El Puerto de Liverpool, S.A.B. de C.V. ($LIVEPOLC1)

Good morning. My name is Anna, and I will be your conference operator. [Operator Instructions] This is Liverpool's First Quarter 2026 Earnings Call. There will be a question-and-answer session after the speakers' opening remarks, and instructions will be given at that time. Today, we have with us Mr. Gonzalo Gallegos, Chief Financial Officer; Mr. Jose Antonio Diego, Treasury and Investor Relations Director; Enrique Grinan, Investor Relations Officer [indiscernible] Investor Relations. They will be discussing the company's performance as per the earnings release for the first quarter 2026 issued yesterday, Monday, April 27. If you did not receive the report, please contact Liverpool's IR department, and they will email it to you or you can download it at the IR's website. To ensure focused discussion, this call is for investors and analysts only and we will be taking questions exclusively from them. Any forward-looking statements made during this earnings call are based on information that is currently available. They are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors, including the risks outlined in El Puerto de Liverpool's most recent report. Please refer to the disclaimer in the earnings release for guidance on this matter. I will now turn the call over to Mr. Gonzalo Gallegos.

Good morning, and thank you for joining us on our first earnings call of the year. Our first point of results reflected a mixed operating environment, while retail performance was impacted by weaker consumer demand and the number of temporary disruptions during the period, our financial services and real estate businesses once again delivered strong results. Highlighting the resilience and diversification of our business model. Financial Services delivered another quarter with double-digit revenue growth supported by portfolio expansion and solid participation of our credit cards across retail sales. [ Real Estate ] also posted solid growth, driven by a higher occupancy and continued progress in lease optimization. In retail, the quarter began positively with a solid winter sale. However, as the period progressed, consumer spending remain cautious amid a softer macroeconomic backdrop, with customers continuing to prioritize promotional events and discretionary purchases remaining selective. Additional operational and external factors also weighed on performance, which we will address in more detail shortly. At the same time, we remain focused on disciplined execution, expense control and the stabilization of our logistics platform, while continuing to invest in capabilities that support long-term growth. While near-term retail conditions remain challenging, we believe many of the temporary factors affecting the quarter are being addressed and expect underlying trends to improve over the coming months. We will now move to a detailed review of our quarterly performance. Consolidated revenue for the first quarter totaled $45.4 billion, remaining broadly flat year-over-year. At the segment level, strong momentum in our nonretail businesses helped offset softer performance in retail. Financial Services delivered revenue growth of 11.6%, while real estate increased 4.4%. Retail revenue declined 1.9% during the quarter. Within retail, excluding discontinued operations, commercial revenue declined 0.2%, reflecting softer consumer demand and heightened sensitivity to promotional activity. At the same time, our unified commercial strategy continued to gain scale with consolidated digital GMV increasing 12.4% and year-over-year. After a strong start of the year, bond by the winter sale, sales performance during the quarter was impacted by 3 main factors. First, the main headwind remains a cautious consumer environment, amid a softer macroeconomic backdrop with customers continuing to prioritize promotional events and discretionary spending remaining selective. Second, as we continue advancing through the start of our new logistics facility, we experienced temporary operational challenges that affected the timely flow and store level availability of a range of imported merchandise. -- creating pressure across selected categories, particularly apparel and shoes. For additional context, sales of imported apparel and footwear categories declined 20% versus the prior year during the quarter. Third, performance was affected by the February security incidents center in Jalisco and extending across the broader Pacific and Bajio regions, which resulted in temporary store closures for 2 to 3 days, and the short-term suspension of certain led chain activities. Beyond these direct effects, the incidents also weighed on consumer sentiment through the following weeks. In addition, quarterly comparisons were demanding across both Liverpool and Suburbia, following growth above 7% in the prior year period. At Suburbia, top line performance was also affected by the decision to defer mid-season sale to April, better aligning promotional activity with product availability. While conditions have since normalized and corrective actions are in place, we expect a gradual recovery in operational momentum in the coming months. As a result, same-store sales declined 2.5% for Liverpool and 3.1% for Suburbia, driven primarily by lower traffic partially offset by higher average ticket. Category performance in Liverpool was led primarily by consumer electronics, including computing, cellular and TV as well as appliances and cosmetics. Home and apparel categories remain under pressure. Digital penetration reached 31.4%, representing a 3 percentage point increase year-over-year. Marketplace continued to provide incremental scale with GMV increasing 12.5%. At Suburbia, growing hardlines, particular motorcycles and electronics, partially offset weakness in women's apparel. Digital share reached 7.8%, representing an expansion of 160 basis points year-over-year, while digital GMV increased almost 15%. Underlying retail gross margin performance remained strong with margin excluding logistics costs, increasing 140 basis points year-over-year. Supported by disciplined merchandise management, including inventory control, promotional execution and a more favorable exchange rate environment. Results also benefited from Suburbia's decision to defer its mid-season sale to April, which provided a temporary margin tailwind during the quarter. These benefits were partially offset by category mix pressure resulting from the delayed arrival of certain imported goods. As a result of the previously described logistic challenges during the first quarter, we incurred approximately MXN 150 million in onetime expenses aimed at ensuring operational stability and service continuity across the supply chain. This amount was above our original expectation. Looking ahead, we now expect to incur an additional approximately MXN 100 million in onetime expenses over the coming months, bringing the total estimated impact for 2026 to approximately MXN 250 million. Even after this incremental logistics costs reported retail gross margin reached 30.9% representing an increase of 70 basis points year-over-year. As a temporary logistics headwind only partially offset the benefits of a strong merchandise execution and cost discipline. Consolidated inventory increased 9.9% year-over-year or 6.6% excluding in-transit inventory. This was partially driven by a deliberate increase in consumer electronics inventory to mitigate potential supply constraints in cheap dependent categories and prepare for expected demand peaks associated with the upcoming World Cup. Despite this strategic build, overall inventory levels remain healthy and aligned with going forward demand, supported by enhanced planning and assortment management. Meanwhile, our Financial Services segment continued to deliver strong results during the first quarter, with revenue increasing 11.6% year-over-year primarily supported by a 10% expansion in the gross credit portfolio and higher usage of our credit cards as a preferred payment option. This performance reflects the continued strength of our commercial integration strategy, which has increased the participation of our proprietary credit cards across retail channels. At Liverpool, sales finance to our own credit cards represented 51% of total sales, an increase of 190 basis points year-over-year. Suburbia also recorded an improvement of 290 basis points, reaching 35%. In parallel, we continue to strengthen our broader financial ecosystem through the expansion of additional financial services, digital capabilities and customer engagement initiatives further reinforcing card usage and loyalty. As a result, our active customer base increased 8% year-over-year, reaching 8.7 million cardholders. Effective this quarter, reported figures now include Minipagos within the active base, providing a more comprehensive view of the scale and reach of our credit platform. Minipagos is a fixed installment financing product designed for Suburbia customers, enabling purchases across both physical and digital channels through biweekly or monthly payment plans. Unlike traditional revolving credit products, it operates under an independent payment structure and does not include interest-free installment features. Its inclusion reflects the continued diversification of our credit offering and our focus on expanding access to financing across a broader customer base. Credit portfolio performance during the quarter remained aligned with our growth strategy. The nonperforming loan ratio reached 4.4%, increasing 70 basis points year-over-year in line with expectations and reflecting both external dynamics and continued portfolio. Risk metrics remain solid, supported by a conservative provisioning approach. Reserve coverage improved to 11.4% and up 130 basis points, while reserves covering nonperforming loans stood at 2.8x. In this context, credit loss provisions totaled MXN 1.5 billion for the quarter, increasing 25% year-over-year. This was mainly driven by portfolio growth, the higher level of nonperforming balances and our prudent reserve methodology. Despite this higher provision expense, the Financial Services business continued to deliver strong profitability, supported by healthy revenue growth and resilient operating trends. While our portfolio continued to expand under a disciplined underwriting framework that balances growth opportunities with prudent risk management. Our Real Estate division continued to deliver solid performance during the quarter with revenue increasing 4.4% year-over-year. Results were primarily supported by higher occupancy levels across the portfolio together with ongoing lease renewals and repricing initiatives that continue to enhance the revenue profile of our assets. Portfolio occupancy reached 94.6%, representing an increase of 200 basis points versus the prior year, reflecting resilient tenant demand and the quality of our commercial locations. We continue to optimize lease structures and tenant mix, supporting asset productivity and sustainable rental growth. Consolidated gross margin for the first quarter reached 41.7%, representing a year-over-year increase of 160 basis points. Performance was supported by favorable business mix dynamics including a higher contribution from financial services as well as benefits from inventory discipline, promotional execution and exchange rate tailwinds. These factors were partially offset by the previously discussed logistics efficiencies and a less favorable merchandise mix within retail. Operating expenses, excluding loan loss provisions, depreciation and amortization, increased 6.2% during the quarter. The main drivers were higher personnel and service-related costs, reflecting wage inflation and labor-intensive operations. At the same time, expense control initiatives continue to mitigate these pressures and moderate the base growth versus prior quarters, including provisions, depreciation and amortization, total operating expenses increased 7.5%, as a result, EBITDA for the quarter totaled MXN 5.1 billion, representing a year-over-year contraction of 6.2%. The EBITDA margin stood at 11.3% with a negative variation of 70 basis points versus the prior year period. Turning to Nordstrom. As a reminder, the recognition of our investment within our quarterly reporting cycle follows a 1-, 3-, 3-, 5-month schedule in order to align our respective financial calendars. Under this methodology, our first quarter results incorporate Nordstrom's February performance only. During the period, Nordstrom reported top line growth of 4.9% year-over-year, while adjusted EBITDA margin reached 2.1%, representing an expansion of 110 basis points versus the prior year. Beginning this fiscal year, reported results also reflect additional depreciation associated with a fair value step-up of certain fixed assets, consistent with customary purchase accounting treatment in transactions of this neighbor commonly referred to as pushdown accounting. Under this approach, selected assets are adjusted from historical book value to fair value, resulting in incremental noncash depreciation charges of $35 million during the period. Reported net loss for the quarter totaled $41 million. Excluding the previously mentioned noncash accounting effect, adjusted net loss was $14 million versus a net loss of $27 million in the prior year period, reflecting continued progress in underlying operating performance. In our financial segments, this performance was recognized through the results of associates line, contributing to a loss of approximately MXN 168 million for the period. Including Nordstrom's reported results, together with certain minor timing and accounting adjustments. In addition, we received a dividend payment of $9.3 million in March. Recorded within the Nordstrom investment line and representing a cash inflow during the quarter. We currently expect actional dividend distributions of approximately $28 million over the balance of the year continuing to support the overall return profile of this strategic investment. Nonoperating performance during the quarter reflected net financial expenses of MXN 1 billion. Year-over-year performance benefit from improved foreign exchange results, reflecting lower currency volatility, partially offset by higher net interest expense due to the lower average cash balances following the Nordstrom acquisition and a lower interest rate environment. After incorporating these nonoperating effects, consolidated net profit totaled MXN 1.9 billion representing a decrease of 17% versus the first quarter of the prior year. CapEx for the quarter totaled MXN 1 billion, representing a 55% decrease versus 2025. The reduction primarily reflects the near completion of the Arco Norte Logistics Center, together with the conclusion of various expansion and remodeling projects. Capital deployment continued to follow a disciplined allocation framework during the quarter, with investment primarily directed to our expansion and remodeling initiatives, the final phases of our new logistics facility and new store openings, enhancing our operating platform and supporting profitable growth. Operating cash flow during the quarter totaled MXN 572 million. The balance sheet remains strong with cash and cash equivalents closing the period at MXN 22.8 billion. Net leverage stood at 0.6x net debt the past 12 months EBITDA, reflecting a conservative capital structure and providing ample financial flexibility to support strategic initiatives and ongoing operations. As previously announced, on March 12, proceeds from our recent bond issuance were applied to the early repayment of the bond originally maturing in October 2026. In relation to shareholder returns, a dividend of MXN 2.95 per share was approved at the ordinary stockholders' meeting held on April 14, equivalent to 23% of 2025 net profit compared with a payout of 17% of 2024 net profit in the prior year. This increase reflects the strength of our balance sheet and our continued commitment to a balanced capital allocation framework. This dividend will be distributed in 2 installments. The first payment of MN 1.77 per share is set to be made on May 22, with a second payment of MXN 1.18 per share scheduled for October 9. In summary, our first quarter results reflect the resilience of our diversified business model, while retail performance was impacted by weaker consumer environment and temporary disruptions during the period. our financial services and real estate businesses continued to deliver solid growth. We remain focused on disciplined execution, the continued stabilization of our logistics platform and the advancement of strategic initiatives that support long-term value creation. We appreciate your continued interest, and we'll now open the call for your questions.

[Operator Instructions] Our first question comes from the line of Gabriela [indiscernible].

Gabriela from Goldman Sachs here. I would like to explore a bit more the same-store sales train this quarter and how that translates to you for your guidance. You mentioned a soft consumer demand, operational challenges with the important rise and the security incident. Could you help us just aggregate the relative impact of each of these factors. But also as we go into the second quarter, -- is there any early indicators of a better demand trend? Or do you see the full year 2026 guidance as achievable? And then my second question is also into the main trend. How you're thinking about the seasonal events such as Mother's Day and Road Cup and you mentioned the mid-season sale for Suburbia was deferred to April, which helped the retail margins. So how are you -- do you have any early feedback of this mission sale in April? And how should that impact your retail gross margins in the second quarter.

Let me start with same-store sales. We would not characterize the quarter as a structural change in Liverpool's competitive position, performance was driven by a combination of temporary and external factors that affected overall traffic. As I mentioned, the consumer environment remain cautious and customer concentrated their spending around promotional events. And second, we faced temporary logistics with dated availability issues in certain port categories, particularly in a parallel footwear. And third, results were measured against a demand and comparison base. As a reminder, Liverpool reported a 7.9% growth in the first quarter of 2025, while Suburbia reported [ 7.1% ] so the comparison doesn't help. At the moment, we are not providing an exact figure between each of these events. Now regarding the seasonal events, we think that these temporary items that affect our internal operations are already behind us. So we're optimistic on the seasonal events. And talking about the Suburbia mid season sale, we expect an uptick in sales during April once this promotional event is executed and minor contraction in Suburbia's margin.

Thank you. Our next question comes from the line of Melissa Bain.

Melissa Bain from Bank of America. I just wanted to ask if you could expand on the supply chain issues that impacted in ports, what happened? And I just wanted to confirm as well that the issues have been fully resolved? And if so, when did that happen? And then just to confirm again, on the margin impact that you anticipate for the second quarter. I think you mentioned a minor contraction at Suburbia, but maybe if you could be a little more specific and then how much of the first quarter gross margin expansion was more temporary or related to the timing of the promotion coming.

Let me start with the logistics. The situation was primarily related to the start-up phase of our new logistics facility. We experienced temporary execution some temporary issues in the execution of our imports operation. That impacted the timely distribution of certain imported merchandise to the stores, so as a result, the availability in some categories, particularly apparel and shoes was affected throughout the first quarter. So we do not -- our view is that this is not a structural capacity issue nor did it involve any material asset damage, it was mainly an operational ramp-up matter that are typical of a project of this size and scale. And that temporarily impacted the productivity and the service levels to the stores. So again that this started happening at the end of January. During the quarter, we had opportunity to implement corrective actions focused on things like workflows, systems, fine-tuning inventory prioritization and some additional operating resources to support overall throughput and a store replenish that. So as of today, operating conditions have improved materially and service levels have mostly normalized. So merchandise flows are significantly more stable now than what we witnessed during February. And -- so in that sense, we believe the most significant disruptions are already behind us. Now regarding margin, we remain optimistic on our gross margin outlook because the logistics issue affected margin into rance. On the one hand, some out of stocks we pressure on sales, particularly in clothing categories, the overall apparel and footwear. And second, delayed import time -- important merchandise we do the availability of fresh product at the store, which typically increases the average margin. So as the logistics become more stable, both merchandise availability and margin execution should improve. Now talking about Suburbia, keep in mind that Suburbia relatively low in the consolidated gross margin. So our expectation is an uptick in sales with a minor impact in the consolidated margin.

Our next question comes from the line of Hector Maya.

A follow-up on the operational challenges on availability of imported merchandise. What was behind that? I mean, we understand the ramp-up issue on your side, but what happened to the specific category of imported merchandise and also on the expenses to maintain supply chain continuity, could you provide more color on what specifically drove the MXN 150 million of nonrecurring expenses. Was this for expedited freight, alternative routing, enhanced security. Should we expect the same mix for the coming additional expenses? And also, could you please share more details on the state of the bottlenecks on imported merchandise.

So let me start with the logistics. The logistics facility is not a single operation. It's a very complex operation that has numerous operations under the same growth. So, as I previously communicated, about 80% of operation migrated from the old city to the new one. If you take a closer look at the 20% that was in the previous warehouse, one of those operations was managing of the imported merchandise. So we migrated the imported merchandise operation from the previous facility into the new one. So again, the size of the scale of these type of operations, we have some temporary inefficiencies on that operation that in turn caused the timely flow of merchandise to the store. So it's not the whole facility is an item specifically related to the important merchandise management that migrated from the previous warehouse into a new one. On the onetime expenses, your sense is correct. It's a combination of increased labor and increased rates. So the freight occupancy during the period were lower than it usually is in order to maximize the speed of flow of merchandise to the stores and also, we increased overall labor to increase the overall capacity of that operation. I would like to say that our outlook for the additional [ 10 million ] is the final stages of this operation as close to merchandise flows to them until the stores get normalized.

I understand. also on the financial business, we saw a solid revenue growth there. And you also had the increase in NPLs and loan loss provisions. You noted that this is within the projected levels and reflects portfolio expansion and seasonality. But considering the softer macro and the cautious consumer that you are seeing, -- are you noticing an underlying deterioration in consumer credit health? Have you tightened? Or do you plan to tighten your underwriting and origination standards in the coming quarters? And also, I know that maybe it's too early in the year, but how high is your conviction about your guidance for the year, particularly on the EBITDA margin range?

Well, let me start with the financial business. we have a very prudent risk management profile. So I don't think our appetite overall has changed. We have seen some early warnings about the deterioration of the overall other portfolio, and that's why we have increased our loan loss provisions. So as long as we can balance the loan loss provisions with the growth and the profitability of the portfolio. And as long as we continue to increase NPLs slightly below 2019 levels, I think we will continue with our current plans. Now talking about the full year guidance at this stage is it's too early to reassess the full year guidance based on the first quarter performance alone. While results for the quarter were affected by a number of temporary factors that I already discussed, the year is still in its early in its early stages and important commercial periods remain happen. So we will continue to monitor those operation trends including the normalization of our logistics performance and our upcoming promotional events, and we will provide updates in future communications.

Our next question comes from Ben Theurer.

This is Ben Theurer from Barclays. Just 2 quick follow-ups. So first of all, we've talked obviously about the challenges in the first quarter. But as we look ahead, and we're seeing like globally increased freight cost, transportation costs, et cetera, and you've pointed out a couple of issues here in the first quarter, the incremental $100 million you've just talked about. So I wanted to understand a little bit as it relates to just availability of importing goods that particularly come from overseas and the challenges on freight availability, ships, vessels, et cetera, how much of an impact do you guys expect in terms of sourcing some of the merchandise that you need, particularly in light of the issues that you had in terms of availability in the first quarter? That would be my first question.

Thank you, Ben. So the overall global constraints regarding logistics has had only a minor impact on our operations. I would say that these temporary issues are more related to our domestic operations rather than the overall global transit between our contract manufacturers in Asia and our shipments to Mexico. That's why when I talked about inventory, one of the impacts on the supply chain is that there's a difference between the inventory that is held at the stores versus what is held in transit because it reflects that the merchandise was in our warehouse, but the overall timing of the transit between the main warehouse and the stores was increased. So it's a domestic logistics issue, not an international logistics issue.

Okay. Understood. And then just following up as well and clicking a little bit into some of the digital ecosystem and some of the growth rates. Was there any particular reason for some of like the lower GMV versus last year as well. I wanted to understand a little bit what's been driving down some of the deliveries in short term, et cetera. It feels like there's a little bit of a shift in consumer behavior. So just understanding the drivers behind, a, the third-party sales within the ecosystem of Liverpool, but then also the specific stuff around your deliveries, direct deliveries, click and collect, et cetera, what are consumers currently shopping for?

Yes. Let me start with overall GMV. given our unified commerce strategy, there is no clear distinction between our physical channels or our digital channels. So one of the reasons why GMV decreased is also the availability of imported merchandise. Keep in mind that most of our softlines are shipped directly from the store. So if we have constraints on imported merchandise, it not only hurts our physical sales, but also our digital sales as the same constraints apply to both channels. So one of the advantages of being -- to have a unified commercial strategy is that we're able to attract customers and serve customers through several means. And the other way around happens when we have this type of issues. And I would say our view is that most of our reductions in things like Click & Collect and overall GMV contraction is directly related to the type of issues and the overall economic backdrop.

Our next question comes from the line of Alejandro Fuchs.

Alejandro Fuchs from Itaú Valore. I wanted to see, Gonzalez, maybe you can share your thoughts about the Nordstrom operation. What do you expect maybe for the year? Anything that you have talked to the team in the U.S., I think that will be also very helpful.

Thank you, Alejandro. Overall, we're very happy with the investment and the way the results are coming in. As I said, for the first month of their fiscal year, top line grew almost 5%, which is high for U.S. standards. EBITDA is improving and EPS would be also increasing if you exclude this adjustment on overall depreciation. So overall, we are very happy with the investment, and it's coming in slightly above expectations. As you know, we do not provide a guidance of the yearly Nordstrom results. But what I can tell you is that last quarter, we reported almost at MXN 2 billion benefit on our -- on Puerto Liverpool's results due to the Nordstrom operation was mostly offset by the PPA adjustments. But if you consider those almost MXN 2 billion for the quarter and projection, that can give you a range of what is our expectation for the full year 2026.

Super clear. Maybe if I can just follow up very quickly coming back to Mexico. Obviously, as you said, things on the consumer front are being a little bit, let's say, weaker maybe to start the year. I wanted to touch maybe on competition in Mexico, both online and at the store. Anything that is worth highlighting that you're seeing that is different to start the year in terms of competitive environment? Anything that caught your attention during the quarter that is -- I think that could also be very helpful.

Yes. As you know, retail space in Mexico is very competitive. And we are competing against formidable players who are really good at what they do. At the moment, I don't -- we haven't seen a significant change during the first quarter, and we do not believe our first quarter performance represents a share erosion from us rather than this combination of external and internal factors. So even though the overall economic backdrop is not great, and we see the consumer environment remains very cautious and very focused on promotions. We continue to see overall resilience in employment levels, formal wage trends and overall credit usage, which provide underlying support to consumption. So we are seeing also a healthy performance around promotional events in categories tied to technology and appliances and beauty. So we expect demand conditions to remain mixed in the near term with a gradual improvement as the year progresses, assuming a stable macroeconomic backdrop. So the only thing that I will add is that our focus remains on execution and maintaining flexibility to respond to these type of things.

Our next question comes from the line of Antonio Hernandez.

Just a quick one regarding the Minipagos that is now being included within your base. Is this because of a shift in your strategy or maybe you're promoting more this type of financial services? Any color on that?

Thank you, Antonio. No, I think we are starting to report that externally because it reached the 200,000 customers. So we believe now that is large enough to be reported as part of the -- of our current portfolio rather than an initiative. So it's kind of -- it's being graduated from a project into our base. And -- but talking about customers, we are excited about this Minipago. So this is a product that was tailor-made. It was designed for Suburbia customers that is enabling purchases across our unified commerce platforms. And what is interesting is that it does not include interest-free installment features. So it has a different credit profile than our current credit cards. And that's -- and given the milestone that was reached during the first quarter, that's the reason why we started reporting it.

Okay. And given this macro backdrop that you've been mentioning, do you see maybe consumers more willing to enter into these type of agreements?

Yes. I think there are some signals in the economic backdrop that are encouraging, like overall employment and wage increases, but also credit usage. And as one of the relevant players in that space, credit usage also translates to us in higher credit usage, which provides support to overall consumption.

Our next question comes from Alvaro Garcia.

Alvaro Garcia from Banco BTG Pactual. A couple of questions. First, just kind of like a housekeeping thing on the number of Liverpool Express and the number of boutiques there we saw a pretty significant shift there. Just maybe you reclassified some in the press release that there was a big uptick there. And then on the consumer environment, -- now obviously, it's been discussed a lot this call, but I was wondering if you could maybe provide some color from a geographic standpoint. We've had a lot of feedback about same old sort of performance in the North and specific weakness in the South, including tourist zones, which maybe wasn't the case in the past. So any sort of color on sort of your performance by geography would be greatly appreciated.

Thank you, Alvaro. From footprint expansion, we have been opening Liverpool Express. So we are committed to that new format. We think it's very convenient for the customers, and it's helping us reach a number of customers that weren't necessarily included with our previous footprint. And that's why we have opened so many of them. So yes, in the last quarter, we went from 44 to 69 locations. And in terms of the specialized boutiques, we have also opened a few of these boutiques to expand the reach of the portfolio. And that's why you see an uptick on the number of specialized boutiques. Now talking about geographic standpoint, during the quarter, the security incidents that happened in February affected primarily the state of Jalisco, but it had an impact on the overall Pacific states and the overall Bajio region. And it wasn't only the store closings of 2 to 3 days, but also that it had like a continuous effect throughout the following weeks, where we saw a reduction in overall consumption. And that has been reflected in some of the tourist parts. If you've been following the hospitality industry, there are a number of reports indicating some warning signs. And I think that, that reflects also in consumption in some of these areas. And also you mentioned the South, I think where there was an oil and gas industry presence in some parts of Southern Mexico. We have seen some reduction in overall demand for a number of quarters as of today.

And I guess just one last follow-up would be, you've repeated on the call today about how you don't think this is reflective or this quarter's results is reflective of sort of structural share losses or share losses in general. It's very specific to all the items discussed on the call. Have you -- or could you -- I'm sure you have internally, but would you be able to share could you quantify the one-off impacts on this quarter from a sales standpoint, that would be helpful. If you can't totally understandable, but if you maybe could give us sort of what a pro forma sales number would look like in your mind, that would be helpful.

We're not providing that type of details. We have some internal estimations, but we're not in a position to share them internally. What I would say is that we expect -- we're optimistic about the upcoming quarters, and we do not expect these internal issues to hinder our ability to serve customers in the upcoming months.

Our next question comes from the line of Renata...

Here, Renata from Citi. So my question is a follow-up related to Arco Norte. As the investment cycle has been concluded, what we can expect in terms of efficiencies? And if you have KPIs that we should look structurally for now on to see the company capturing that would be really great.

Thank you, Renata. We see our Arco Norte facility as a key piece to our overall network in the upcoming years. It's a very large and very complex operations. So in the short term, we're focused on stabilizing the operations that we already have in there. As you can imagine, most of our attention has been directed to optimize the imported merchandise operation and ensure timely flows into the store. I think we will be in a position to start working on efficiencies regarding overall labor freight and store availability within the upcoming months, but we're not providing a guidance on specific KPIs.

Our next question comes from the line of Emiliano Hernandez.

Just to follow up on the Nordstrom question as we approach the 1-year mark since the stake acquisition, what key learnings have emerged? And how are you incorporating them into Liverpool, particularly? Anything material on e-commerce, loyalty or supply relationships there? And also somewhat repetitive, but on same-store sales, can you talk about how April is trending so far, just to confirm that you are seeing sequential improvement there?

Let me answer the Nordstrom question first. We have been doing a lot of benchmarking regarding a number of operations. But at the moment, we have not had any significant effect on either Liverpool or Nordstrom due to these factors. It's a long-term initiative. So we do expect some benefits, but nothing material as of this first quarter. And regarding same-store sales in April, our Venta Nocturna event just finished, and we are going through the process of analyzing those results. But as I said, we're optimistic about our future performance given that our view is our internal issues are mostly behind us.

Our next question comes from the line of Joe Thomas.

It's Joe Thomas here from HSBC. Two questions from my side. First of all, on the real estate business. Occupancy is up despite the consumer environment being weak. Can you perhaps just help us to square that circle and understand what's going on there? Are you having to get better terms? Is there a risk that it could deteriorate in future? That would be the first question. And then the second question regards inventory risk, obviously, up 9.9% in the quarter. I just wonder how exposed you might be now in a weak consumer environment to having to discount that more heavily?

Thank you. In the real estate, I think it's a reflection of our overall commercial effort. As you know, we have 30 locations that are very attractive to the market and provide a very good option for tenant customers to come in and establish themselves in those locations. So our view is that it's a function of our overall attractiveness and the quality of our assets. And we're not seeing a decreasing trend on overall tenant appetite. Now turning to inventory. Part of this inventory increase is completely deliberate. -- particularly in consumer electronics inventory. We were forecasting some constraints in chip-dependent categories like computers. And also, we expect a temporary demand peak associated to the World Cup. So in order to prepare ourselves, we did a deliberate inventory -- overall inventory increase in those categories in order to be prepared to satisfy that type of demand. So at the moment, we're not worried about the overall health of the inventory.

So just to clarify that, the inventory build is not really related to the disruption in the distribution facility. It's really planned for already.

Well, I would say there's a portion of both. However, none of them is material enough to represent a significant risk on our future margin.

We have time for one last question from Andrew Ruben. Please state your company name...

Andrew Ruben from Morgan Stanley. Most have been answered. I guess just to get your latest thoughts on capital allocation, we saw there was the approved dividend and the payout is about 20% of net income. And now that you're past, I guess, the Peak Arco Norte spend also funding the Nordstrom stake acquisition, I'm curious a sense of updated capital allocation priorities and what you would need to see to consider perhaps a greater dividend payout in the coming years?

Thank you, Andrew. Every year, we assess our current position, the strength of our balance sheet and our commitment to maximize investor return. So that's why we decided to maintain the dividend in pesos per share, which translated into an increase of last year EPS. Our view regarding capital allocation is that we want to balance shareholder return and to provide the company with enough balance sheet flexibility to be able to support potential business expansions and support the current business. So that's a discussion. It's a complicated discussion that we have on a yearly basis. And that's why as a result of those discussions, we decided to increase the dividend to 23% of the previous year's earnings.

That concludes our question-and-answer session. I would now like to hand the call back over to Gonzalo Gallegos for some closing remarks.

Thank you for your interest and for joining us today. We appreciate your continued interest and support, and we will look forward to speaking with you in the next quarter. Good day.

That concludes today's call. You may now disconnect.