Grupo Casas Bahia S.A. ($BHIA3)

Good afternoon, and thank you for waiting. Welcome to the earnings call for the fourth quarter of 2025 at the Casas Bahia Group. [Operator Instructions] I'd like to inform that this call is being recorded and will be later published in the company's RI website, ri.casasbahia.com.br, where you can find all the material from this earnings call. You can download the deck on the chat icon and the slides are also available in English. [Operator Instructions] I would like to highlight that all the information and any statement made during this earnings calls connected to business perspectives, forecasts, operational and financial targets for the company are beliefs and premises from the management of the company, and with the information that is currently available. Remarks about the future are not guarantees of performance. They are connected to risks, uncertainties and premises because they are connected to future events and depend on circumstances that may or may not occur. Investors must understand that the overall economic conditions, market conditions and other operational factors can impact the future performance of the company and lead to results that can have a material differences from those disclosed today. Today, we have with us company's executives, Renato Franklin, CEO; Elcio Ito, CFO and RIO; and Gabriel Succar, Investor Relations Director. And now I'll hand the floor to Mr. Renato Franklin.

Good afternoon, and welcome to our earnings call to discuss the results of the fourth quarter of 2025 and the fiscal year of '25 as a whole. Before I start my presentation, I would like to cover a very direct perspective. Two years ago, when we started our transformation plan, many would question the viability of the Casas Bahia Group. Today, with BRL 3.8 billion less debt and a leverage level of 0.4x pre debt over the EBITDA, 9 quarters in a row with operational improvements. This discussion is behind us. The moment of just surviving is behind us. In the fourth quarter of '25, as you will see throughout the presentation, we delivered a record GMV of over BRL 13 billion, an 8.7% growth. Our online channel accelerating more than 20%, driven by our 1P strategy and the opening of new channels, just like the partnership with Mercado Livre. At the same time, we are gaining share in our core categories with the right price positioning, leading more than 3.8% gains of market share in television, more than 3.8 points of gain in appliances and a gain of share in all our core categories. Our adjusted EBITDA grew 38.1%, leading to BRL 1.8 billion in operational cash flow in the company in the fourth quarter. And again, it's important to make a note here. I know you noticed that EBITDA was below some expectations. We gave you full disclosure of non-recurrent events. And I want to be transparent, our gross margin reflected a stronger growth mix on the online channel, which brings us different margin from brick-and-mortar stores. But this is a conscious strategic decision by the company. We are building scale on our digital channel that combined with Casas Bahia adds marketplace, 3P and financial services. Our online credit service will lead to more value generation to shareholders than using the percentage margin in the short term. It continues -- our credit options continue to be solid even in this challenging scenario. We're going to see the best level in 2 years and the portfolio growing 7% with record production in 2025, more than BRL 10 billion in clean credit with our proprietary credit model that's very advanced and a stable default level. Each one of our more than 1,000 stores is a logistic hub, which is certainly a differentiator for our online channel. They are also an experience store and a credit store. This asset, our digital competitors cannot replicate. So we will be a relevant partner for every digital player that wishes to gain national scale. And the message I have for you is simple before we start our presentation. We delivered what we promised in terms of capital structure and operational discipline. Now, with this solid foundation, we have, as a priority, to transform this improvement into positive profitability. We are sure about the path. We have identified the lever and the execution is ongoing. And every quarter, you'll be able to see consistency in the execution generating results. Next slide, please. Now I would like to cover 2 important milestones from 2025. The first one being the consistency in execution, a robust execution that reinforces the power of this brand and our competitive advantages; commercial scale, logistic infrastructure and our credit solutions that allow for this company to deliver consistent results at every quarter. And the second one, a transforming one has to do with the structural reduction of our debt level. Two movements that took place in 2025, one in the third quarter in August when we did our first debt conversion and the second one in the market that was concluded on December 31. We achieved a reduction of more than BRL 3.8 billion in our debt -- net debt, which gives us savings in cash of over BRL 7 billion in the next 5 years, which is transforming for the company and will certainly unlock improvements at different operational activities, improving our negotiation, giving us more flexibility for promotional actions and for operational strategies in this company. Next slide, please. So we go over the highlights of the fourth quarter. These are very relevant highlights. We've already mentioned this, but we reinforce our record GMV of BRL 13 billion, 100% from the core, focusing on our main categories and much better results than we had twice as much categories with a better margin, a growing EBITDA and a generation of operational cash flow that is stronger, BRL 1.8 billion in the quarter with a liquidity balance also evolving in comparison to the previous quarter. We had the beginning of the partnership with Mercado Livre, which has been contributing with great lessons for us, encouraging the organic traffic of customers who see our brand in Mercado Livre and migrate to our app and website. We gained total market share, 0.6 percentage points online, which is relevant and in the categories more than 3 percentage points. The reduction of our debt level was transforming. Reduction of our leverage was transformative and the growth of our credit portfolio with a stable default level, reinforcing how disciplined we are in granting credit. And now let's take a closer look at GMV and the different channels. Physical stores, same-store sales of 2.6% in the quarter, and we have to remember 2 things. The fourth quarter of '24 gave us a strong comparison base. We had grown 16% in same-store sales at that time, which certainly impacts the fourth quarter of '25. And when we have a challenging macroeconomic scenario with higher indebtment level at families, this put pressure at the base of the pyramid, which tends to go to physical stores, and that has an impact in sales. But our discipline in credit also delays the growth in sales in physical stores. So, we believe that physical stores will start to present a more robust growth once we see an improvement in the macroeconomic scenario. We are not going to grow at any cost. We have a commitment with the bottom line with profitability and not with growth. Now on the online channel, a 25% growth. And I would like to highlight that for 5 quarters in a row, we have been presenting growth in our online channel. Mercado Livre started working with us in November 2025, but they represent less than 5% of the total company's GMV. So we're growing in every channel, which gives us an operational leverage, and we'll start talking about cash margin that becomes net profit because sometimes the percentage margin is lower, but it certainly contributes to the operational leverage of the company, distribution of fixed cost and value generation for shareholders. 3P, very strong, which reflects our audience. We are a destination store for the purchase of appliances, technology and furniture, and we grew a lot in the fourth quarter of '25 as well. Casas Bahia becoming an important channel for the whole industry selling appliances with an additional assortment to our core. With specialized players, we need to offer all models for the categories. But the model that generate a return as 1P, we acquire; and the models that we're still uncertain about the return, we choose the 3P strategies. And when we reach a certain volume metric, we then transform it in a 1P model. So, a relevant gain in market share. Now let's go to the next slide to discuss our main business to generating value in the company. Our credit, our buy now, pay later option, BRL 6.6 billion in our portfolio, generating BRL 10 billion in 2025, a milestone that's also very important because a few years ago, we were producing BRL 300 million a month, and now we are at BRL 900 million a month, some months going over BRL 1 billion. So a very powerful growth even with all the discipline in credit granting, keeping default levels below 9% like we have committed to with a controlled PDD quarterly loss under control and production growing. Obviously, we see -- an improvement in the macroeconomic scenario will allow us to open this tap a little bit further and generate more growth to physical stores to our credit products and to the online channel. And this is an important difference. Over the quarter, we reinforced our online credit structure, which gives us even a bigger addressable market with a similar profitability of the physical stores. So we do see a huge potential to keep on growing with credit. And now on the next slide, I would just want to reinforce the company's capabilities and how robust our mathematical models are when it comes to granting credits to consumers. Look at the default level at the company, the blue line, 8.6%, the indicator over 90%, comparing the same indicator with similar products. In the red line, we see the total market overdraft had improved a lot from the first quarter of '24 to the first quarter of '25. And now we have reached 17.2%, and our level remains stable. And credit card installments also got 300 basis points worse and ours have remained stable, showing that, yes, there is a demand for credit, but we are not going to accelerate this process until we are comfortable that we are growing this, keeping the right default level without running into unnecessary risks. Now with a better capital structure, we're going to keep this discipline, so we keep improving with consistency in the long term quarter after quarter without looking for a major leap overnight. And now I'll hand the floor to Elcio on the next slide, so we can discuss the relevant transformation in our capital structure. Elcio, please.

Thank you, Renato, and good afternoon, everyone. Thank you for coming. Many positive highlights in this quarter, as we just heard, but without a doubt, the most relevant one being the decisive step in the transformation of our capital structure. Different from previous quarters, I would like to start with this topic specifically. Starting in August '23, when we launched our transformation plan, we have seen that the capital structure has become a key point in our management. And since then, we have gone through several evolution as we evolved our operational performance. Over the last 2 years, we have had several examples of advancements in our debt profile, the most relevant one being the one we concluded in December 31 last year with the renegotiation of the 10th issue of debentures. Let's go to the next slide, please. This is the most relevant picture of all. Renato gave you some details, but our operations in December combined with the first conversion of BRL 1.6 billion done in August, truly transformed structurally our balance. So, in the second half, we reduced our net debt from BRL 4.95 billion to BRL 1.13 billion, meaning a BRL 3.8 billion reduction or 77% of the total in just half a year. In terms of financial leverage, we ended the year with 0.4x compared with 1.9x in the third quarter of '25 and 2.2x in the second quarter of '25, meaning a much more comfortable level, very different from the situation we had in the recent past. And another data to help us understand the size and magnitude of this transformation, like BRL 7.7 billion in savings in cash over the next 5 years. From the -- actually from the 10th issuing we made. So I just wanted to record our thank you to all stakeholders who have contributed for this transformation to be possible, especially to our debenture holders who participated in the operations throughout the year, but also to the banks, credit insurers, shareholders, vendors and customers who have trusted and continue to trust us. Let's go to the next slide now. Here, we see our amortization schedule for our financial debt. On the left side, the previous schedule and on the right-hand side, the new schedule after the transformations. And so the transformation between the 2 graphs is quite visible. I just want to clarify that for 2026, BRL 146 million that we see here have already been liquidated. So, we don't have any relevant debt -- financial debt to expire in the next 5 years, which brings us another perception, and it is another structural change in the company versus what we previously had. So, this transformation has hit many different dimensions that we would like to share with you because certainly, they will impact the operational benefits that Renato mentioned. When we talk about BRL 7.7 billion of savings -- cash savings in the next 5 years, these are the direct impacts coming from these operations. But on the next slide, it becomes clear that there will be other benefits with this new balance profile. For example, we have already renegotiated a reduction of almost 4 percentage points in most of the funding lines for our credit. So these are benefits that come, of course, from this transformed balance profile. And the idea is to reduce even more financial waste in the company from now on with a lower risk, obviously. So, we already see this impact even before the announcement of this new balance when we were watching these structures, we already see the capture of this benefit at a lower cost considering the new risk level we have. We also announced to the market the migration of BRL 1.4 billion from short-term revolving lines for a 2-year term line. So with that, we reduced the risk of short-term refinancing, bringing more stability for the financial management, bringing predictability and stability in the financial management of the company. And just from this operation, we have a pro forma. It's still not fully executed, and it's not part of the fourth quarter, of course, but at short-term debt level that drops from 59% to 28%. In absolute terms, the short-term debt is now BRL 1.2 billion comparing with the liquidity of BRL 3.4 billion we have presented. So, lastly, this improvement in our capital structure is not a conclusion actually because this is a continuous process. And now we start a new moment with focus on other areas to keep reducing financial waste and providing different structures, so this balance become even more robust. So we have gone through a very important stage, and we're starting another one, a stage of optimization, flexibilization so we can gain even more cash with a more flexible balance. We've mentioned this before. We do the consumer financing business quite well, but we have other fronts in terms of suppliers that we can also monetize our ecosystem to our favor. Now, let's talk about the second chapter of our results. Perhaps 1 more slide. So, in parallel to this transformation in the balance sheet, we are delivering our ninth quarter in a row with margin expansion. On the left-hand side, we can see revenue numbers, and we'd like to show you this slide because it clearly shows the evolution quarter after quarter. So, I'm not going to repeat what Renato already mentioned. So, we saw an expansion in revenue with record GMVs in the fourth quarter. On the right-hand side, we see our gross profit of BRL 2.7 million and a gross margin of 31.5%. A highlight is our SG&A, the lower left-hand corner as a percentage of revenue, dropping 1.3 percentage points year-over-year, highlighting the operational leverage and the discipline in expenses despite, of course -- despite the growth in revenue and the inflation of more than 4% in the period, operational expenses in nominal values have remained stable. And this is a challenge we have posed for this organization recurrently, how we can capture the efficiencies because there are still many to be captured, but this is a slow, gradual process going down to the details of every process. Our adjusted EBITDA has reached BRL 826 million with a 29% growth versus the previous year. And it's important to mention, many of you actually highlighted the positive impact here. At the same time, we have this migration online with slightly slower margins, but we will keep advancing that as we evolve credit and services here as well. Next slide. So, here, we can see the comparison, the annual comparison from our results. And the same idea applies. We see this consistency in growth with our gross margin a little bit above 30% and a very well disciplined SG&A, which is converting operational leverage into our adjusted EBITDA with a year-over-year expansion of 1.6 percentage points. I just would like to highlight our net loss and our adjusted net loss when it comes to income taxes. We suffered a negative effect of BRL 1.45 billion when it comes to deferred. So, every year, we do studies on the balance of our income tax, how over time from future taxable incomes, we can use this fiscal credit over time. So, in our baseline scenario, the realization of these credits happen in a horizon under 10 years, very much in line with the term we had last year. However, in the geopolitic landscape we have right now with a high degree of uncertainty, we have done some stress tests. And in these simulations, we consider the macroeconomic premises that were more adverse. And in our business, when we think about macroeconomic premises such as interest rates and inflation, they impact not only financial expenses, but it comes all the way from the top line, impact in default levels, credit and our net results. So, in a moment with growing interest rates, we have this financial impact on the business. And as we see this scenario with lower interest rates, we also reap all the benefits in all our business lines. Now, for this new scenario, I mean, considering the geopolitics of today, in a very conservative and cautious way, the company recognized a provision of BRL 1.04 billion. This adjustment doesn't have a cash effect, 0 cash effect. It pretty much changed the economic generation of the company. And in the future, as we evolve with our results and as the scenario becomes clearer, we could also revert the provisioning as well. So, net losses at the quarter was BRL 1.5 billion. If we exclude this specific effect from the deferred income tax, the net loss would be BRL 79 million, but we reported BRL 3 billion, and the adjusted one, BRL 1.5 billion. And now for my final slide, before we open for questions. Last but not least, we had BRL 1.8 billion in the generation of free cash flow in the quarter, an increase over the last year. In the actual results, BRL 2.2 million, the largest cash generation of the company in the past few years. So, on the right-hand side, we can see the trajectory and even the EBITDA numbers on the bottom, just to show you that little by little, we have this growing trend with a big focus on our management and our commitment to find efficiencies and capital allocation remains the same. I think we are past an important stage, and it was a requirement to get over that. So we get to the second stage that Renato will now comment on. We have gotten this far and now we are working for a more recurrent profit profile with a very positive cash generation. And considering the size of this company, it's important to take a step-by-step approach when it comes to those changes. Renato?

Thank you, Elcio. Next slide, please. Another one. So, for the take-home messages, I just want to recap what happened in 2025. 2025 was a very intense year with a very challenging macroeconomic scenario and also challenging in the microeconomic scenario and everything we needed to do in the company. It was a year with great deliverables. When we look at the transformation in our capital structure that Elcio mentioned, combined with a record GMV level, our growth in EBITDA, our growth in credit with the full levels under control and our operational cash flow and the full transformation in the capital structure again, this was truly a year that made us certain about our ability to execute. And by the way, I'd like to thank our team and all the stakeholders who are supporting this journey. Next slide, please. And now I want to focus on what's to come when we look at 2026, what can we expect to deliver. First, I'll say it again, we delivered everything we promised in terms of operational discipline and transformation of our capital structure. We have proven to have a strong execution. Now, we have a solid foundation and our priority is to convert all these improvements into a positive net profit. And once again, we have clarity on the goal. We have clarity on the path and on the levers necessary to get there. There are many levers. We have a large 2-year program that we call CMC27 that will transform this company. But in a simple way on this slide, we have 3 main levers. First, improving our financial results with a reduction of financial expenses. We have already transformed our balance, and now we are working to reduce our spreads, increase our credit limits, which is a very positive thing for our stakeholders that will improve our working capital, monetizing assets. There are many assets that did not have an advantageous monetization for the company, and we are changing that. Increasing of payment terms with suppliers. This is already happening. We have more suppliers, which allows us to have a more favorable negotiation because we have more players fighting for the same market, optimizing the turnaround of our stocks because I open more channels and I can improve stock turn and the drop in the interest rate, which has a direct impact on us. And it also has an indirect impact, which is much greater than the direct one contributing for the improvement in sales in our physical stores and the growth of our credit revenue. The second pillar is connected to that growth. So regardless of the macroeconomic scenario, we will capture operational leverage, which is translated in an expansion of our cash margin. The cash margin that each sale leads to the company. The percentage margin varies from channel to channel, but we will only sell with a positive contribution margin. For 9 quarters in a row, we have been delivering growth in our cash margin and our EBITDA margin. And the opportunities now include new partnerships with an increase in e-commerce relevance. Our share of e-commerce used to be half the store. We had 26%, 27% of market share for our core categories in our physical stores. Of course, in some regions that will get 50%, but others still have a lot of room to grow. But online, we had 13%, 14%. So, our online market share will continue to grow. We have a lot of operational leverage to capture those improvements. With better scale, we can have better negotiations because as we sold more than planned and we grew sales and establish new partnerships, this certainly improves our negotiation power with the industry to make the right adjustments for the new mix of sales channels we have. It's not going to happen overnight, but we do see opportunities that now with a better balance sheet, more credit and more suppliers, new players in the industry finding a better balance on our investments. So, the company's margin is protected even with a larger mix of sales happening online. And our third one more to this company, what we wish we had done before. But now with the transformation of our balance sheet, we have the right energy from management to focus on that. We will make great progresses in credit and services. We have increased our portfolio to BRL 6.6 billion. We have adjusted our digital credit offer but we still have a lot of opportunities of improving execution, both in physical stores to increase share as well as in levers to bring new credit consumers to our physical stores and our digital ecosystem to improve this whole journey that will certainly impact the conversion of these credit customers, generating sales, profitability and as a consequence, contributing because there is a greater penetration of services. So, it certainly can contribute to more sales of services and insurance and bring a real contribution to profitability. So, these are the 3 main messages before questions. So, consistent operational execution, the transformation of our capital structure, which is concluded and our monetization of the ecosystem. So we are preparing it to be the engine of the profitability for 2026. Having said that, I would like to open for questions. Gabriel, if you could please help us organize the queue, and thank you again for joining us.

Our first question comes from Pedro from XP.

Two important topics that I would like to cover. First, it's clear that the online volume has grown a lot in the quarter. And if possible, I would like for you to break down how much of that came from Mercado Livre. I think it's less than 100% of the total GMV. But I also want to understand the economics behind that. Because initially, you mentioned that there will be some pressure on the gross margin, but that could be offset on SG&A. So now that you have more visibility almost 5 months of the partnership with Mercado Livre, do you have anything to share with us on that note? I think it can help us with margin projections for 2026. And you mentioned the levers quite thoroughly. I imagine you're going to keep on mentioning that in the near future. But on the other hand, considering the greater volume and in terms of capacity, what are the gaps that, in your opinion, still need to be addressed in terms of investments? Any incremental investments for 2026 that you deem necessary? Or is the company already ready to deal with this larger volume? I think these are the 2 questions I have.

Great. Thank you, Pedro, for the questions, and they are certainly essential to help us understand the thesis of this company and the profitability of our channels. It took us a while to enter a relevant channel like this because we wanted to make sure we could have a contribution margin and value being generated. So, as mentioned before, the company's online channel are actually many channels. We have our proprietary channel. We have partnerships with other marketplaces inside banks, loyalty programs, each of them with a different contribution margin. And even in our proprietary channel, there are different sources of customer acquisition. We have our organic customers that bring a lot of profitability, customers who come via influencers, paid media et cetera. Mercado Livre positions itself pretty much on the average of our digital channel. So, it's better than half of all the channels that we have with a positive contribution margin, in terms of direct effect from sales via Mercado Livre. But there's also an indirect effect because it brought a lot of visibility to the brand, and it generates an organic traffic to our website and app. It's important to reinforce that all customers continue to have a direct relationship with the company. We do the billing, the delivery is done by us. Wholesale services are provided by us. So, it is a company customer that we can reach through different sales plans. This also brought us more information, of course, and created the opportunity for developing new channels because it certainly improves our ability to optimize the ecosystem we already have and stock levels we are -- already available for the digital channel. Now going to your second question, I think there's a connection because we do see a lot of growth potential in our digital ecosystem as a whole. If we look at the agentic e-commerce we launched in November, it also brought a relevant additional growth. Since week 1, we achieved important results. Operations have been happening for 3 months with a consistent evolution. The average operation is above the average of our salespeople. So, compare Mercado Livre and online and agentic commerce with our sales team, it's an additional channel. It's not a replacement, but it generates additional sales with the contribution margin. We don't see a need for investments in infrastructure. We have idle capacity that allows us for this operational leverage. That's why we see the dilution of expenses. We can invest in technology, but at a level that we already had. So, when we look at the year's capex, it's going to be similar to the levels we had in the previous year. Again, with a focus on the digital journey, AI tools, some of them pay for themselves quite fast because of productivity gains. Some levers brought 90% of productivity gain, for example, certainly improving the efficiency of the company. And there are many others as well, other -- some small other bigger, but all with a very significant material gain.

I just would like to add, Renato, because you went quickly over this. But from the economic perspective, it's important to mention that, Pedro, we use the same stock for our online channel. Since we do the logistics, this is very important because with that, we can have a greater stock turn and a more efficient stock turn because it's a different channel, and I can have a mix of products that I want to decide to sell here or there. So, we do have that pricing tool and audience definition tool. So stock management, thinking about ROIC and integrated capital is certainly an important channel with a margin that is even better than some of our online channels. It's pretty much average, but we can see the growth, which is the topic of the day. We need to grow with profitability. And the online world certainly brings its challenges. But as we improve our credit offer and as we improve these other channels, we can reduce the so-called detractors or those with a lower margin, and we can advance for a more adequate profitability level.

And there's one more thing. Every growth in the online channel certainly helps us dilute our logistic costs because every store functions as a mini hub doing logistics, which certainly improves our competitiveness of our in full option. You're going to see a transformation this year when it comes to logistics services revenue and a dilution of the costs that in the end makes the company more competitive. So it's a win-win that profitilizes all the ecosystem. That's why you have to look at the contribution margin and the reduction that it brings to the whole. This is the business model for the company.

Our next question comes from Gustavo from Bradesco. I actually have 2 questions. First, about the working capital dynamics of the company under 2 perspectives because with the improvement on your leverage with a more balanced scenario, how is that impacting the relationship with suppliers in terms of terms, mix of products? So if you could give us some color on that, it would be great. And also to understand how you think of that over the year. And the second question is about the seasonality of this year. We have World Cup in the second quarter. I want to understand how you are going to use the seasonality in terms of working capital? And how -- what can we think about in terms of stock investment? And perhaps if I may add another question about the online channel. It's become clear that the online channel is growing more in your core categories for quite some time now. And I want to understand your company's strategy from now on, if you're going to keep on exploring this with your partnership with MercadoLibre or if we can expect other types of partnerships perhaps.

Thank you for the question, Gustavo. Let me just finish my notes. Otherwise, I'll forget your question. So first, working capital dynamics, and I think Elcio can give you more details. But without a doubt, improvement with the leverage and balanced certainly helps us because it impacts working capital and gross margin because, again, we grew fast. And the macroeconomic scenario was very challenging in 2023. We had issues in the industry, which impacted credit. Our negotiation many times was limited because you would buy at the credit limit that you had with each supplier. So that additional investment that usually happens in retail when the industry wants to accelerate sales was limited because there was not much credit in the market to accelerate sales and then sell you more. Now what saved us is that we brought new players and certainly improves the dynamics in a structural level because we have new players in all categories. And now we start to see a very positive impact in terms of credit improvement and credit limit from each supplier, whether through insurance or open risk, which is that clean credit from suppliers that we had in the past, it's basically disappeared in 2023. And now it's back in pretty much all suppliers. Just 1 or 2 still not offers it, but we are discussing approval. And it certainly allows us to have more flexibility in terms of the negotiation. And so limits, they go down in an elevator, but it goes up in a stair wheel, as I often joke. So nobody is going to double the limit overnight. But it allows us to go over the seasonality. And the seasonality actually helps us take a slightly bigger leap. So initially, the increase of credit limit allows for you to buy what you need for the seasonality, and you have some buffer to have more flexibility in the negotiations and improve your commercial margins. So that's how we see the dynamic over the year. And now going to the second part of your question, how seasonality can impact our working capital? Over the year, we see it's natural to capture improvements in working capital, whether through the better terms with our suppliers or a greater efficiency in our stock turns because now we have more digital channels. And we have a centralized stocks for online channels, which certainly helps us optimize the stock. The World Cup will impact purchase just like Black Friday, but with a bigger concentration in television. Screens is our very strong category in Black Friday, but also mobile phones and the impact in mobile phones is not as intensive as it is in screens when we think of appliances, but we will prepare our stock for the World Cup. World Cup is in June and July. So the stock is going to be built over the second quarter. So the beginning of the second quarter, we see some more receivings. And possibly, we're going to end the second quarter with a slightly higher stock level, which will be normalized in the third quarter, and then we start preparing for Black Friday. So it's almost like 2 Black Friday events in the year with a great investment from the industry. Everyone is highly excited about the World Cup, which, in my opinion, is an important nonrecurrent event, especially considering the difficult macroeconomic scenario. We don't see this as a positive year from the macro perspective. We see that the company will keep gaining share. And we also see this one-off movement of the World Cup, which is relevant. We estimate that the Screen category is going to grow almost 15% this year just because of the World Cup. So it's certainly a relevant growth, and this growth is expected to be concentrated both in the second and third quarters. Now in your question about online channel and our strategy in terms of partnerships, we understand that our overall strategy is to be the largest 1P in Brazil in appliances, technology and furniture; biggest buyer, biggest seller, considering all competitive advantages, which is the best and biggest logistic infrastructure and a great credit portfolio. So to be the largest 1P, I have to push all channels. And we have one big channel coming up. If we divided this in 4 blocks, we have the physical stores, which is very important, where we have the experience, it's a showroom, a lot of credit, depending on the macroeconomic scenario. Online channel, our online channel, which is very relevant with our app, WhatsApp and our Agentic commerce marketplaces and now we have AI. AI is already a relevant portion of organic traffic for the company, not paid traffic. AI still don't work with media. They're starting to test that. So today, the organic -- the traffic is only organic. And the new protocol that Google is launching, the OCP protocol will allow for a direct conversion inside agents. So we are prepared for that. We understand that our commercial scale and our logistics scale will make us very competitive in this new relevant channel that will be created. And it's better for us because the greater the number of channels, the greater negotiation power we have. So from the structural dynamic perspective, we see a very positive horizon for the company. Someone needs to distribute the products to customers, and we are more than ready to do just that.

Our next question comes from Wellington from Bank of America. I have 2 topics that I would like to explore with you. Going back to something you already mentioned, which is the online/offline dynamics. The industry as a whole this year and retailers, especially in the last quarter, saw a migration of sales from offline channels to online channels. So thinking about your own offline channel, and this migration dynamics, could you give us some color on how the market share dynamics or your relative performance so we can understand how the industry also behaved in this more promotional period we had. And the second thing would be about margins. I think Renato and Elcio have explored this. The online channel creates a different margin dynamic. But I want to understand what is driven by margin and what is driven by category mix. So explore the difference between channel mix and category mix. And perhaps drilling down a little bit, we noticed a very powerful SG&A control, especially when it comes to SG&A costs. I just wanted to understand if we still have room for more cuts or if you expect to see this level from now on?

Thank you, Wellington, for your 3 questions. They are very relevant because it will allow me to explore market dynamics. When we think about this migration from offline to online channels, it is happening faster than we had imagined. And there's a piece of this, which is connected to the macro scenario that impacts categories because, again, remember that the macroeconomic scenario impacts everyone. But the smaller the income, the greater the impact. And depending on the category, we have a mix of consumers from different income profiles, and that also changes depending on the channel. So we do have a migration of consumers that used to go to stores to shop. And now they see the app with nice dynamics. They see the digital credit as a channel that they can shop in a fast and easy way. This has an advantage because we can better capture those impulse shopping because in stores, I feel like buying a TV. I plan to go to the store on a Saturday. And then you go to the store, something might happen, it rains and you don't go. Online, you think about it, you go and you shop. So it helps you capture that customer who is willing to buy. On the other hand, there's a base of the pyramid who is highly in-depth. So they want to buy, but they cannot find commercial conditions that they can afford because today, for many customers that we would require 15% down payment, we have to require 45%, 50%. I would offer 20 installments. Now I'm offering 8 or 9. So the down payment is higher, installments are higher, and that suppresses demand. And going to your second question now, this happens differently depending on the category. If we think about people shopping for furniture, Furniture are discretionary products, high added value because of the high average ticket and the penetration is higher at the base of the pyramid. And this certainly impacts consumption. We don't have official numbers. If you go to Nielsen, former GfK, you have official numbers for all technology and appliance categories, but not for furniture. We have from online, but not from physical stores. We see that we're growing similar to stores. So the share of furniture actually drops in the company, but online, the market dropped 22%. Okay. Furniture is much more of a physical channel thing. But the macroeconomic impacts furniture and that impacts gross margin. And then there's a specific dynamic for the company. Our share is different from each category and different from each channel. So when we say on average, 26% stores, 13%, 14% -- you look at appliances, I have up to 50% of share in the Southeast in appliances and TV. But online, I had 20%. Obviously, because of the power of our brand, it's natural for these numbers to be closer together. So we will see more growth online in the short-term while these numbers normalize. Nothing is going to happen overnight, especially considering our discipline in capital allocation. But for some quarters, I think we still have 2 or 2.5 years of growth above market level because the market is also growing online because we are better balancing the share. It's important to talk about 3P just to give you some color on the year. 3P was very strong in the fourth quarter. What we see now in 2026 is more discipline in the industry and the big sellers and also small sellers with a lower volume. Obviously, our arrival in MercadoLibre certainly impacts that because we have now more visibility on the commercial strategies and the pricing from each player. And our negotiation power allows us to act quite fast to mitigate the more aggressive strategies that could impact the price of the market as a whole. But we see everyone being very disciplined, waiting for the second quarter because of the World Cup, and we have a strong seasonality, both for TVs, but also appliances and mobile phones, but with a lot of discipline on 3P. I think 3P fights with 1P, and that impacts price a little bit, which generates more pressure from us in negotiation. And to avoid that pressure, we are seeing more discipline on the industry level, so we can have a more rational 3P. This is what we expect for 2026, especially while the macroeconomic scenario remains challenging. I think there was one more thing. Oh, the SG&A, right, levels. We're not going to see any cuts of that magnitude, but there is a gain in productivity because of the use of AI. This brings a game. There are many things to be done, but nothing is going to happen overnight. Nothing that will lead to a significant reduction in SG&A.

I just wanted to add one thing that you mentioned, Renato, regarding furniture and the macro scenario. There's a big impact on the furniture category from the macroeconomic scenario. This happens all over Brazil. We are leaders in the sailing of furniture in Brazil, and we have a plant. And the furniture category speaking of the mix you mentioned is the one with the largest margin. So as we see improvement in the macroeconomic scenario, we will see a recovery or a more significant recovery of the category. That's why when we talk about the macroeconomic scenario, the effect for us is quite relevant in our whole P&L. So we can monetize and explore it, explore the benefits more once we see the improvement in the macroeconomic scenario. And SG&A, it's what Renato said. That's why our focus is to keep growing volume in a profitable way with new initiatives, whether online or offline, to increase sales with a stock turn under control, we can certainly dilute that in SG&A, which is the classic operational leverage concept and that will certainly impact our results. Besides productivity and efficiency gains that will happen and will be incremental over the year.

Our next question comes from Gabriela from Goldman Sachs. I want to follow up on the MercadoLibre partnership because half of the quarter had that operation happening. I want to understand what were the lessons from this partnership, both in terms of product mix, average ticket and the customer profile from this channel compared to your own online channel. You've mentioned a little bit of that, but perhaps you can tell us more how that impacts your customer acquisition cost.

Thank you, Gaby. When we talk about MercadoLibre, there are many lessons and some positive surprises as well. First, we expected to see more shadows in the customer base, but we saw many new customers via [ MeLi ], which certainly helps us. The customer profile was a little bit more higher income. I think lower income customers are -- have a very strong relationship with the brand. When we look at our digital channels, we have a lot of customers who go to our offline channel, but they use our omnichannel strategy to buy in the best moment for them. So they go to store, they see it, they get the salesperson WhatsApp. Sometimes they conclude on the WhatsApp or via app. MercadoLibre brought us a greater coverage. And one great thing was to see the variety of SKUs. Since the beginning, we started selling without focusing on fewer SKUs. It's much less concentrated than our offline channel and online channel, which is more -- has more variety. In the store, we have promotions for each category, so you see a greater concentration in SKUs, which is great. It helps with stock turn. It helps us ensure a healthier inventory, and it captures opportunities that sometimes we would not be able to reach because we're talking about a very specific customer from a smaller category because we're always looking at the 80-20 ratio. The tool encourage competition between sellers. You have a lot of visibility on the strategy from different players in the digital market, and that helps us adjust our strategy, both at MercadoLibre and in our own channel. So it helps us keep our competitiveness with more access to detail, which is important and positive. And another positive surprise was to see that some categories that are relevant for the company, but many times are not mentioned, one example being tires, large or bulky products that we sell at a relevant volume, but they are not the core of what we do. Well, somehow it is core because we have a different logistics for bulky products. And these sales also grew in a very significant way, showing that there is a potential for having dedicated people for these strategic items for the company, relevant items for the company that could have a bigger impact in our P&L. So inside our commercial department, we have now a structure to address these opportunities and have a better negotiation on these opportunities that are not just connected to tires. We also sell power tools and gym equipment, for example, that we usually sell online or 3P or -- but that did not have such digital reach. And now we certainly gain more relevant because we are in this platform, MercadoLibre so it generated a lot of gains. Customer acquisition cost, it's an advantage because it's under control. You don't pay. You don't make a media investment and run the risk of actually finding the conversion. I pay over converted sales and in a percentage that makes sense for the company, as we mentioned, it generates a good contribution margin. And of course, we also take advantage of the benefits like the cost of capital for funding credit card and other things that don't impact our profitability. So it has been very profitable and very positive to have this partnership with MercadoLibre.

Our next question comes from Lucas Esteves from Santander. I have 2 topics that I would like to cover. First, the 6:1 labor scales with all the discussions we see in the media over the end of the 6:1 working shifts. Do you see a need for operational adjustments that you might need to do and the financial impact that this could have on your business? And if that could be transferred to price or impact competitiveness? And the second topic, Renato, you mentioned Agentic commerce and AI, which is a topic that I'm very interested in. So I want to understand how you see this? What is the potential for disruption and the migration from the offline to the online channel once Agentic commerce and AI allows us to check out directly on these platforms? And how do you see the capital allocation because of that? If you think about capital allocation, maybe to strengthen logistics would make sense because in my mind, I think every small offline seller will need to go to an e-commerce platform and we will need a logistic partner. So if you think about using that as a strength?

Excellent question, Lucas. Thank you. Speaking on the labor-related question, this is a topic that has been discussed for a very long time. We're not going to speculate about the impacts or when this is going to happen because this is a discussion that comes and goes. If it becomes a reality, we will need to adapt. There is an impact. You have to adjust our staff or headcount and impact the compensation of our salespeople because they make variable income. So salespeople, they have a minimal commission, but they also make a percentage of sales. If you dilute that in a bigger headcount, you have a similar SG&A with a little bit higher benefit number. So the impact is in the adjustments we need to make, and then there's an impact on the salespeople and you have to think about the impact on that in the general population. It's a very complex topic. So we prefer to wait for the definitions before we can make a more assertive comment. On your second question, talking about Agentic commerce and AI initiatives and even the protocol that will allow for all agents to shop because it's one thing for our Agentic commerce to shop in because it works on WhatsApp. The other thing is to be plugged at the different AI platforms, making customers' lives easier. Many of you already use cloud co-working. We do 1 million things via cloud. You answer posts, you write posts, organize e-mails. So why not shop there. Obviously, I do believe in a large share. I'm a great enthusiast of this topic. I am a heavy user. There will be an audience that will choose that -- but just like e-commerce didn't kill the offline channels, AI is not going to kill e-commerce and it's not going to kill offline. I think stores remain to be a very relevant asset. When you look at our surveys, for example, the vast majority of consumers who shop an appliance on an industry website on the company's B2C, they first went to store to check the product. More than half of them went to one of our stores. So it's still quite relevant the power of the offline channel. It will keep on existing. And again, Brazil is a huge country with very low income levels. So the need for credit for buying these products remains relevant and consumers, when they need credit or when they're buying a high-ticket product, even if they're paying credit card or cash, they need a channel to complain to. They need post-sale services. So having stores is certainly important. And that takes me to the second part of your second question, which is logistics. Since I got here, the first conversations we had with the Chinese players for them, our biggest asset, what sets us apart is our logistic infrastructure. This is what's going to allow this company to be successful in the future. And when they see what happened in China and in other countries, the players who had the largest logistic infrastructure ended up dominating the market. We also believe in that. And when we talk about technology investment here, a relevant portion of this investment goes to logistic efficiency. And that's another structural factor here that will certainly help us because we have an idle capacity today but it allows for a certain operational leverage. But the tax reform in Brazil will certainly bring an opportunity to optimize this even more, which in the end gives us more incremental capacity for growth or optimization of our infrastructure depending on the behavior of the market and depending on our ability to execute and grow. So we do see growth in logistics, and we do see logistics as one of the most strategic assets of this company. I believe there's a great value to be unlocked at the right time once we decide to give visibility to our logistics business. We have more than 100 external clients. Every quarter, we bring more 3P. We increase retail media, our CV pool. And this business at the right time, when it makes sense, we will certainly accelerate and it will become a relevant business for this company, not just strategic and complementary, but also relevant with an impact in our P&L.

Our next question comes from Andrew from Morgan Stanley.

I'm interested a couple of items on your relationships with the marketplace sellers. The first, just how you incentivize them to focus resources on Casas Bahia versus other marketplaces? Is there a certain type of seller that aligns more with your marketplace than others? We know there's a lot of competition out there. And then the related point, how you manage 1P and 3P conflicts. We know now that you're focusing on the core, there's more overlap between 3P and 1P. Maybe if a product gets big enough, you could bring it into 1P. So curious how you manage the potential for conflicts in that channel.

Perfect. Thank you, Andrew. I should answer in Portuguese, right? So I'll answer this in Portuguese. So when it comes to relationship with marketplaces and how we incentivize marketplaces to focus on Casas Bahia, this was another positive surprise and another important lesson we had. Our stock depth makes a big difference when it comes to this competition for growth between marketplaces because when they make an investment in a smaller seller, this investment brings some elasticity and then it goes out because they run out of stock. So if you work with each seller, they have 100 TV sets or 500 or 1,000 units of that SKU. If you go to Casas Bahia, you have 10,000, 100,000. So the numbers are certainly much bigger. So this depth of stock and the breadth of assortment allows for this investment to have a much greater return on marketplace than investing in many different sellers. That's why there's an investment to advertise the official store for specific categories and also in specific SKUs. And that brings a negotiation power to us with these marketplaces, which is certainly very relevant and brings a lot of sales elasticity. And we calibrate that because it's the same commercial team deciding what's going to happen to each product. We balance that as to avoid cannibalization or a price war. We accelerate one, this SKU focus here or there in a way that we can optimize profitability and at the same time, remain very attractive to our customers. Now on your second question, how we manage 1P and 3P sales and the competition that exists between these 2 products, which in reality are two big sellers in our platform. When you go to our website, you see a TV set from a specific brand that I bought is going to be sold, and you have not the same SKU, but a similar SKU from 3P with a very specific difference, which is not always perceived by customers. Obviously, once I buy it, I prioritize my 1P. If I didn't buy it yet, the 3P sale is relevant and good with a better ROI. If I have to buy something to sell it, you don't have capital being allocated. So the 3P sales are certainly very positive. So 3P sales are not only complementary to ensure a good experience for customers, but it's also a way to maximize the returns on the investments we made. So it's not a simple calculation to get to the right moment, we will transfer from 3P to 1P because of the seasonality of demand and the changes in consumption patterns, new technologies being launched. We try to calculate that quite frequently, and there are some simulators we use to show the best levers. But there is a certain level of internal competition between the area buying 3P and the area buying 1P, so we can maximize the value from both types of sales and then independently be able to compare them. But the commercial department has the autonomy to look at the product and say, this product is selling well. I'm going to migrate it here, bring the margin alone. And for the accountability, they have the total revenue of the company for that category, which includes 3P. And the margin that they deliver, including the cost of capital, also includes 3P sales. So it's not a trivial model. There are many variables in place, but we have some dashboards that certainly helps the team learn about that and understand the specificities of capital allocation, returns so we can optimize this in the long term.

Renato, we don't have any more questions. So now I'll hand the floor to you so we can close the call.

Thank you very much. I think before we close this, I just wanted to thank you for your questions. They certainly reflect how disciplined we are and keep improving and how transparent our reports are. And I just want to share 3 big numbers so you can all think about them. First, 77% of reduction in our debt, 9 quarters in a row of improving our operational margin and BRL 1.8 billion in operational cash generation for the company in the quarter. These are not promises. These are facts, numbers that prove our ability to execute and that are certainly very relevant. We know that the market is expecting the next chapter. So the question that goes unanswered is when do -- are we going to have a positive net profit? We are also very anxious to get to that chapter and different from where we were 2 years ago. Today, we have the right capital structure. We have the operational discipline and the monetization levers to get there. The path is much shorter than it was before and the complexity of execution is also much lower than what we had before. Our commitment to you is very simple. Less talk, less storytelling, less concern about creating a thesis and more results, more consistency at every quarter. In the next quarters, we'll be delivering more details on the metrics that matter. The monetization of our ecosystem will evolve. The cash flow will be normalized with financial expenses dropping. But the reduction of spreads and other reductions, they will take place over time. For example, the credit profile, we reduced the spread, but it's 14 months, so we can replace the funding of our credit. So in the second half, the end of the year, you will see financial expenses at a normal level -- normalized level. But every quarter, there will be an evolution in the bottom line. So you can keep following it -- this in real time and share the same level of confidence that we have. The next chapter will certainly be much better than the previous ones. with the right management time now to focus on what's strategic, our credit and the long-term perspective for this company. A new moment, much better to work here, much more fun for us as well. Thank you for your trust. Thank you for your time. And thank you to everyone who has helped us get here for the past 2 years, allowing for this huge transformation to take place so we can start to reap the results and show better results. Our team is available for any follow-up questions. I wish you all a great day. And of course, we have to invite you all to our Investor Day on the 23rd, make sure you register on our website. We expect to see you all there. Yes, on that day, we'll give you more details on our strategic program for the next 2 years and the levers that makes us confident about profitability. Thank you so much, and welcome to our Investor Day. I expect to see you there. And we have a lot of great sales on our -- this Consumer Week in Brazil, make sure you check out the stores. Thank you so much.

The earnings call for the fourth quarter 2025 from the Casas Bahia Group is now closed. Thank you so much to all of you, and have a great day.