2023. So we've been leveling off the revenues when we look at the share per channel, in the franchise, multi-brand, and the web channels. In 2024 -- I'm sorry, the sound of the microphone was cut off again. Just a glitch, we'll fix. Apologize for that. The classic ones are the ones that provide stability. They provide efficiency in our supply. And in terms of products, they make us stand out. So about brand and positioning. So we got it right in choosing those who have worked with us in 2022. So we are leaving this important moment of branding and positioning. So in addition, with a highly attractive PVL, it's a brand that is connected to the current moment. It is a desired brand. We were in an event in the Birman House. And we had Gloria, a designer. So even if you are from finance, I think you're familiar with Gloria, right? She was beautiful, quite elegant, flashy. Then we looked to her feet, and we were wondering, beautiful. She said, I'm wearing Anacapri. So Anacapri now has this power. It's a very good branding moment. It's a very good product moment as well. So we got this gift. We now have this special station for Anacapri. So we are highly prepared to take the next step and to promote accelerated growth in expanding this uncomplicated brand that was created by my dear mentor, the dear founder under Birman. So early on, it had its moment of adjustments. We began with a street shop, we want to speed up our expansion. We want to offer manicure as well. And now in this station, we have this special space. [Technical Difficulty] I apologize the sound is breaking up. Again, we can't hear the mic of the speaker. I apologize for that. So in addition to expanding with this new project that you just saw, we have the possibility of using pop-ups and kiosks and the evolution in the retail, I think this has never been seen. So this is flagship. And now the licensees, they are connected with the brand right next to the station here. So the brand is cool. It is exactly what the consumer wants. It has the angle of the consumer. So we are quite confident. We have opportunities in the bag category. We have not invested in this category. It's a newer category for Anacapri, the bags. So there is an opportunity in the Resort collection. The sales were not the best, but then the summer collection is really a hit and we have been growing steadily above 2 digits. Including the same-store comparison priorities, expansion, the new vendors focusing on the PVL. So we are quite attentive to PVL in our pyramid of products. So we aim at promoting efficiencies at Anacapri. The right product at the right price, meeting the needs of the uncomplicated consumers and our own shops nearby the stations, we're going to be running so many tests, and we can roll out the experiences that take place here to other places. [Technical Difficulty] I apologize Mic's not working. [Presentation]

So a very important item. So Alexandre was telling me about this. It's important to say, we are talking about Alexandre Birman revenues Schutz and Schutz revenue for the Brazilian market. These were the figures that we were showing to you. So Alexandre Birman, this brand that in the last 3 years, has been growing at a rate of 40% our own shops. They are the key channel. For the luxury consumers, they connect to this channel. So we have a high level of loyalty. We have a high retention of consumers buying from this brand. So the Birman house is a highlight. Have you been there? So we should visit you in this [indiscernible]. It's a very special place. There is this [indiscernible] very unique experience for the luxury market in Brazil. And the consumers, they may customize their items, including the shape of their feet, so women, you're going to love it. Let us meet there, so that you can actually experience the Birman House. It is truly different. It is all about luxury, and this is something that we have been offering to our dear consumers. We grew by 41% in the 9 months of the year that we've measured, sales growth in the omnichannel as well. So consumers are seeking to buy from home, from the comfort of their home. So delivery by the shop is something that works for the brand, Alexandre Birman merchandising. We have been structuring this area. We have begun in 2023, and this is going to further support the purchasing according to the style and design. We increasingly understand our consumers, and we can offer the right product within the Alexandre Birman category. And as I said, a very high retention rate of recurring clients buying from Alexandre Birman. Opportunities, adjusting the global calendar, and we're going to work on that strongly in 2024. And then the pre-fall sales that was below expectations, but all of the other collections they have had very good results, very high results. Priorities for 2024, structuring the global marketing. So we have a new marketing manager. He's going to be operating from New York, but he is Brazilian. He's quite familiar with our business. And he is going to provide you with more visibility. He's going to be working on the calendar, a global calendar. So he's going to be connecting with the key opinion leaders within Brazil and outside Brazil, so giving more visibility to Alexandre Birman globally. So a marketing plan with this agency. So this is individual work [indiscernible] that works with Texas and Paris. It's going to be working with Alexandre Birman and Schutz as well. So we are quite confident we're going to increase the design level of our consumers. [Technical Difficulty] Mic is cutting off again. Apologize for that. Thinking of Arezzo, the key channel is franchise. So we should be strengthening the relationship with the franchisees, working closely, working on communication, improving the management of our franchisees, Schutz. In addition to the work to rescue this brand as a brand of desire, we have the new architectural design. So we are going to do this relevant work in the digital channel. It is the most digital brand. It is the youngest brand. So this is going to be important in 2024. Anacapri priority is accelerated, expansion of the network, promoting this growth, increasing the capillarity of the Anacapri brand and Alexandre Birman. I mean, resuming the approach as a luxury brand in the global market. Thank you very much.

Hi, guys. How are you? Good afternoon. Well, first off, I would like to thank you for attending this meeting today. It's our Arezzo & Co last year, I couldn't be with you. I had a wedding of friend of mine in Portugal. So Jim, my partner was representing myself with everybody here with the Arezzo & Co. It's an honor to be here with you, working with this family that is increasingly strong and united. Having said that, everything that we do begins and ends with our values. Absolutely, everything that we do. And it's precisely about the slide that is here. It's the slide with which we open every meeting for the Arezzo & Co from the least to the most important meetings. So what are the values? It has to be a good and big dream. If it's either good or big, we don't believe in it. Well, if it's a great dream, there are some examples of failure, but the mind must be open as well. Although people believe that technology is the raw material of innovation, here we believe that technology is a means, it's not an end. Innovation is perceiving that a human being has an issue. So you have an idea for a solution, and then you make that solution work and you make a human being use that solution. So the raw material of innovation is not technology. It's like listening well. If you want to innovate, we have to open our minds. And the third value is that we are committed to people and to results to both. So we are a retail business. We work with thousands of people. And the more we are concerned with these people at the highest possible level, professional or personal level, the more they will deliver as a consequence. And professionally, of course, we train them. We build their capacity. It's a wonderful team of people that we train every day. They want the full year. And in their professional practice as well. When we practice those values with discipline, the purpose happens. So we want to take care and fill and surprise people every day. So you are a stakeholder that is fundamental to our business. You are our shareholders. So the purpose is expressed to all of our stakeholders. And just in like any other meaning, we are opening up the meeting with the same slide that we use for every single meeting. Having said that, well, the vision, just like the purpose, this is expressed and seen in our business. Our vision is to be the best and the largest lifestyle platform in the country, in Brazil. So a very important video. We have this our Inco video, that is the Convention Day of our group. It's a very special video. This was our last convention. It was in the foundation here in Rio de Janeiro. So myself and Fernando, we were leading the campaign. So Fernando, then became a religious person. So we made the first photographic campaign of the brand that was in 2005. So we have a convention for everybody working with the brand. This was in September, and my children, they had never been in a corporate convention. They wanted to see and go. They wanted to participate. So we always do the way the big Ola. So, we do this wave and then we say this world, this word, let's rock. And then, it's December 7, we are close to Christmas. And I'm going to leave the city and go to Spirito Santo. I've been in Sao Paulo, it's crazy, and this is how it goes. So you saw how many people were purchasing in our shop here downstairs. And I would not be here. So none of us would be here actually, if it wasn't for the people that work in the back office, distribution, in the office, in the shops, at the front, so that we can deliver the best results in the fourth quarter. I would like to thank everybody because without people, this day here wouldn't be possible. So this is our lifestyle platform, conceptually speaking. Have dynamo, we have doing gas. They've been with us since the beginning. So we spoke about this vision back way then. It sounded a bit weired of a brand that could have sub labels. And then you would use a value as a consolidator because of its technology and because of its logistics. So we had an early stage vision that value and consolidation and posturing. This is something that we hear in the financial markets, right? We hear this in the back office, but this would not generate much value. Value then lay in growth. So we developed solutions over time. And it's not in order, but the print on demand. So that's a printing machine that could bring T-shirts on demand. So we would just produce the T-shirts after selling them. So the inventory was huge. So we bought the printer, and we started printing everything that we saw on the web, and this was on demand, then it became 2 major facilities, and we migrated to the digital channel. A big channel for the consumers' demand. It is so important to us that it became a digital business to us. So we developed this technology, Reserva INK that offers services to thousands of other shop owners other than us. So whereby we can be the owner of so many other businesses without being the actual owner, which is quite a nice value, right? So the WMS, the best retail modality was push and pull. We had no money to hire a market platform. So we started developing our push-and-pull system. Our WMS grew, which today we have push and pull, for cross-docking, for retail, for wholesale, for selling and for omnichannel and e-commerce for the digital sales. Prime loyalty program. I'll talk about this later. And now is the clientele software, bringing together the entire consumer journey, making sure that all of the touch points will be then delivering an experience that is above and beyond the consumer expectations, be it by Whatsapp, be it by the shop itself, be it on the Internet, on the desktop. So now maps the points of touch using AI and machine learning, and we deliver the best possible experience. In brands, we have 2 verticals. One that we call Pica-pau brands, the Woodpacker brands. It's like the red woodpecker. We have Reserva, Reserva Go and the Mini. And the other 1 that we call the new brands. So these brands we launched after Reserva. So we do the workwear based basics. We have the INK Reserva, which is this platform. We have the Reserva, the simple brand that is the base brand for the democratic ones. Pau, that is the used streetwear and they all compose this brand platform and lifestyle platform. Look at this. We talk about synchronicity. So when we compare ourselves with Arezzo, it's impressive. Because if we take Anacapri that is very democratic, fun. It's an entry point for the brand, Arezzo, casual and giant, AB + social brackets, Schutz, fashion in style, Alexandre Birman, the luxury brand. And then when we compare with the Arezzo & Co, entry brand Democratic basic, it's gigantic. It's casual, it's A and B social brackets. I'm comparing with Arezzo, right? [indiscernible] quite luxury. So we have a synchronicity with the core brands, they connect to each other. And it is our platform. So we are based on values. We use technology and logistics. We have been investing over time, especially in the last 3 years. And we deliver and we foster and we consolidate brands. The only brand that is consolidated is Baw. So either we foster or reconsolidate the brands that supplement each other or they represent a lifestyle. Well, I'll talk about the 9 months of 2023, but it's hard to do that without taking into account the past history of our company so far. By 2019, and I was talking to [indiscernible] before coming on stage when Lou is showing the brands. So this was the toughest moment, when you take it from 0 to 1. So you make the brand be understood. You create the culture of that brand. You create the brand equity, the brand's strength. So up until 2019, we were focusing and creating a strong brand and then COVID hit. And then at the end of the pandemic, we had this encounter of Souls and business with Arezzo & Co. And this value was unleashed based on the partnership. And then 2021, we spoke about the calls. We spoke this in the Investor Day. So we have the strategic initiatives. We didn't want to get it wrong. So we integrated with the Arezzo & Co. We acquired Baw, the first bread. The new shop project, rolling out with the remodeling of the shops, the integration and the growth of Reserva Go because we had just a brand license. We had just a brand license, a B2B model inspired in the Arezzo. Because it lies in our DNA to sellout. So shorter cycles for the launches of the multibrands. So we learned how to do this and adapting our governance to Arezzo's governance, so that we could better communicate every day. Always with the independence and the freedom to work. That's great to be able to do that. That's a merit of this partnership. 2022, so we focus on integrating BAW. So we made huge investments in expanding our distribution center and also in technology. And fundamentally, we invested heavily in our facility footprint on demand. It grew a lot. It was a migration of channels, technologies became more advanced. So we used the [indiscernible] technology. Now we use the [indiscernible] technologies, which is Israeli, a more expensive technology. So our facilities became more productive and with higher quality. And beyond that, we made an expansion of our brands in 2023 and I'm going to be speaking about the 9 months of 2023. We set the bar very high. We wanted to deliver growth with more efficiency with the right cost, the right cash, the right inventory. So we decided to promote growth this way. So at the EBITDA, we can see the results. We earned 5 points from 2022 to 2023. Well, having said that, now I can speak about the 9 months in 2023. Okay. Beginning with the figures. So we are obsessed by our clients. We are obsessed for our clients that are seeing. We've always been. So when we see the growth curve, B2C to the end consumer, we are kind of discouraged. Are we on the right road? It's quite enthusiastic for us, better saying because we see the figures. The figure grew at very important rates reaching BRL 836 million up until September. And when we see the consumer journey, it went from the offline to the online. So we captured the client by using technology and culture, because 49% of our sales are digital and omnichannel. Now speaking about the 9 months, in the first 9 months, we delivered 40% growth in revenue from those 15%, growing at the same base and 69% growth in the online sales. 46% of the active base, we grew by that. So we have more than 1 million active customers in our base. As I said, we learn with Arezzo & Co every single day. BRL 301 million of sell-in in the first 9 months, which is a growth of 26% versus last year. And looking at the number of clients, we increased by 12%, our customer base. Well, figures are an important snapshot of the past. We have many strategic initiatives, and we've selected some that go beyond numbers because we want to give you a taste of that. Numbers are something we work on every day. We have digital tools, but if we don't plan the seat of innovation, I was just talking to Alexandre and Anderson, when I joined the company. We were at an event and Anderson said they don't believe in Anacapri, but I'm going to prove them wrong. And you did. Anyway, we need to plan for seeds of innovation. Of course, a lot of innovation falls behind, but we have to plan some because some will blossom. I give you here some highlights of innovation in our businesses. I really love this figure. It might look like an ordinary slide, but this is super important. Once the journey goes into digital, there are 2 quality and consumer criteria. Actually, we have 3 criteria in digital. Their experience will be good if delivery is fast, if delivery is fast and if delivery is fast. This is the 3 criteria. The rest comes later. That's why we highly invested in our logistics and on demand. Of course, Arezzo also invested quite strongly in that. And we reduced delivery deadlines. So freight times, and our target is to drop it by half. It used to be 6.9 days, the delivery time -- can we move back to the previous slide, please? Well, without Print-on-Demand, 6.1 days. Now our delivery time is 2.9. This is the average 2.9 days. Every day, we remove from delivery, we grow sales by 3%. We increase loyalty, customers feel more assured and they come back. When we have this huge sales base, just think of the potential this represents. This is proof that this gives value of consolidating brands. It's logistics. Well, 36% is influenced by the salespeople. When COVID came to an end, the use culture was really thriving. So we cannot lose track of that. We cannot -- we have to keep it up, the culture of use. And then sales just grew after that. Any number of items, which is super important to measure success, so in the 9 first months of this year, we sold 5.8 million items, 37% growth as compared to last year. Very well, capillarity. This was a year of a great deal of growth. We opened up 12 of our own stores, 15 franchises, and we remodeled 16 stores. Well, the new shops would these delivers a high level of efficiency. Sales growth was highly delivered after the remodeling. So we spoke about this in other Investor Days. So we are rolling out this process yet. We still have a stretch to go and that's a delivery that we have to do in my base. And then we are keeping up the pace, we are inaugurating new shops, including our own shops and franchisees. We have groups of brands today. And when we look at the business, we already have a major avenue for growth with the current brands. Regardless of brands we might have or consolidate with, there's a lot to be done with what we already have. Again, talking about the innovation seeds we've planted. Let me talk about the woodpacker brands. We are not reinventing the wheel. We have Prime, which is a loyalty program. It was launched this year, BRL 299 a year. That's the value we charge. And then clients have some Prime benefits. Exclusive offers of prepurchasing some exclusive products, we have sold 49,000 Prime accounts. The active base for the Woodpacker brands 1 million clients. So we have 49,000 Prime clients, and the average client goes to the store twice a year. The Prime client goes to a store 10 times a year. Average clients, BRL 430 an average per visit to the store. Prime clients, BRL 1,000 per visit to our stores. Let's do some quick back of the envelope math. These BRL 300, this is recurring revenue. Suppose you have an average spending of BRL 430 twice a year, that's BRL 860. Okay, 20% EBITDA, BRL 180. That's the profit brought by this client. Again, a back-of-the-envelope math. So the average client, BRL 190 for us. Once we convert a client into a Prime, even if they don't buy anything, we've made BRL 300. And there's recurring revenue, BRL 15 million a year in monthly fees that we charge. The second strategic highlight for the company. Abroad in Europe, we have 2 different sponsoring for sports groups or teams. We have sports brands, of course, Nike, Adidas, and then we have fashion official partners for sports teams and brands such as Diesel, Replay, Dolce Gabana, Square, Off White, many brands associate to athletes or clubs and pay to have their images connected. They are official partners and they develop licensed products, and then we sell these products in their own channels and in partner channels. Well, we launched a first initiative with Flamengo soccer club last year. And in terms of sellout for month 1, we sold more than BRL 2 million. This year, we launched the same thing with Vasco. Thankfully, they did not go down in the Brazilian league. They played yesterday, and it was a very difficult match. BRL 1.4 million in the first month in the first sellout month plus the sell-in, right? And even in sports gear stores. If you are passionate for football or for soccer, if you wear a soccer jersey, you can have a nice beautiful shirt with the crest of our team or a polo shirt, cool shirt with the crest of our team, something that looks good on you. This is the business and the market understands that this is a sports-inspired apparel. BRL 5 billion is the size of this business in Brazil according to Euromonitor. So this is just the taste of this business. Flamingo alone has 175 stores around Brazil. Vasco, has 38 stores. We have a squad that is developing products for a whole time line of new releases for these clients, store owners, multibrand stores. And for sellout again, this squad is already ready, up and running, and we want to launch more partnerships. This can be huge for us. Glasses, sunglasses. We do lots of pilots for licensing. Well, Reserva Go started as a licensing and it worked really well. And when we reached Arezzo, when we joined Arezzo, we realized that things were not going that well. Things started going well when we joined Arezzo. Well, we created a product tree based on market research, seven models and 23 SKUs. This is for sunglasses. We sold BRL 1.5 million in sunglasses in the last 3 months. So this is a successful MVP. We want to expand this into our own operation, but probably with licensing. We are already in conversations to understand what's the best model. And the last initiative is beachware. We've always had beachwear products, and it's a large line for us, and it's important in wholesale stores. When we ask sellout clients, what is the poster boy for our brand, and they say beach shorts. Well, we almost don't sell beach shorts, so we see an opportunity here. We cannot have a beachwear area in our stores. There's no room for that. We can have a couple of shorts and linen shirts. We actually started reselling our brand, myself and Fernando into stores located in hotels. And we thought, well, these hotel stores, they are very practical, but they don't have a lot of expertise in retail. One of our partners, Carol Bassi, introduced us to Fairmont in Rio. And we asked Fairmont, would you like to open a Reserva beachwear store, we just had to do a small CapEx investment because we used the hotel's infrastructure. We have just a curatorship of products. These are products that we have, linen shirts, 100% cotton products. Our nicest beachwear shorts, tailored beachwear. And this store sold much more than what we expected, amazing results for us. And that is a new avenue for growth, which we didn't have before. We now can open new stores in beach cities and coastal areas and new hotels, maybe in airports where we have a lot of people circulating. People who want to buy these products. Okay. Now let's talk about our new brands. Let me start with Oficina. Oficina grew in a very fast pace, 67% growth, 11% of share at Arezzo & Co. That's 6 percentage points in just 2 years. So we are still growing within AR&CO, which is really important because we decrease our risk per brand. Something important Oficina. Our sales per square meter are 10% higher than Reserva's. But we have 50% of the number of products that Reserva has. Average spending BRL 630 or BRL 1,000 for Prime clients. We will probably have 17 stores of our own for Oficina. This was a year of expansion for our brand, 50% growth versus 2022. And now we have many also multi-brand stores. Strategic moment for the store in 2024. We want to go into footwear, social footwear. This is -- there's a gap in this market in Brazil. People don't have a lot of alternatives. Actually, men don't have a lot of alternatives. We want to launch a cross border website. This brand site has a fit for international sales. But we want -- we don't want to buy more than what we can chew. And let's keep on expanding a brand that is just beginning. There's a lot to be done here in all channels, in our own stores, online, multibrand stores. What about Baw? In 2021, we bought a digitally native brand. Growth was their premise and their gross margin was quite tight. So we integrated the brand into our company. It brought many cost upsides for us. And we set up a simple plan. We want to raise prices because gross margins are tight. It was digital only. Of course, we knew we were going to lose on sales because we were to increase prices. So we increased the prices, we did the rollout in brick-and-mortar stores. That's what we did. An excellent year for BAW. We also launched the brand app. 35% of the digital revenue comes from the app. We opened 3 stores with very interesting commercial revenue, BRL 582 million points of sale. BAW is a young streetwear brand from 18 to 24. We don't have too many players in this area in Brazil, right? You just have to cross the street, 200 meters away, we have a store here at Oscar Freight Street. It's worth visiting. Okay. What about Simplus? Simplus is the baby in the family. Simplus' goal is to be the best basic wear in Brazil, democratic basic wear. On and off-line Reserva or Simplus experience. Entry price is BRL 69. And in the MVP period, we opened our website and sales are amazing. And we have opened 1 store at Baha shopping, a 90 square meter store. Baha Shopping is a shopping mall in Rio de Janeiro. Average sales for this store, it's almost 3x the square meter results for the peers in the same segment. As for the expansion plan for Simplus, we're not going to have huge stores. Again, we want to provide the same experience as reserve provides up to 120 square meters, but we focus on basic wear. Simplus means simple in Portuguese. We have to keep on doing the basics. So we have to focus on that. We cannot stray from this goal. We have salespeople. This is not a self-served store. And with a lot of added value for the experience in the POS. Anacapri is something that is a benchmark for us. We just saw this year today. Anacapri is an excellent benchmark for us. So we should open 3 new stores now. And in 2024, our focus is the Southeast of Brazil, still in our owned stores. And we want to design the franchise project for us. Starting in 2025, we want to expand also in owned stores and in franchises. Our dream for the future of this brand is that it lies in the hearts of Brazilians. Further like Havaianas, Moji, like Vivara, Havaianas occupy this room in our hearts for a while, but this is an opportunity for textile products. And like in anything we do, we go step by step, little by little, we are steady, but not giving it too much gas. And we think of every step we take. I'm about to finalize. I mentioned this in the beginning. I mentioned the Mandala Reserva INK. This is the print on-demand business online. So you have a facility where you print products, then you create a platform and you plug other stores into your platform. Reserva INK is the platform. Within 30 or 40 minutes, you set up your store. You might be an entrepreneur trying to work in fashion or you might be a creator, which is a huge trend in the market. The 4 main U.S. players have $1.5 billion in revenue together. It's a huge growth business, most of all, with the growth of the creative economy. Platforms will monetize that. And they need product revenue. Instead of renting, audience, they monetize your audience. We have [indiscernible], Mr. Vis, Kim Kardashian with Skins, everyone's doing it. This is the Print on Demand business. Reserva INK has 3 packages of solutions. This is a digitalized fashion business. That's what we do, fashion retail. And this is the only digital business that we have at AR&CO. The basic plan is a monthly fee of BRL 159. The average price is BRL 59. There are more benefits. I don't have time, but please access Reserva.INK. Then we have another plan, BRL 539 a month, and the average price is BRL 46. So you pay BRL 59 for a piece. Everything you sell above that is yours. If you sold it for BRL 86, the entrepreneurs keeps the difference. And then we have another package, a higher package. We have 65,000 stores plugged into the platform. This is a sixfold growth versus last year. Looking at GNV, 269% of growth. Highly scalable business for the company. Why is it growing that fast? Because this platform is now plugging into other platforms. If you have a store at Shopify, selling t-shirts or hoodies or whatever we have, they can plug on INK and start using our services. So each platform we plug in, we exponentially scale value. We plugged into Shopify, Novemshop and [indiscernible] and we want to plug into more platforms, whether this is in Brazil or abroad. Many U.S. or European or Asian brands, they want to sell in Brazil. Well, they can use our print on-demand facility. It's just a matter of plugging into their platform. We can increase the product mix because currently, this is just T-shirts. So it's just the beginning. These providers sell mugs, so there's a huge opportunity for other products. A huge road map of integration with other retail platforms. And starting this year, we want to use the print on demand facility to set up our quick prototyping facility for Reserva INK. That's similar with what Anderson and Alexandre said at the beginning of the company. They've created Zara before Zara existed. Anderson was here before Ortega. Okay. So from the bottom of my heart, I want to thank you for your presence. I want to especially thank Arezzo & Co. You are so loving, so warm and you've welcomed us with your arms open. We learn from you, you learn from us. This is I would like to thank Alexandre, Anderson and the whole Birman family for betting on us, for placing your bets on us. We know the story, right? And it might seem like a reasonable story. But in the past, it wasn't. There was a very strong component of courage, and we really admire everything you've built. So thank you very much.

And there is a chapter about this in the book. There's a chapter on intuition. And we talk about Ronnie. Okay. We've had the opening remarks, strategic vision, Anderson, Sachete with a clear perspective about our strategy, the brands under Luciana's leadership in Arezzo and Schutz and now Ronnie talking about the AR&CO platform. So let's have a brief coffee break for you. There is a voucher, right? So feel free. We have some interesting things. And let's be back in 20 minutes, a quick bio break, coffee break. Okay. Let's be back here before 5 Brazil time. Thank you. [Break]

So good afternoon, everybody. My name is Mauricio Bastos. It's been 11 years working for Arezzo&Co. I'm in charge of technology and digital sales. That's the second block of presentation. We're going to discuss the support areas here that not only provide support, but these areas can be actually the accelerators of our business. And to talk about this, I'll begin with our most important asset, I mean, our clients. Everything begins and ends with clients. Product development, marketing campaigns, we always think about the clients. And by assessing, 2023 was a highly positive year in terms of customers, both in the expansion of the active base and also growing the KPIs, client capture, retention and winning back, I mean, bringing back the clients that have not purchased from us in a year time. Well, something that really stood out is the digital channel, the website and the e-commerce, in general. As said before, more than sales platforms, we have platforms that work as the flagships of our brands. So we can actually develop experiences. We can provide narratives. And at the same time, we can show the assortment of products that you would not find in a single store, no matter how big that could be. So this is all about investing in the relationship, promoting engagement, and as a consequence of that, this will generate conversion, more conversions. Speaking of the big figures. So we grew consistently at Arezzo&Co. And in our digital platform, we have followed the same pace. Look at the size of the digital channel by LTM in 2023, it's equivalent of the size of the company. When we look back and we take like 2017 and '18, just now, just on the online channel with Arezzo&Co and AR&Co, we have a powerhouse in the digital platform. It has been growing steadily. And this is after the stretch of the pandemic. At that moment, we had a high acceleration. Some businesses doubled in size, as was the case of the digital platform. However, the pace is still strong, constant growth, as you can see here, with a CAGR of 23%, very large numbers. When we put together the assets, we are speaking of an audience of more than 370 million visits -- 370 million sessions. So we are able to scale up the operations. Let me give you the spoiler. The Black Friday this year, I guess you've heard about the numbers, it was a total hit. It was a historical record of plus 28% compared to the last Black Friday. This is just for the online channel, but that's an online record, Arezzo&Co plus AR&Co generating results beyond BRL 26 million. This is quite a relevant moment, for example, a peak moment as is the Black Friday. It shows our capability of scaling up the operation. And at the same time, they show what I call the podium effect. After you have reached a record, something that you had never reached before, the entire baseline goes up. And we have seen that recurrently. We set the records, and then we have a larger operational base to hit new records. So when we did the assessment of our business, and then we translate the audience that I was showing to you into business. As Luciana and Rony and Alexandre said, we have businesses that are highly well positioned and segmented. So we have a large addressable market. And our positioning is quite clear, we have a large share of the market. So when we put together a total audience of our website, so we used this open and public data tool to do that. So our passion website audience, our ratings really rank really high, especially with the A, B and C income brackets, encompassing other categories as well. This really depicts the power and the size when we put the strength together. If we look side by side or asset by asset, it's not clear how powerful we are. But this generates a lot of opportunities. And we usually leverage the cross-selling between brands, between clients. This is what we do with our strategy. So all of the brands, here they are. So they all have a quite relevant market share in the online channels. The share has been doubling in the 3 or 4 years -- in the last 3 or 4 years. Well, the penetration level of these brands is very high, such as AR&Co, 28%; and Schultz, 25%, and other brands that still have a room to grow. AR&Co and Schultz, they still have room to grow. But Anacapri as we are here today, there's this huge potential to expand this brand because the entry point is quite relevant. So we see a good potential for growth. In our apps, our apps are the powerhouse for the brand. So Rony mentioned Baw and [the app accounts] for 1/3 of the business results. So we have 1/3 of all digital sales in e-commerce happening through the apps. It's worth pointing out our capability of designing and developing solutions such as the apps, very quickly. Baw is an example. It was done superfast, superagile with the AR&Co team. And here, we have the Vans off the wall. That's a global case for the brand. It's the first country to develop the brand app, apart from the U.S. app. So very little time of operations. This accounts for 18% of the sales of the brand. It's a quite young brand. It's a huge friend, quite successful. This app was relaunched with an organic investment in marketing, but it really shows very strong numbers and our capability of expanding even further. Thinking about the digital and the potential to grow based on the digital. So of course, we have to talk about the omnichannel. We can connect all the dots and providing the best experience and shortening the way between the supply and the purchasing of products. So in 2023 and continuing in 2024, we focused on strengthening the platform from the technological standpoint, and we are also investing in operational excellence. So basically, use connecting the ends with the technology, you don't have the operational excellence to really meet the orders and to serve our clients. So we really have been working to make that happen. Today, the base for the omnichannel clients, and they purchased for more than one channel. It is an 11% base, yes. This means that there is wide room to increase their loyalty and to increase the lifetime value, increasing the market share and the loyalty level of the clients vis-a-vis our brands. And the only client has proven to be a more interesting client. They purchase more often, the average ticket is higher and the performance is better. Even though they can be in the brick-and-mortar shop or online, they perform better than a monochannel kind of client. So how do we go about doing that? So for a long time, we have been investing -- including the pandemic, we have been investing in this platform offering so many mature and strong solutions from the technological standpoint to support our expansion. This encompasses, I mean, the big capital, the endless shelf, I mean, to sell a product that you don't have in the inventory, we can use vouchers for the clients, the [indiscernible] app. This helps us to invest in the relationship with the clients, activating the entire network here. When you made the tour of this shop, I think you've felt the experience. So we can use your [taxpayer] number or your cell phone number. If you have any record within the Anacapri brand, the salesperson has all the information to provide the best service. She knows what you bought, when you bought the product that you locked in your card, for example. This is an opportunity to leverage the relationship and the sales and the ZZ-link, which is the remote payment platform that helps us to foster omnichannel. But it can be present in any kind of transaction. By using my phone, we can generate a payment link in any shop online. You can also have a hybrid order, and you can use a single payment link. This is available for all of the sales teams. And we have just launched -- so a bit before Christmas, we are preparing a new version of this app. It's now faster and more effective, yielding better results. So the sales people can actually assess our app. They give us an NPS, and it's the highest NPS ever, showing that we have a ready-to-go solution. Via participation of the digital in the sellout, this has been growing fairly and significantly. So Luciano spoke about the figure and the revenues that account for 35% to 40%. But when we add the revenue, plus the shop results, we are talking about 60% of everything that happens at the shop floor. Everything is activated, delivered and connected by a digital tool or biotechnology. In the bottom in the chart, as you can see the evolution of performance and customer service, this really depicts what I mentioned about the agenda. We have been training our partners. We have been training the franchisees, the operators to serve the clients as best as possible. We measure by cluster. We have this fuel of operational excellence, and we were able to consolidate 30% of the operators because they are in the highest performance cluster. Well, they serve orders quite quickly. Their inventory is well developed. They have the highest NPS, and all of this has to do with the high level of qualification. So we have been testing and implementing other fronts of omnichannels, dark stores, advanced CDs, experiences like this one, where we are with the Anacapri station. In a few days, it has proven to be a big success, a big hit. Comparing with the Schutz [indiscernible] shop, this performance here is 5x higher just by receiving orders and connecting orders. Since the shop has a stock capacity, which is quite relevant. So we are delivering and delivering quickly in Sao Paulo, but we're also serving the entire state of Sao Paulo. Now the big figures. The [ZZ] app, the new version was developed, as I've said. And in 2023, it has sold more than BRL 670 million in revenues. And this is done directly on the app. Quite strong figures. They have been growing and growing steadily. And as Rony said, it's all about the culture of use. There are three pillars that we always mention about the omnichannel: technology, which is the underpinning structure; the culture of use, which is a central pillar; and the third pillar is the management pillar. There's no use having the technology, if we don't have targets. So we should know how many clients we have to talk to. What's the conversion rate? What is the effectiveness in establishing contact? What is the productivity? So all of that is measured and managed. Speaking of data now. So we had a great evolution, very good implementation this year. But it's the redesigning of the data architecture, something that the end consumer doesn't see. But we like talking about technology, the things that we don't feel like varying the pipes. Our platform is at a whole new level. All of the reports, all of the management is live here in this data management platform, and we have been generating value. We have now a greater number of users within the company using these tools. The speed of report production. So just to give you an idea. So there was this big report processing everything in the company, and it took us like 6, 7 hours to be produced. So they invest 1 hour, the report is issued. This is valid to so many other reports. So we are quicker now. And we have been using AI in quite specific agendas. And I'm going to give you an example as a way of speeding up and adding value to B2B and B2C agenda. And we have been investing in training our teams as well, so that they are familiar with this. So that they can create their data tools on these platforms. And a big partner to grow that, we invested in this startup company, and they have been training our teams. And so many stacks of technology amongst them the data stack as well. So let me give you the example of the use of data in some of the applications. So Cassiano will come over and speak more about this, but there are two examples. One is B2B, the other is B2C. Speaking of B2B, so we developed this robust platform. So we went to the market. We understood what was out there. So we knew that we had a capability to really develop in-house, integrating our technology. So we could develop this platform to better manage demand supply -- greater intelligence in the supply. So we developed so many technologies related to planning, being assertive in recommending products because people then are not in the dark. So we provide strategic recommendations in terms of market and merchandising. So we have data on categories, subcategories. So we provide this information recommending the idea of purchasing model. So this algorithm has become more and more precised. There are other models. I mean what kind of product should the shops buy? So we have this great work in predictability of demand and allocation of inventory. The push and pull system, as Rony said. It's a quite strong agenda, and we work with the [ZZ app] for that. And so out, we have been investing in the algorithms to improve the CRM and recommendation layer. So by navigating our website, and by receiving recommendations or by reaching out through a tool, we do have apps that processes high volume of data so that we can more efficiently provide answers and insight for the consumers, and this has expanded the revenues and increased the conversion rate. Since our base is very large, if we have any level of increase, this means a lot. House [indiscernible], House of tech. So we have been investing in technology quite consistently and diligently. These are technologies that generate value. These are technologies that are connected to our core values. There is this very important agenda for experimenting and for connecting with the start-up companies, but we really focus on strengthening our core. And to that purpose, we developed this platform with this template. We call it, integrating technical template. So for those of you who were with us, it's a translation of the integration playbook in the technology arena. So when we incorporate a company based on their model and based on our needs, we connect, we plug it in, in our platform. This is what we did with the Vans Off the Wall, a major pilot, spending with the AR&Co. And we keep doing that in a more agile way. This year, we have integrated [Sunset] and HG, and we have the example of the Vicenza brand. It doubled the participation in the multi-brand channel. It triples the e-commerce sales, and now we can escalate. Because today, Vicenza uses technologies, and it's a smaller brand. And by itself, it wouldn't be able to invest that much. So we are able to dilute the investments. And as a platform, everybody can leverage what has been developed -- what has been built. Something that was mentioned here, the technology is accelerating franchises, and that's the case. So everything that is due here, these are pillars in which we have technologies supporting the brands and the franchising to improve the processes. So in the pandemic, everything that was related to sell-out was accelerated, but now we are capturing value in a different layer, that is the B2B layer, especially when we talk about the intelligence of the back-office for our partners and franchisees. So we have the management layer, that is the portal to the franchisee. So we launched a new tool as well. It is a selling B2B tool. There's a new version for that tool. It's increasingly faster. And speaking about the next steps, here we have the future agenda. And I brought to you a simple exercise. But what this shows is that sometimes we have a disruptive pathway, but we have to do basics well done. This is extremely relevant, and there's much value to be extracted from the basics. Because today, by small stat, we can really promote a quite relevant upside. Here, we have some key indicators: the e-commerce performance, the omnichannel and the client perspective. If we are doing from 5% in winning new clients, how much additional revenue are we going to have? If we add 5% to the web performance, what's the result in the bottom line? So by doing this simple exercise, we see upside of BRL 400 million, just in the growth of via digital channel, just by leveraging some of the indicators that you see here. And now speaking about 2024, here, we have the priorities for technology. So we have been investing in those topics, and they are going to become priorities. Speaking about our business for franchising, as I said before. And then we have the program sphere. It's a quite strategic pillar. So we have an agenda for the automation of the distribution center. This is going to promote efficiencies, and also solving our architecture with the SAP. We are always using new solutions with the SAP. Omnichannel, we're going to keep on investing, promoting the expansion of the e-commerce with new websites and new platforms. The sales app, this has also been evolving. So we are working on the last mile as well, and this has to do with this project here, I mean the shops and the capillarities and how this helps us to reduce the lead time. So for every hour that I reduce in the lead time, this will increase conversion -- further increase the conversion and the operational efficiency, I mean, qualifying the entire network to be able to better serve our clients. Speaking of data, so we are now implementing a new architecture, and this has to do with the business areas because we want to have new users, new formats, new dashboards for management. The gains here are exponential after setting the base, via American operation and AIZZ. We're also investing in the data platform, the training of our team, the upskilling. So knowledge is the basis to extract value from technology as well as the artificial intelligent agenda. And all of this is supported by this major platform that I talked about. So late in 2023 and throughout 2024, we'll be redesigning the architecture. That is the future view of architecture. So we stop, we review, we look forward, we measure the trend, and then we set up a project pipeline with investment so that these projects can be supported. So this is what I have to share with you. Thank you very much. I'll be available to answer your questions in the Q&A session.

Good afternoon, everybody. I am Cassiano. I'm in charge of the operations, and it's a pleasure to be with you. My 11th Arezzo and co. Investor Day. So I've been here for more than 10 years. Many things changed. But when I look at the roots, when I look at the fundamentals at the core, they're still the same. So I have Joao Fernando Hartz, my partner -- the fundamental partner for Arezzo. He's been with Arezzo for 31 years. And with the cooperation of Sunset and HG, he is devoted to managing our plans and to developing our creative center. So looking to the pandemic period. It was like a turmoil for the supply chains all around the world. And in this period, our business model became a differential because we verticalized. So we were born as an industry more than 50 years ago, and we developed this business model in the symbiosis with the retail sector. This enabled us to quickly understand the behavior of the consumers, what was happening at the edge, we translated that and we implemented throughout the chain a very quick way. So our creative center in [indiscernible]. So we call it a footwear software black. There ideas materialized. The ideas can be adjusted. So we wrote a code for shoes that is a complete specification for the product, so that the products are produced as smartly and as precisely as possible. We can only integrate the entire chain because we develop our products 100% in-house. So we closely manage our vendors. And over, we have full control over the distribution. So we know what happens on the edge, we translate that into information and we feed the system. But integrated chain management, that's alive. This is under constant information. So we can group the transformation movement of this chain in three major change fronts. The first one is merchandising and supply. It has to do with the product management, and this begins by creating the collections. It has to do with all of the assortment decisions, what we should buy, how much we should buy. And then we do the sell-out management as well. The second change front has to do with production and distribution, it has to do with logistics as well and sourcing. And the third ground, the one that Mauricio was talking about, that's the channel integration. And the key point now is enacting the desire of the clients wherever they are to the product, regardless of the distribution channel. So to speak about the changes in managing the supply chain, let us begin with the beginning of everything, I mean, merchandising and supply. In 2021, we inaugurated this project to assess our assortment model and also to assess our relationship with the franchisees. Because they're really important for the selling. So we decided to choose the Arezzo brand to make all of the assessments and to develop all of the propositions and to run all of the tests to see what was working or not. And then we organized our action based on three major pillars, that is purchasing with supply and relationships. We looked 5 years back in the purchasing from our franchisees, each collection. And we wanted to understand who got it right or who got it right more often, who could better foresee the purchases, the best-selling products, and that led to sales at better prices, less waste of product and more growth. For the second pillar, we realized that some franchisees get it right more often. But when it comes to fashion, new products, products in which we don't have a track record, it's the set of purchasing our requests from franchisees are buyers, our franchisees are extremely qualified. They understand the reality of their stories and their regions, and we introduce them to our collections in our showroom. And very few days, we can understand what's going On. In this, global world order is usually right about what's going to be sold in the future. But when we look at individual orders from franchisees, there's a lot of mistakes. So a product that should be a sellout. Then it's not being bought by 80 stores and other products that supposedly would be slow movers. They would be bought by just a few stores. So the most important thing was not to eliminate the sell-in for new products, but rather to combine -- to combine the existing wisdom with an intensive use of data, processes, organizing models that allow us to adjust individual models and receive the best orders. That's why we created a new stage in our process. It's an addition of orders. For 1 day, we improved this model for many years. And then 1 day, we identify the products after the request that have greatest chance of being best sellers or slow movers, and we added the orders. We increased the presence of best sellers. Of course, we have to balance the mix per store, the type of products, the colors, but we fine-tuned this together with the merchandising team the best way to do that. Results are quite exciting. In the purchasing front, we've invested in a prediction of sales per store. We look at different types of products and also purchasing [per size]. Well, looking at replenishment. This is different from the first pillar. Here, we have the sellout. Here, we need centralized decisions. Once the products are selling, we get it right if we look at replenishing the stores ourselves from our side. So we have designed several changes to improve the level of replenishment in our network of source. For many years, we've had a program of ongoing replenishment. We have our Arezzo classic, Schultz Essential, Anacapri classics, and we are improving that for the whole collection. First, we identify the best selling products. We create inventory, and we constantly replenish these products in our network. The third pillar is to work with the execution at the other end. Looking at inventory, managing the experience of the client from franchisees, we know technology can support all that. And that's why we developed these solutions in a support system, which we have called [Ser] platform. Platforma Ser. The first is EV planning, the first topic for this platform. It cares for planning at a very detailed level and the purchasing plans also. Then we have ZZ assortment. This is about orders, recommendations for orders and then the addition of the orders as I've just explained. Then we have ZZ repa, repa from reposition or replenishment, reposição in Portuguese. This is about in-season management, replenishing according towards selling better. And then we have the 6R management. This is a jargon we use at Arezzo with Rs in Portuguese: to replenish, to remanage, to repromote with the internal team, products that need more merchandise, to reprice whatever needs repricing, to collect from the store, [indiscernible] in Portuguese, and to reactivate when the time comes, whether that's due to seasonality or to sale -- the sales season. This platform is used inside Arezzo. Franchisees will increase -- have increasingly content with [indiscernible]. They have VNet to manage their stores. They already do that. And we have the showroom to define their orders. They already do that. So we started with this pilot and the Arezzo brand. Results are amazing. For ZZ planning, our purchasing recommendation per category. Currently, we have 200 stores, the Arezzo brand that have this resource available. And for the last two seasons, the stores that followed our recommendations had 5 percentage points more turnaround than the stores that didn't follow the recommendation, either because they are not in the program or because they didn't want to follow the recommendation. Average discount for these stores is 2 percentage points lower than for other stores. In ZZ assortment, you see the results of the addition of orders, editing of orders. We add products to each store. Sometimes we remove some products or we add other products. We adjust the mix for the store, and 75% of the added products end up being best sellers in the sellout. We do this for all Arezzo stores. So we are producing less models and less variations. So that increases the volume per model and per color, which also increases productivity with time. Regarding replenishment, automated replenishment our own stores with the Arezzo brand have been using this feature for longer. In 2023, 6% growth and sell out when compared to other stores. They also reduced inventory because they don't receive so many products. They know they will have replenishment. Now for the implementation plan in 2024. We want to take these tools to all stores. They are not available in all stores yet. And we will do this for Schultz and Anacapri as well.

Good afternoon. My name is Joan Fernando. I'm here to show you some figures and information about sourcing and industry or manufacturing. Well, 2023 -- or in 2023, we consolidated our presence in two manufacturing poles in Brazil. Our broad distribution results in agility, flexibility and swiftness. We are present in different regions of Brazil, and these regions have different manufacturing characteristics and different products. Rio Grade de Sul in the south of Brazil represents 70% of our footwear production and 75% of our bag production. I wanted to highlight that in 2023, we saw a growth in the state of Bai, which is a pink one. They are producing footwear for our group, and they have 13% of share. Also in 2023, we expanded internationally in terms of sourcing. We are now present in Italy, with support for production for brands, [indiscernible] Texas and Alexandre Birman. Here we have more information and some important figures for our own plants and partner plants. Our own plants represent 16% of footwear produced for our group. The highlight is the [indiscernible] plant to the Northeast of Brazil. In 2023, significant productivity growth, 45%. That's because of the modernization of our industrial plan. 40% increase in the volume produced and just 2% increase of people. And in the Northeast, we see huge growth potential for us. We saw this throughout 2023. Looking at ZZ bags, our bag manufacturing plant. In 2023, it represented 17% of our bag production, and that's our own plant. I want to highlight the prototyping area, two areas actually, one for Arezzo and another one for Schultz. 50% of our product development is done within ZZ bags. This is also an impressive figure. Using cutting technology, we had huge gains in the use of raw material. This raw material is leather, of course, which is the most expensive raw material in our industry. In sourcing, we reduced the lead time by 10% in 2023. We've also improved delivery -- on-time delivery, 4% improvement. Finally, all our bag and footwear suppliers are ABV tech certified. Looking at the development of our sourcing is amazing. Now about logistics. We have two main movements in recent years: the expansion of the capacity of our operations and also the renewal of our distribution model. Regarding our logistic capacity, in March, we've inaugurated a new distribution center in Rio de Janeiro, a 12,000 square feet area. This has represented a very important support for reserve of amazing growth. Also in the beginning of this year, we started operating our new distribution center in the state of Espirito Santos. It's called ZZ [indiscernible]. It has 40,000 square meters, and it serves all mono brand Arezzo&Co companies, multi-brand, and it also serves our e-commerce. We have a brief video about this distribution center. Our [indiscernible], the state Espirito Santos, our new distribution center started operating in Q1 '23. Consolidating logistics operations. [indiscernible] Lab was designed to integrate replenishment operations for e-commerce and brick-and-mortar stores. The product is available at the right time in the right place. With build-to-suit design in Phase 1, it has over 40,000 square meters. Initial capacity of 4.4 million units, 4% in open grid. Sustainability, lead goal certification, automated project will be concluded in Q2 2025. Phase 1, Phase 2, Phase 3, connecting demand wherever it is to the right product at the right time. So in 2020 year, we had major evolutions in our supply chain. We've increased our sourcing capacity with our own production. We strengthened our management capabilities. We have developed our bag creation center. We inaugurated a new distribution center in Espirito Santos. And we are innovating our supply model and our relationship with franchisees. We have a platform that will be a powerhouse for our future growth. Thank you very much. And now I invite Marco to come to the stage.

Good afternoon, everyone. This is my ninth Arezzo Investor Day. This is a very important moment for exchange, for learning, and I also want to hear from you. We learn a lot and we bring it all back home into the business. People, management, ESG and expansion, these are my topics. And I wanted to talk about our culture. Rony mentioned this, our AR&Co culture. We have Arezzo&Co culture. This is a group as a whole. But we also have the legacy business, which is Arezzo&Co from the legacy brands. Sorry, I forgot the word, the speaker is saying. We have our organizational identity, which is represented and communicated in all the environments of the organization. This was written 20 years ago by Anderson, and it's more current than ever. These are our principles, our vision, our manifesto, our mission. The guys are everyday work, what we do, how we act, how we interact, how we make decisions, and they are the compass for our recruiting and selection process. And also for our internal career promotion for our talent. The company has gone through a transformation and growth process that has been huge. This brought a new profile and a new site for the company when we look at our team, our collaborators, our employees who make it all happen. 8,500 direct employees, 60% of them are still with Arezzo&Co and legacy brands. Then we have more employees, 30% from AR&Co. They are split into throughout the whole chain, in the industry, in retail and in our corporate areas. This is still a women company. 57% of our employees are women. Let's look at our census. We have eight main headquarters spread around Brazil, plus New York and Italy. 52% of people in leadership positions are women, 20% of leaders are black and almost 40% or actually 40.9% of our employees are black as well. Let's look at our chain as a whole. We are an asset-light company. We have many manufacturing partners and franchisees, who are our partners as well. So we have an impact in 50,000 indirect collaborators. They are the employees of our manufacturers and the franchisees. So if we look at the chain as a whole, this is about 60,000 people impacted. So this is the number of employee -- of job generated, how many families are part of Arezzo&Co. Well, looking at HR or our people area, we've had 2 important initiatives this year. First is the playbook that we shared last year. We want to ensure that the integration creates synergy and integrity for the companies that come to our group. With brands, this process is almost finished for AR&Co and Baw. Looking at new businesses, the process is complete. And looking at new brands, such as Carol Bassi, Vicenza and TROC, we will move forward in that throughout 2024. But we already have a design for that. The second line of work in 2023 is people development. A health and wellness program, ZZ Balance is the name of this program [indiscernible], emotional, psychological, health, educational health, 50% of engagement in these programs. Training and development programs specific for different areas so that ensures technical specific development for each activity. And we also have leadership development programs. 80% of our team has been trained throughout 2023. So training is conducted. We look at leaders and then we look at different areas, retail, manufacturing plants. We also have D&I programs, diversity and inclusion. This is very important for us, and also sustainability. Our expansion or the increased number of employees must come with an efficiency gain. Between 2019 and 2023, we doubled the number of employees. At the same time, the direct cost of corporate employees compared to revenue has improved. It moved from 6% to 5.3% of the total cost of our company. Okay. Now let's talk about management. This is a connection with Arezzo&Co in 2023. I come from Falconi. I worked at Falconi for 13 years. And I am still a good friend of Falconi and Professor Falconi. I was one of the first trainees in the company. Professor Falconi and Professor Godoy, they interviewed me in-person. And the trainings, I was part of and the company, were given by Professor Falconi. What a privilege. You joined the company and you were hired by the professor. Being in close contact with him, I had direct access to the source of knowledge. He's my neighbor, we jog around the same streets, we exchange ideas. And we have a process that has matured for 10 years throughout the company. And he said something to me, "if you don't plan, you will spend more time to deliver what you want and you will spend more money." Usually, companies don't plan a lot because they say, I have to deliver on this, I have the targets, I have the meeting, and they don't spend time in planning. So they start to do these activities, but they don't have a clear target. They don't have a clear plan. However, this is a trial and error process because people are not aligned around the same goal. We don't know what are the problems everyone needs to tackle. And therefore, you spend a lot of time executing, trying to reach the results in correcting course. If we overcome the resistance of saying, no I don't have time to plan, then you stop, you define your goals, you identify the process that need improvement, the indicators that need improvement, who needs to do what. Execution is quicker. The processes are shorter because everyone knows where they're going, and then correction is diminished. You need less correction, of course. So you save on days of work and you save on money, reaching better results. A classic PDCA has 8 stages, the eight numbers you see here. If you Google this, you will find the PDCA. But Arezzo&Co goes beyond that. For each stage, we have specific tools, specific processes that are tailor-made for our reality. This is not a cookie-cutter receipt. This is taking place in practice in all areas at all levels. When we look at identifying improvement opportunities, that's when we define the budget, the dashboard for individual performance for our executives. And this is connected to PPR. Arezzo&Co is a company with meritocracy. We have individual performance indicators. We have an action plan. We already have at Arezzo&Co and in our main rooms, the calendar for 2024, it has been published, new collections, research, governance with the dates -- with the day -- with the actual day. And this is all about planning. Well, in execution, we also have tailor-made tools and methods to then verify results on a day-to-day basis. You might say, well, this is theory anyway. No, I want to show you how it works in practice. This is a map. It might seem complicated at first, but it's actually simple. Let me explain it. At the top are, we have results, then cash, and then we have strategic fronts from the left to the right at the top. So we have PDCA for all our processes. So it's not just about looking at the EBITDA or net income. So let me explain this for you. Then we have the N1 level. This is the first level, CEO and the C-level. We have a weekly meeting. This is a blue one. We look at weekly results to the store level. Then N2. The brands have their previous meeting before that, they look at deviations and they plan actions, and that is the result of an even previous meeting from regional areas. So it all goes from bottom to top to the Executive Committee. The results cycle includes expenses, gross margin, people. Every month, this is brought to the Executive Committee. We have the same methods, and it's a monthly analysis we run. We have a monthly N1 for Arezzo&Co and a monthly N1 for cash as well. We have inventory management meetings, CapEx meetings and default or delinquency meetings. We also focus on clients, expansion plan and NPS, Net Promoter Score. This is the methodology for revenue. So first, we look at the store, then regionally, then at the channel, then the brand, then the company from bottom to top from 5 to 1. Everything goes up to N1, and we have this in detail store per store with all indicators we need for budgeting purposes, volume, conversion rates, average spending, bags, shoewear, this -- or footwear. These tools are used by the whole company. No other brand has something like this. We've removed the figures of core -- of course. But I just wanted you to understand. Our DRE compares results to budget to inventory for all lines from gross revenue to net income. And then for each initiative, they can be strategic initiatives in the company, they can be legacy brands, or mature brands, new brands that we have developed in the Arezzo&Co brand. And we can also look at acquisitions. We can compare this, and it's 100% comparable. This is all found in the Arezzo&Co platform, both for the brands we've developed for the last 51 years and also for the brands that were -- that have been acquired since 2020. This is how we look at deviations per store or per operator. And here, we classify operators with a deviation because of lower sell-in or because of management problems or due to external factors, financial restrictions. And that's how we see all these indicators with the menu of the actions we should take to revert these results. So this is mature. We have it, it's implemented, and it has been quickly connected. And now we can plug it into any new integration we might have. Well, we have a yearly report. And in the company, sustainability goes beyond what the legislation requires. We want to set ourselves apart. We need this for all the brands, very well structured within 4 pillars that you probably know, responsible production, healthy environment, empowered people and transparent communication. This is all organized and connected to our matrix, which is updated every 2 years. So we have the main material items identified and connected to these 4 pillars. Then we have public and open targets. And we are always open to talk about them. They are associated or connected to the 4 pillars. That ensures that our matrix is being well served within our priority items. Here, you see our 4 pillars, what is the level that we are. And the highlight is ABVTEX, as we saw the accreditation of direct suppliers. 93% are accredited, 93% of direct suppliers. Here, we see footwear and apparel. Our target is to reach 100%. 33% of Alexandre Birman's and Schutz leather is tracked. And by 2030, all the leather for all the brands should be traceable. And this would be unheard of in Brazil and unheard of in the world, I would say, for the leather supply chain through blockchain technology. This is going to be a worldwide case. Healthy environment. So we are golden seal according to the GHG protocol. We have the grading of B+ in the CDP, 31% of sustainable materials that are used in our products. Empowered people, so we do highlight the diversity and inclusion initiatives. I was talking about the project that is playing the leading role, that is prioritizing the hiring of black people. So we had many interns. We're going to have 30 additional interns in 2024, 11 of them were hired, and we also invest in capacity building. Transparent communication, we are acknowledged by the major indicators, such as IC, CDP and the B+ CEO for all of the companies of the group. So the highlight on TROC, these are transformational indicators. So we have been investing in this -- in the company. We have 30,000 items of the company that have been traded by Schutz. 580,000 (sic) [ 508,000 ] items that have circulated from all of the brands of TROC in addition to the impact indicators with the savings of billions of liters of water, thousands of tonnes of outfit that do not go to the landfills and so on and so forth. Speaking of expansion. So Luciana was talking about the. Alexandre was talking about this. I would like to highlight our current footprint, 993 brick-and-mortar shops. This is the third quarter information. We have 806 franchisees and 187 own shops. We have 5 brands that can be prone to franchising. So we expand as a priority with the franchisees and via on development brands with additional 11 brands. So on the right, we have the reading of the number of franchisees, 443 and 33 from the AR&Co. The expansion of the AR&Co, we prioritize the major cities. So we can expand with the franchisees of the network, 78 franchisees. We have done 2.2 shops per franchisee. Market share work, Sachete spoke about this. So this enabled us to read the full potential of the brands under Arezzo&Co and under AR&Co with the clarity on the full potential and how we can reach the full potential for each of the brands of the group. So I bring you this table. So Sachete was speaking about the details of this work. Here, I can show everything that we encompass. We saw it before. I mean, here, we can see the tiers, and we compare with Arezzo, which is a more mature brand, the market share study that we developed, the size of the potential is shown here. So here, we have information for Anacapri and Arezzo. A benchmark from another retailer, which is a large retail in Brazil, and then the multi-brand and [ web ] sales information. So with the reading of this entire table, we are able to define per street, per postal code what is going to be the future expansion of the brands of the group in terms of footprint. So here, our beliefs on the success factors. So on the side of operator, the availability for the operation time, as Anderson mentioned early on in the process, it's not an operator investor. It's an operator that is going to make out of that, his means of leaving, availability for investments to fit with the brand, experience and knowledge on the retail. And then we introduce the person in this world if this person is willing to do so. On our side, the negotiation of the point of sale, financial feasibility study, the recommendation of the approved vendors and brand expertise, training and integration. So the stages from the recruiting of a lead, we identify the point of sale up until the inauguration. It takes from 80 to 100 days to be able to complete via process for each of the openings. And then finally, here, we have our reading on what's going to happen this year. So we should open 50 stores, which is in line with the guidance of the year. So mostly, we have shopping mall -- stores, 80% as the history shows, 60% of the shops are franchisees and 63% are done with the network franchisees. So I would like to thank you for your attention. So I invite Sachete for him to continue with the presentation.

Well, time's short, so I'll be very quick. There's not much else to say about the figures. I actually have to learn from you. You always teach us about finance in our sessions here. More than speaking about the numbers, I want to explain the decision-making matrix, how we consider the financial data within the company, and how we address the pillars to make the decisions and to guide our day-to-day work. So one of the strengths of our model that is a multichannel model, and we use this model at a very high level to manage not only revenues, but also to manage results and performance. So all of the strategy on how we are going to expand with the brick-and-mortar, monobrand, franchise, e-commerce, this is always permeated by a financial analysis to make the best possible financial decision and also to check monthly performance and results. So it's a whole habit, a whole -- right, that is multichannel. And then as Anderson was saying, he is always demanded from us. So we have to be financial and salespeople. We don't want just to be paying bills. It's a financial system that has to be in close connection with the franchisee, with the vendor because we are the strong link of the chain. We have to teach and support and guide. So that's the key role of the financial department. We are present in the day to day of the franchisee, in the day to day of the vendors, supporting them with legal matters, financial matters and really providing support to be encouraging. We are a single company, but we have more than 700, 800 franchisees, more than 70 vendors for footwear, more than 50 vendors for apparel. So we play an important role as the financial department, internal controls and robustness of the systems. This is what enables us to look beyond. So we are quite mature in terms of systems and processes and in people. So we have an excellent team. So I pause here to thank my team, people who are next to me, helping me. I have the best country team, I'm sure. So this is why we can devote time to helping the stakeholders as well. And then finally and most importantly, discipline. This permeates the entire company, and it has been going on for so many years that is the structure and the decision-making metrics for capital allocation. We are highly disciplined, strict control, strict follow-up. Whenever we develop a project, a new shop, a new design for certain projects, we have a confidence level that is very high on the figures that will happen, and this enables us to make a simple mathematical decision, whether it's going to be a franchise, organic, inorganic. But for some other projects, we don't have all information, a new brand. You may design anything on the Excel, but then follow-up becomes very much important and constant review of the follow-up and also decision-making in continuing or in phasing out the project. Speaking about the major financial numbers, you do have access to the data. So the CAGR of the revenues is here. Well, maintaining our [ mandala ] with the breakdown of revenue between the brands. I mean, the dependence on the brands that is diluted and the dependence on the channels that it's very well diluted, this makes us stronger because sometimes we have a challenge with the channel we can offset with the other channels. If we have a challenge with the brand, we can offset with the other brand. Speaking of the major indicators and KPIs, shedding some light. You always ask questions about this. This is part of the conversation, right? For 2023, what should we see? What is the company strategy for 2024? In line with what we said in the opening, with our strategy, we want to earn a gross margin. You saw the increase in the third quarter. And it comes -- it results from a higher efficiency sell-out, a lower markdown. We are achieving a higher EBITDA because we have leveraged our revenue growth. And we strictly control expenses. We dilute the expenses as compared to investments. And ROIC, well, levels are quite high, but the perspective is increasing this ROIC. The CapEx investment in the last 2 years was made to support the physical expansion of our own shops, investments in omnichannel, in the new distribution center. So now this investment will yield results diluting over time and diluting in terms of net revenue growth. So gradually, we're going to see the expansion of the ROIC that is in line with the working capital. Consistently, we have been talking about the evolution of the working capital over the year, beginning with the inventory, the stocks. So our performance was worse in the first quarter. The second quarter came better. And then in the third quarter, we had significant gains reducing of the number of days in hand. And then for the fourth quarter, the same trend remains. Our line of vendors, this was a questioning point. So we have been aligning on that. In the third quarter, we should have gains. We had an improvement by 7 days. And now the curve, as compared to last year, is fully closed. So we resume the accounts payable days very much aligned as was in 2022. All of that put together should result in a growing ROIC performance and also consistency in paying dividends. In 2023, we see normality. So we are going to provide returns, giving back part of the cash generation, part of the profit to the shareholders. Now just to close. Speaking about our budgeting process. I'm not going to go into detail, but I wanted to summarize. We have a market share study addressing the growth in revenue and management model that is going to take into account the methodology, the branding, the channels. So we are going to build the budgeting process, taking into account brand channel efficiency increase. And restlessly, we want to each brand to gain efficiency. That's the magic of our model. You think about Anacapri, Arezzo, AR&Co and the entire structure behind them. In terms of product, marketing, DM and support to the business, we don't need to grow at the same pace of the revenue growth. But some revenue growth or a good revenue growth gives us significant operational leveraging. It's a target of the management to capture the operational leverage and to make it happen. And then I close the financial presentation, and then we carry on.

So it's a great pride to be able to continue with the legacy that was created by my father. He is here. He is a strong man, resisting so many hours. Thank you for your time and your dedication. So this part is highly important. Q&A definitely will address this part. So we have this slide ready for you. So we are anticipating your questions. It's an easy question to be asked. So Sachete is more than prepared for this topic. So the impact of the tax changes. So we do have the answer for you. You may take a picture because we're very well prepared. I would like to close. Well, the focus for 2024, focusing on the core, more specifically, the expansion of the existing brands, especially on a cap rate. So we are quite confident. Well, the results of 2 weeks of the shop are quite encouraging. Arezzo is leading the way. So we have new expansions, and we are going to be sharing our guidance in a few minutes. Operational efficiency. I had a meeting in Santander Bank in August this year. And I said that the focus would be increasing profitability. This happened in the third quarter. It's going to happen in the fourth quarter as well, and the focus is continuing to generate cash to have a very interesting payout. Omnichannel. The omnichannel approach. To us, it's a big bet. We are investing in CapEx, especially in logistics and really leveraging the shops. We grew in São Paulo in Anacapri after improving the delivery efficiency. So we grew steadily and the inorganic expansion pipeline. Licensing is worth pointing out. Although we had one excellent deal, so far, it's a hot deal. So we have a strategic area that focuses on that. I was in New York last week with many players. The international brands, they're coming strongly to Brazil. So the agenda is really hot topic at Arezzo&Co, news to come soon. So also the M&A issues, but focusing on the core. It's a secondary line of growth. This company in the last 12 years has had a sound growth based on the core, and that's the key growth strategy. Consolidation is a near consequence of our execution capacity. You saw this incredible team, and I have the honor of working with them, wearing the hat with them. So we showed to you Mauricio's capacity, the omni management, the e-commerce, the systems, Cassiano plans and thus logistics. Cassiano has experience in sourcing. Vidal has great experience in management. As we are familiar with our team, we are really in charge of our people. So we have been investing in sustainability as well and controlling the expansion. It's a quite sound company, a well-prepared and stable backbone to keep up the M&A agenda, but it's not the priority for 2024. We are awaiting for the headwinds to go back. But we are highly prepared. Guidance. I would like to share firsthand, very firsthand the shop that we inaugurate in March 2024 in Iguatemi Shopping Mall. Highlighting this shop, not speaking about the numbers, same-store sale was 34%, BRL 2 million. It is the oldest shop after [indiscernible]. It's been there for 30 years, a quite mature shop. And now in December, in the first 5 days, more than 40% same-store sales, we want to hit BRL 3 million. So that's an Arezzo shop at the Iguatemi Shopping Mall. Capital allocation is key to us. So we have been investing in Anacapri. Now we will be investing in the Arezzo. To follow through, we always want to keep growing. This is the final shop. We're going to inaugurate in March 2024. It's going to revitalize Arezzo and as often, we'll be defining a process to further capitalize this expansion. We're going to do remodelings. We're going to have 15 movements in remodelings. We have many franchisees aligning. We have financial support to the franchisees. They had good results in 2023, and most of their results are going to be reinvested to maintain the strength of the Arezzo brand. In figures now, here, you see the interior. It's very much of data. It was a whole year process, more than 5 design versions up until we were sure. I mean the color pallet, the lighting, the flow. So this shop will really revitalize the Arezzo brand. Our commitment. We've always delivered our expansion pipeline. Since 2014, we doubled the number of shops. We've never had a year with a retraction in our footprint. In 2024, we're going to open 40 shops, excluding Anacapri, because in this new concept, we are committed to opening additional 40 shops. Our guidance is highly optimistic. We have initiatives like the Simples shop, the extension of Reserva, the extension of Arezzo Light model, and Anacapri will take the leading role to expand the footprint with additional 40 shops as the formats that we showed. So now I open for Q&A. So can you help us with the chairs here, and those of you who want to begin by asking and if you want to ask by the [ tax ] system and the impact, let me show that slide again. So we were very much concerned with the timing here. So let's leave the screen on the Q&A, perhaps [ before ] will not be asking about the tax impact. Help me to organize the mic.

It's Thiago, from Itaú. It's a question to Rony, okay? So Rony, let me talk about a concept. It's reasonable to suppose that the growth of a brand from a certain extent, it's a dilution. So it's difficult to pass on pricing, the brand becomes less desired. And on our side, we try to measure how your success that you've made can be close to a limit. So what kind of observations do you do? What do you monitor to make sure that we are not getting there close to limit? That's my question.

Well, there is no silver bullet for that purpose. At the end of the day, when you show the CAGR of all of the brands and the growth over time, we do fine-tuning because branding is not exact science. We do, we test. Things work, things don't work. So I was in your group downstairs, and people were asking exactly the same thing. And I mentioned the case from some years ago, well, the brand was like 10 years old. So there was this violent process of piracy. It was absurd. So to us, we were very much afraid about this. How come? How about the desire of the brand? And there have been so many things that we did. Let me give you just one example. If you take the basic Polos, the Polo shirts, the woodpeckers, no longer have contrast of color. It's a [indiscernible] chance. So we kind of erased the brand on the product. So one of the things that we did to protect our brand. So we kind of diluted the piracy movement little by little up until it vanished. So in this day-to-day management when we handle the brand, we feel when we are getting close to a limit, about Reserva, which is the oldest brand of the company, we do have an expansion plan, and we are working on this. This expansion plan is based on this assumption in which capital cities, we're going to have our own shops and some other capital cities, we're going to have franchisees, in the countryside, franchisees. So the Reserva rollout now, we do have some remodelings to do, very few on shops to open and many franchisee shops to open to inaugurate. So this is outside the major metropolitan centers. But even so there's an important volume of shops to be opened. When we do the planning, we take the assumptions that you saw here in the presentation. The data that we survey and everything that we showed you, what kind of multi-brand we have there, the online market share, what is the online market share because of the absence of a brick-and-mortar shop. But when the online sales are representative, but there is no brick and mortar, we need to have a brick and mortar because it generates more sales on the online. And then Reserva, which is the oldest brand, and I think your question is about Reserva right, because we have a clear avenue of growth for all of the other brands. I think your question was about Reserva brand okay?

So I have a question here. I have 2 questions on our side. Guanais From BTG Bank. The first question is about pricing positioning comparing Schutz and Arezzo. So I would like to hear from you even because of the economic scenario in Brazil, we see a trade down by consumers. So Alexandre, how do you see that the trade down of consumers and the positioning of in Schutz and Arezzo? The second question about Anacapri. Can you talk about the demographics of the expansion of Anacapri from the 40 shops that you're going to open next year? So what is the distribution of the shops throughout Brazil?

Perfect. I'll begin by the second stage of your question, Anacapri. We're going to focus on São Paulo countryside, countryside of Minas and Central West. We want to have a stronger brand in these regions, and this flagship generates a greater effect here. So predominantly, the shops are going to be out in the street with a low occupation cost. In the Northeastern region, Anacapri has a big room as a brand -- a big place as a brand, but we need to strengthen in places in which we are not strong. So the Northeastern is going to be for 2025. So now we're going to invest in the Southeast. Well, price. We work with the cost plus. We develop the product. We define the best added value for that specific product. So in 2021-'22, there were tough years because we had increased costs of raw materials, scarcity of production. So there were moments in which China virtually had a blackout. There were many American brands that we have in Brazil in the past, they resorted to the sourcing in Brazil. So this generated a higher competitiveness for the vendors. So we have to work strongly to manage and keep up our prices. And the growth that we had in 2022-'23, this is not going to happen in 2024. I'm speaking openly about pricing. So we made the winter collection with the selling that's a whole sales level of 2024 and the prices are flat when we compare to 2023. But your question is very good. I mean the tradeoff between Schutz and Arezzo, the Arezzo brand developed its brand awareness. This resulted from the planning work from Luciana and her team in 2022. So we're doing the same work with Schutz. So Arezzo has the ideal price point of BRL 339. Up to BRL 339, it operates very well. As of BRL 400, then it's a higher pricing. Well, it varies according to the categories. I'm not talking about boots. I'm talking about sandals and other shoes. The Schutz brand has an ideal price point of BRL 590. So we have the average price above that. We're working on engineering. We want to have iconic products, but at the range of BRL 590. It operates well until BRL 690. After this price, it has to do with volume, especially in shops outside the Rio de Janeiro and São Paulo cities. So we have 2 pieces of work in Schutz. One, having more products based on this average price from BRL 590 to BRL 690. And two, giving more value to the brand equity. So we have an entire planning for 2024. It is a mid-run process. You will not increase the brand value. I have to speak in dollars. In dollars, it's not expensive, USD 120 and Arezzo USD 59. But now speaking again about the Schutz and the work we do at Schutz, we want to increase, enhance the brand equity. So today, there is a brand perception that is not so different when we compare Schutz and Arezzo. So we are growing steadily with a greater capillarity. And as Luciana said, we do have a product that use the local brand Schutz. So this was well accepted by the multi-brand customer. So we do have quotas, quotas for buying the old school models. And we did that with the winter collection with Schutz. It was welcomed by the multi-brand consumers. So it's going to be a gradual process to increase the brand's desirability. There's a new project. We just hired a studio so far. So we were not satisfied with the previous status because we were not sure about the shops. Our shops are quite uniform. So we're going to inaugurate a new shop in the second half of 2024. So Schutz is the youngest brand of the group. There is a wide universe in the digital platforms. This is where we're going to work, but it's connecting with the new consumer and bringing this consumer to the Schutz space because it's quite different from the Arezzo brand. A whole different age group, although it's a very well desired and democratic brand. So there's an important difference in terms of branding, reach and guidance when we compare Arezzo and Schutz in terms of the digital platforms and the new consumer. I wanted to thank our newest Board member to Tufi Duek. Let's give him a round of applause Tufi Duek. What a pleasure to have you with us. Thank you. Thank you for coming. I was about to wrap up, and I saw you, and we were speaking about branding. You can contribute so much about that.

We have some questions. I'm keeping track of who raised their hand first.

I'm Danny from XP. First question regarding price. As per your previous answers, I don't think price is a leverage for growth. And it has been in the past, not just for Arezzo.

May I just add something before you finish because it's important. We have the entry price and the exit price. We have reduced markdown sales. Since November, the same-store sale, we have markdown and full price. For November, same-store sale, I think was 17%. There was a decrease in the markdown sales and our growth in full price sales. When that happens, the average price we report in our earnings release, it increases. But that does not mean this is a catalog price. We sell at the full price, so the average price is higher. I just wanted to say this when the consumer looks at the window of our store, there was no price increase, but full price sales increased. For earnings, there is a price increase, but it's not an actual price increase, it's an actual reduce in discount. I'm sorry for interrupting. Our gross margin has improved. Our price strategy has not ever been like that. It's a different price for the new brand, but the AR&Co...

Sorry for interrupting. I wanted to know about volumes actually. It's a brand that -- for apparel, it also draws the essential on the shy growth of the last semester. Maybe that has some base dynamics?

No, it's actually 35.7%. That's AR&Co for 9 months. I love Investor Day. And I hope you have some time -- we're going to have a DJ after we finish. And if you have time, you can say we're not in a rush. And I know we have some people through video conference. Well, first of all, our main focus is revenue growth. We began our results -- our open results in 2011. We were coming out of a more industrial business, and we are one of the few companies when we look at brands or groups of brands, that show their volumes. When you look at our volumes, it is made up of several brands. So we have strong growth in volume in 2024 because Anacapri is going to grow a lot. But that doesn't mean Schutz performance has improved. We might have a decrease in Schutz. For our volume information in the earnings release, it does not tell a lot about the health of our business. We don't measure our products in liters or tons. If you decrease volume, it means that you have idle capacity or that CMV will increase. 16% of our production is in our own stores. Maybe 25% more or less is the limit. But volume for us is not that relevant. Most of all, when we look at full price turnaround, maybe volumes go down, but full price sales go up. I want to look at all the performance metrics of our company. And volume is something we are very diligent about, but it's not a decisive factor when it comes to performance and market share of our business. We have several brands involved. In Q3, I was looking at volumes. And when I started looking, I've said volumes are down. MYSHOES 250,000 pairs, and again, 250,000 pairs in Q4. So this is not a KPI that has such an influence in our performance as a company. You have a second question, right?

Yes, my second question is connected to apparel. In Schutz, there is a reverse avenue. And I -- the M&A, there was some information about that. And you said that this is an avenue for 2025 -- and you have beachwear, underwear, there are other categories as well.

Yes, some points, all the new business takes some time to mature. Anacapri -- BRL 500 million. But it has been 4 years. Our revenue used to be [ BRL 30 million, BRL 25 million ]. New businesses take a while to mature. Having said that, in the moment in the beginning of '23, it was very difficult, and our growth performance and profitability is the best in all comparables. However, we had to establish priorities. And there was still some need for investment. We canceled some initiatives. And in others, we believe in their future. But there -- without investment for the time being, we postponed investments, we could focus our time, our attention and our capital allocation in brands we knew were going to bring faster return for 2023. A company that has so many different growth fronts, my main role is to provide guidance. When should we give it gas and when should we step on the brakes. We prioritize unbranded, Reserva is included as well. We can grow more Reserva, Arezzo, Anacapri, they can grow more. So we rebuilt our strategy, and we allocated capital where we knew returns would be better. Women apparel is still in our pipeline. But in compared to other Investor Day, this was a priority in the past. We dedicated time, I dedicated time. We have a workshop for women's apparel. I used to go there every week. And the last time I've been there this year, it was 3 months ago. So we had to reprioritize so that we keep on having healthy growth. 2023 was not an easy year, so women's apparel is still on. It's in our pipeline but it's like ranking fourth in terms of priority. And in 2024, we have to decide how the year is going to continue and decide if we're going to invest more or not. As for inorganic growth in women's apparel, that might be more feasible. We wanted to show the post core stage which are the leaders that support the business. It's a very sound structure. We are well prepared to plug that in. Carol Bassi has amazing results. But women's apparel was good enough for the test we had run. Results were excellent, we did some M&As in January, February, March. Of course, these deals had already been closed in 2022. But in 2023, our focus was core organic growth. We will begin 2024 the same way. Maybe we reach cruise altitude, and we might then change the priorities.

Hello I'm from Citibank. Since Rony is here, I wanted to hear you about the ecosystem. Everything that it's outside of Reserva's core. There are many levers, Simples Reserva Go, you have interesting opportunities in terms of synergy there with Arezzo&Co. Where do these other initiatives search to add more growth? When we look at profitability, 18% margin, that drew my attention. Looking forward, is this margin sustainable? Do you want to increase that? And then I have an additional question.

Go ahead.

Regarding the U.S., next year in terms of growth -- Macy's -- Arezzo and Macy's, so if you can talk a little bit about this and also profitability and breakeven.

Okay. I'll answer the second question. Thank you very much. Yes. Along the same lines, the role of the Executive Committee and of the Board is throughout the year to target our investments, capital allocation, time allocation and energy. 2023 in the U.S. market, department stores have a relevant percentage in our revenue, but they decreased their order. They have high inventories, they are publicly traded. So we place more energy in our e-commerce sales. Results were great, mostly in full price sales. The execution capacity in retail there is limited. So we will not expand in stores. We might even shut down few stores. Wholesale is extremely profitable. We've had sell-in for summer 2024 results are positive. So there will be no decrease versus 2023. But yes, we will cut down on expenses whether that's in the cost of the Madison store and the L.A. store, which we will shut down, we will decrease our operational expenses for the back office of the U.S. company, and this will not be a priority for growth in 2024. We believe in this for the long run, but in 2024, we want to look at profitability. We want to decrease time and investments the Broadway store was important. But the challenge of turning it into a profitable store is a big challenge. We don't have a positive bottom line yet. So we are going to take 2 steps back. We're going to focus on wholesale and e-commerce, which are profitable. We're going to reduce our SG&A, operation is going to be flatter. And let's see how 2024 will behave. Maybe we will have a new cycle of investment in the U.S., but not in 2024. Regarding Macy's investment was very low investment in marketing alone. We don't have a fixed structure. It's the same structure that we have for Schutz and Arezzo so all this quite positive. We're going to have good growth in 2024 in the first semester. So it's most organic, no big levers. It's a marginal e-commerce operation with very low investment, and this is the focus, growing together with Macy's, with insured gross margin. We don't have the markdown allowance because the gross margin is set up at D0. Sell-through was positive in winter, and we have orders for summer 2024. But it's organic. It's not going to be transformational for 2024. Regarding new initiatives, they will grow little by little, things that are not working, we will discontinue and the things that are working, we're going to have an extension plan. They will be part of our growth. We have Oficina Reserva, as I said, 200-something multi-brand, 17 stores. I cannot give you growth guidance. But if you compare this with Reserva, the growth possibilities are evident. Baw have just a couple of stores, but it's amazing online sales and a huge brand awareness. So we still have a rollout to do in terms of brick-and-mortar stores. Simply just the beginning, but the first symptoms are excellent. If this business proves itself, which we already see right now, this is amazing. It can be huge, it can be bigger than what we have right now. And then we have Reserva Inc., highly scalable, sixfold growth. It has technology involved. And there's a lot of growth if you go through an inflection point and GMV has similar rates as online sales, Internet sales. It is profitable already. So we do have growth for these new initiatives. We still have plenty of growth. Yes, Reserva Go. We focused in recent years in multi-brand. When we think of stores, Reserva Go has 3 stores. And also, there's amazing things we can do with Reserva Go. So as it is our business, yes, there's still an amazing avenue for growth.

It's a follow-up question actually for what Joa said. Your market share for Men's footwear drew my attention. We knew the figures for women's footwear. As far as I understand, it's just for casual footwear, right? Rony said that now you are going into social footwear. It seems to be a market of the same size. Can we imagine that social footwear could become something relevant for the company?

Cassiano, I don't know if you know this track record, 14 years in Richards and just 2 days until he joined us. And he also works for Mr. Cat before. This is a market that is a broad market. There's a gap in this market. Reserva Go has a huge volume already. If you go to a shopping mall or to an airport, it's very easy to identify everyone wears these shoes and man are quite loyal. This is a casual sneaker segment. And for social casual shoes, fashion is focusing on that. Some international brands are doing that. My father is a thermometer for that. And he's now wearing more social shoes, he is wearing suit and tie today, but he also wears drivers. Yes. Thank you for your question. We have the market share figures, but we have some visuals as well. Look at your fleet right now, what a high percentage of Reserva Go in your fleet? Okay. This is a casual sneaker, and we have a huge opportunity. We moved from a licensing model, and we have the strength of the brand in our business model. There's still a lot of room for growth, both in segments and also in distribution format. Rony was talking about social, more social shoes. But it is a social shoe that fits the Reserva brand. And we can look at Oficina for that. Oficina has a style, a shape or they represent a lifestyle at Oficina. And that specific shoe is poorly served by the market. If we get the mix right and if we distribute it, right, I believe we have a quick avenue for growth in men's footwear. Also, accessories backpacks are very relevant. You see Reserva backpacks around the streets, and there's a lot of opportunity. Eyewear as well. So we have segments that we can develop. And as for distribution, our distribution is quite strong for the multibrand channel. Relevant sales and Reserva stores, 20% of sales in stores are Reserva Go items. This is very strong, and it's above what we usually have in apparel stores. We have the opportunity to get a store model right and to make it scalable. We have stores in Leblon, BarraShopping. These are all shopping malls in Rio de Janeiro. And if we get the mix right, if we have an economically feasible store, we can then expand on this distribution channel. Rony, would you like to add anything? Yes, casual shoes, AB target audience. So no sneakers, no sports brands.

My name is Pedro from Bradesco BBI. Two questions. Maybe one is for Birman and the others for Sachete. Let's think a little bit more about channels now. In the beginning, Birman mentioned 2023 and the focus on efficiency. Profit from the core, moving back to franchises and multibrand. And throughout the presentation, it's clear that franchises will accelerate. Rony also mentioned that you will start on pilots for next year and for 2025. And my question is about multi-brand. What is the capillarity you can take from this channel? BRL 6 billion in revenue for Arezzo and that a lever for growth in this channel. That's the first question. Should I ask the second? Okay. The second is connected [ Sachete's ] comment, profitability and returns. One of the levers for that is CapEx. And in recent years, it was above regular CapEx. So now this equity is deployed and you're reaping the benefits. At the same time, in this transformation context, this requires rate above what you had before. And I wanted to understand on what you still need corporate CapEx, technology and what is the right level of investment?

Let me start with the second part of your question. Well, when we talk about profitability and leveraging that we come from a revenue growth I talked a little bit about the capacity of the model. When you have a model that's scalable like ours, you grow on revenue and fixed expenses don't grow together. So you leverage. Speaking of CapEx, it grew in recent years because of our expansion strategy for owned stores, most of all, Reserva and VANS. These 2 brands have huge potential before we acquired them. We ran a brand awareness study. This brand, we saw that the brand was higher or bigger in consumer minds than its revenue. So at the time the decision was, let's do this fast. During the pandemic, we decided to go with our own stores. That takes capital, but these are premium stores and premium shopping malls. We even have to pay an advancement to acquire the spot in a shopping mall. Just with the business that we have in AR&Co and VANS, we already have constant gains. These stores depreciate with time, their performance improves and ROI growth. When we renew this contract, we don't have to pay the advancement anymore. We don't have to create a structure of the store anymore. So it's a leaner project as time goes by. This is what we have right now. What we will have is franchisees. And then royalties are above 40%. We will add to more than what we have and the ROI will be even higher. So yes, we are sure about the strategy. Regarding corporate strategy or corporate CapEx. This is important. We will keep on investing in technology, but at levels of investment in technology. They are enough to repeat or maybe reduce a little bit in the next couple of years. But this is something that changes with time. We can live for 1 or 2 years more with the current technology, but we might have to invest in new technologies in the future, AI or whatever. But for the time being, we have the right efficiency level. For multi-brand, one of the major legacies of the pandemic was the digitization of sales in multi-brand. Up until 2020, we had in-person sales and showrooms. With the pandemic, we had live streams online showrooms, and we started serving thousands of multi-brand sellers online. I would present the collection. The style team would be there. Luciana would be in these live streams. So the distance between the brand and the multi-brand clients got shorter. In the past, there used to be a middle person. So we were not in close contact. So we pioneered this initiative, and it's here to say. We have a huge legacy in the B2B system through our virtual showroom and results were amazing in 2023. Looking at multibrand, there's always this yearly bias. We might have some seasonality in the delivery of collections. In 2023, there was a decrease in exports of footwear, and we have some deliveries that took place before. Stores have inventory. Our same-store sales for December is very strong, over 28%. So multi-brand for 2024, we sold our winter collection. We still have growth, and we look at the yearly standard for the next 12 months, multi-brand is still resilient. We have an expansion in the number of stores, and we have a share of wallet gain. We want to work with cross-selling between brands. Vicenza is an important brand for multi-brand and it will help us to reduce Schutz we want to focus in the monobrand channel. We used to have lots of sales with logo, but now we are working with Vicenza. And footwear, when you are a dominant player like we are in terms of market share, through time, we can assess what is the brand we want to give gas to. But we are in close contact with store owners. They are really engaged. We started as a multi-brand differently from other players. Other players started monobrand and then they went into wholesale. Arezzo in the 70s started like that, Schutz 1995 multi-brand. So we have knowledge and a track record of this channel, and we believe it will keep on growing. Some players used to buy a lot of VANS and go online players, large retailers, and they reduced these orders. So there is growth still. But we go quarter-by-quarter working with the mix of these different brands. We have time for 1 last question, 2. Okay, 2 questions. Yes, the guests are the boss, not the host, we've 3 questions then.

Thank you. Sachete. So a quick follow-up on his question here. The expansion that is more focused on multi-brand and franchise in 2024, can I presume that this will bring benefits from the working capital standpoint? Is there any other opportunities for working capital and cash generation in this 2024 dynamics?

Excellent point. This is our role identifying the opportunities and beyond identifying because mathematically, it's quite easy to identify opportunities, but we have to execute together with the team efficiently so that we can keep on growing, generating value and improving the efficiency levels of our business. So the key points of working capital, accounts payable, accounts receivable and inventory. So we have all opportunities to capture. And you saw the efficiencies in the third quarter. We captured those, you're going to see in the fourth quarter, even bigger gain, accounts payable has a historical level. So we cannot further extend the limits because then we're going to be pressuring the vendors. The receivables as well, there's a limit to that. So the levels that we're going to deliver in the fourth quarter, they are very good levels for us to think about future continuity should be recurring, always aiming at efficiencies, but not so many days efficiencies, about some efficiencies. And in terms of stocks and inventories we have to be attentive there because then the money loses value over time. So attention to the inventory, we've gained efficiencies up in days against last year, minus 4 days, excluding the Paris Texas and Vicenza's effect because then it would have been minus 7 days in inventory. We are more efficient. The fourth quarter will show improvement as compared to the last year's levels. We're going to keep on investing in more efficiencies. And then there are other bigger projects, disrupting the apparel model, thinking about new models of serving connecting our industry to our end user, but it's a long-term cycle then because we'll be disrupting the model. For now, in the short-term, we're going to have some improved points as of the fourth Q and some isolate the points that we're going to improve in 2024.

This is Vinicius from Bank of America. In terms of licensing, this is a recurring topic. You said there were some required conditions, strong brand awareness, BRL 300 million to BRL 500 million and the local production. In the new conversations do you see the brands more adapted to these conditions in terms of sourcing? Or can you give up on some of the requirements?

Brilliant Vinicius. Yes. This is the 3 criteria that we impose on ourselves. However, we identified a brand that today has a giant desirability. It is driving internationally. And because of technical quality issues, this deal was very well done. I was vocal about the production levels and production quality levels. We've been negotiating this deal for one year. And in order to announce this deal, if it moves forward, the only 1 of the 3 criteria that I had to give up on in a 5-year contract will be local production. So it's going to be a niche product. The affordability is not going to be at the level that we wanted to open like 40 shops and growing the multi-brands. But today, there is awareness, desirability and the expansion of the growth of this brand and the figures that were shared with us, it is an American brand. It has just arrived in some European countries, they have astronomical sales numbers. So I had to be flexible with that brand. But it is our assumption. Awareness, #1, a great deal of awareness, a great deal of desirability, the capacity to reach at least BRL 300 million. And yes, having a local sourcing, as you said, as we have with [ Avanti ], but I had to be flexible, but it's an important assumption of our skill. And I hope that the final terms are agreed in the forthcoming weeks. [indiscernible]. This is important in the relationship. First today, then we get Marriott. This is how it goes in this conversation as well. So we have an important track record with VANS, we know how to produce locally when we need to. So that's the conversation. We'll begin with the relationship [indiscernible] and then we'll move forward. So the nature of the facts will result in the local production because it's the best for everyone.

This is Guillermo from JPMorgan. The only question is sharing what you have to say about the subsidies, do you see the interest on the shareholding capital.

Yes, that's the final one we were ruling we thought anybody would remember that. Yes, the taxation issue, we don't control that, we control what happens in-house. We work hard, we are flexible and agile. The first important disclaimer, and I always tell you this. We are not the best legal expert to provide counseling, but we do our best analysis. We take into account the time and movements so none of the new pieces of legislation have been fully passed, so this is all hypothetical. But on the last year, we had the 2 major changes that are today at the agenda. The first, the interest on shareholding capital, the JCP. Well, it came strongly, but now there is a tax that may be passed limiting at 50% the use of JCP over the net profit, the net earnings. And if it is approved, the impact is zero to us because we have JCP below 50% of our net profit we want to improve, of course, net profit. But our confidence level is that there will be no impact, if it is passed up until 50%, if it's not then it changes. The second point, which is broader and more complex about charging the income tax and the social contribution for companies that utilize fiscal benefits. We have 2 lawsuits in the State of Espírito Santo, they have been ruled. We won the lawsuits in the Supreme Court in 2020, but we are not collecting based on such approvals. If there is a new law that is passed, this is under discussion. To approve based on 100%, can this impact us? Yes, it can. But the understanding of our attorneys is that based on the rulings and the legal principle that was used to make the ruling was the federated tax, the federated entity, the federal government cannot charge taxes on state revenues. And according to the Supreme Court, this is state revenues and then the government is supporting the company and giving this revenue to the companies. Well, this was the ruling for our case and all of the other companies. If there is a new law that is passed, it doesn't change the legal framework of the federated effect because an ordinary law cannot supersede the federal constitution -- constitutional amendment would be required. And so that's the legal understanding so far. And the point that we have been discussing is speaking about the hypothesis, but our judiciary system is more politicized. So we may have a politicized decisions saying that the Supreme Court made a wrong ruling, and that's the hypothetical universe. We're not eliminating that assumption, but it's a distant far world. And on the right, and then we wonder what can we do? That's the duty as executives, as partners, so we control whatever we can control. And if things get tougher and if the law is passed and if the judiciary system changes the understanding and the ruling if they vote for more political approaches, we'll have to work more and better, we'll have to be more efficient. We're going to review the logistics network. We'll consolidate the distribution center, consolidate the handling costs, operate together with the brand, change the DC closer to production or to plant or to the consuming areas, reducing the lead time and freight costs. So we're going to be reviewing the corporate structure. We're going to streamline. And of course, there's the final lever. I mean first, we want to use this lever, but we try to use it later. That is increasing prices, 1% additional price, BRL 40 million plus EBITDA. But we have to agree with the consumers. The consumers have to like the idea, not always does it work, but it's the final option, increasing prices. But then here, you have an idea whether this will work or not and how much we can work in-house using this lever to try and [indiscernible] or equalize the effect of the changes in legislation, the possible changes in legislation. The questions are welcome. It was a great honor to hear your questions. Tomorrow, I'll be at Itau. Many of you will be there. So we're going to be following up on today's event. Yes, that -- congratulations. Yes, that I love you very much. You [indiscernible] here that -- Yes -- as a son, as a successor, it's nice to see to have you acknowledging my work. I would like to close with this letter that I wrote to you. Excuse me -- so the assumptions, what are the assumptions for 2024? The message that we want to convey as administrators of Arezzo&Co. It's a very important moment to celebrate the achievements, expressive growth between 2019, 2023 exceptional results originated by the organic growth and the acquisitions that generated value quite relevantly, uniting forces, knowledge, skills and people from different companies. I would like to thank [indiscernible] and all of the acquired companies together with the track record of execution with Arezzo&Co. Having said that, well, looking forward, we want to consistently keep on working, capturing the opportunities of earning market share, opportunities of efficiencies, management, levers of growth, expansion of omnichannel, logistics. This is highly relevant and reinforces that we are convinced to deliver great results with a great percentage of growth and profitability. We are focusing on efficiency. We use our capital smartly, so we have ROI generation of cash and dividends for the shareholders. In addition to the organic opportunities based on the best brands of the retail in Brazil, we have the strategic metrics, many in new initiatives. Brizza that we didn't mention here, Simples and women's apparel. The opportunities in which we are investing because of the strategic potential of the market is because of the soundness of our brand. So our inorganic growth with M&A and licensing, we have proven an excellent track record in execution, quality delivery and robust growth of revenue. It's important to highlight that we'll keep on reassessing M&A and licenses, respecting our self-discipline in management and assessing the assets in different angles, generating long-term value for the shareholders at the right moment with the right company and the right brands and especially with the right people. Thank you for your time. Thank you, [ Pat ] -- site, they want to guess the results, they will never guess the results. You will never guess the results. It could be a loss come on. Yes. The guys across the table, they keep trying to guess results. And on that other side as well, they keep trying to guess results. Yes. Let me talk, come on. I never take the microphone. Well the guys across the table, you guys keep trying to guess our results. You will never make it, you never guess it. I know it's your duty. I know it's your job, but you will never guess it. Yes, there's going to be lots of work as we've always had. Yes. We've always worked hard, very hard. Yes, read that book, and you can follow our example. Yes, it's a great deal of work. Cash is king. Cash is king. You preach that, right? Let me go -- cash is king. So you keep talking about the number of items -- the cash is king. That's what I teach him. What do I teach him? Cash is king, of course, I do. Cash is king, wonderful. So let us drink some beer downstairs and price in dollar. Well, if you put it in dollars, it's very inexpensive, Yes, and the stock price in dollars it's very inexpensive, wonderful. You have the stock -- not expensive. So now toward 2,154. Thank you, guys. [Statements in English on this transcript were spoken by an interpreter present on the live call.]