InRetail Perú Corp. (INRETC1) Earnings Call Transcript & Summary

Good morning, and welcome to InRetail Perú's Fourth Quarter 2020 Conference Call. [Operator Instructions] It is now my pleasure to turn the call over to Rafael Borja of i-advize Corporate Communications. Sir, please begin.

Thank you, Leo, and good morning, everyone, and welcome to InRetail Perú's Fourth Quarter and Full Year 2020 Earnings Conference Call. Before we begin, I would like to remind you that today's call is for investors and analysts only. Therefore, questions from the media will not be taken. Joining us today from InRetail Perú are Mr. Juan Carlos Vallejo, Chief Executive Officer; and Mr. Gonzalo Rosell, Chief Financial Officer. They will be discussing the quarterly report distributed yesterday. If you have not yet received a copy of the earnings report, please visit www.inretail.pe on the Investors section, where there is also a webcast presentation to accompany discussion during this call. If you need any assistance, please contact the Investor Relations team of InRetail Perú. Please be advised that forward-looking statements may be made during this conference call, and they do not account for economic circumstances, industry conditions, the company's performance or financial results. As such, these forward-looking statements are based in several assumptions and factors that could change causing actual results to materially differ from the current expectation. For a complete note on forward-looking statements, please refer to the quarterly report, which was issued yesterday. At this point, I would like to turn the call over to Mr. Juan Carlos Vallejo, Chief Executive Officer of InRetail Perú, for his opening remarks. Juan Carlos, please go ahead.

Thank you, Rafael. Good morning, everyone. I'm Juan Carlos Vallejo. Thank you for joining InRetail's fourth quarter earnings call. Today, we will discuss the main highlights of InRetail's fourth quarter and full year results for 2020. I will start with a quick introduction, and then Gonzalo will go you through our earnings presentation. As for everybody else, 2020 ended up being a very challenging year for InRetail in the context of the pandemic, particularly for our Shopping Malls segment. As you all know, the government of Peru declared a national state of emergency on March 16 of last year to try to contain the spread of the pandemic. At the beginning, only commercial establishment related to essential goods and services were are allowed to operate, and only on June 22, shopping malls were partially allowed to reopen nonessential retail. In that context, Q2 was practically our lowest quarter for our Shopping Malls segment and a relatively slow quarter for our Pharma segment as well. Despite that and a stable political landscape that made Peru have 3 different presence in a single year, given the strength and resilience of our 3 business segments, the second quarter -- the second half of the year show a recovery and InRetail managed to experience a double-digit top line growth and a positive growth in EBITDA for the full year 2020. Our Food Retail segment, on the one hand, had an extraordinary year, well close to 20% in revenues and 30% EBITDA for the full year 2020, with a strong growth across formats and categories and closed the year announcing the acquisition of Makro on December 23, which will allow us to continue strengthening our leadership position going forward. Our Pharma segment, on the other hand, experienced a mid-single-digit growth in revenues and EBITDA, despite the negative impact of the pandemic on food traffic, on the sales mix and on some relevant sales channels in the distribution unit. Finally, our Shopping Malls segment, the most impacted, particularly during the second quarter of the year, showed a remarkable resilience and predictability, which allow us to experience a consistent recovery throughout the second half of the year, closing the year within the initial guidance of revenues and EBITDA reduction shared by us at the beginning of the pandemic. With regard to our omnichannel strategy, we continue putting extraordinary [indiscernible] our processing capacity and improved service levels and customer journeys, maintaining our leadership position in the digital channel. We also wanted to share that due to strength and positioning of our 3 segments, we continue expecting a recovery in our Shopping Malls segment going forward and maintain the positive trend in our Food Retail and Pharma segments for 2021, remaining optimistic that InRetail will continue consolidating its leadership position and the omnichannel strategy in the 3 sectors. Looking forward into 2021, we expect that economic and construction rebound will allow us to experience a solid double-digit growth in consolidated revenues and EBITDA of about 15% and net income growth of above 50% for InRetail, supported by new sales area and GLA, the contribution of Makro, positive same-store sales and the consolidation of our multi-format and omnichannel strategy, allowing us to increase the penetration of our successful new InRetail format. With that, let me pass the word to Gonzalo. And as always, we look forward to answering your questions by the end of this call.

Thank you, Juan Carlos. Good morning, everyone, and thanks for joining us on this quarter. Once again, before starting, I would like to briefly remind you that the numbers we will be discussing today are presented under IFRS 16 and are fully comparable to numbers reported in our financial statements from 2019. Moreover, I would like to clarify that our 2020 results do not incorporate Makro's results in our P&L since it was acquired on December 23, 2020, towards the very end of the year. However, our balance sheet numbers do incorporate Makro's statement of position as well as the bridge loan we took for the acquisition. Now please turn to Page 4 in our earnings presentation to start reviewing our consolidated financial results of the fourth quarter for InRetail Perú. In the fourth quarter of the year, InRetail reported a double-digit top line growth, mainly due to a strong growth in our Food Retail segment, a solid growth in our Pharma segment and a progressive recovery in our Shopping Malls segment, which gradually started reopening since June 22. Revenues reached PEN 3.9 billion, a 14.2% increase versus the fourth quarter of last year. Gross margin stood at 29.8% in the quarter, showing a slight reduction, mainly explained by the underperformance of our Shopping Malls segment in the COVID-19 context. In terms of adjusted EBITDA, we recorded a low single-digit growth in comparison to the same period of last year, recording PEN 527 million and an EBITDA margin of 13.4%, mainly explained by the strong double-digit growth in our Food Retail segment, which compensated the significant reduction in our Shopping Malls segment in the COVID-19 context. Finally, our net income in the fourth quarter was impacted by a mark-to-market loss in our Shopping Malls and an FX loss related to a dollar-denominated leases after IFRS 16. If we exclude these accounting effects, net income increased 2.1% in the fourth quarter in comparison to the comparable quarter of the previous year. As Juan Carlos previously mentioned, in terms of guidance for InRetail at a consolidated level and making reference to financial numbers under IFRS 16, we expect to achieve double-digit growth in consolidated revenues and adjusted EBITDA of more than 15% and consolidated net income growth of more than 50% for 2021, supported by the acquisition of Makro, new sales area, positive same-store sales and the consolidation of our multi-format and omnichannel strategy. Now please turn to Page 5 in our earnings presentation to comment on InRetail's main highlights for 2020. As Juan Carlos mentioned, InRetail showed strong results in 2020, considering the very challenging year, with 10% growth in revenues and a positive adjusted EBITDA growth, having demonstrated the resilient nature of our business models. In our Food Retail segment, we recorded double-digit growth in revenues and adjusted EBITDA, with strong performance in all categories and formats. In our Pharma segment, we recorded revenue growth acceleration throughout the second half of the year, leveraged on wellness and nutrition categories are key drivers for growth. Our Shopping Malls segment was significantly impacted by the pandemic with the closure of our malls during the 3 months of the second quarter, but experiencing a constant and progressive recovery in the second half of the year. Additionally, we wanted to highlight the sound financial management we maintained during the COVID-19 pandemic, preserving liquidity and demonstrating the financial strength of our businesses. We immediately postponed our nonessential CapEx, implemented rigorous expense control to generate savings and efficiencies in all our segments, and capitalized on our strong relationship with banks, disposing of available working capital line. Our Malls segment was able to navigate this challenging context on its own with its own financial strength. We also wanted to highlight the focus we put on implementing best practice protocols for COVID-19 in our stores and malls, implementing them in record time in response to constant changes from government measures and becoming a best practice benchmark for our industry. During the year, we have closely monitored the health of more than 40,000 employees with digital tools, providing them with a necessary protective equipment and rapidly responded increasing safety stocks of key categories to give tranquility to customers. Additionally, we would like to highlight the continued strengthening of our digital platform, recording material growth in e-commerce sales this year, quickly increasing our operating capacity through the inauguration of 2 new dark stores in our Food Retail segment, new mini DCs in our Pharma segment and through efficiencies in our processes. In our Shopping Malls segment, we also reacted quickly implementing new digital initiatives in our shopper and click-and-collect to improve customer experience and provide tenants with additional sales channels. Finally, we closed the year with the announcement of the acquisition of 100% of Makro Peru, the Makro brand and its well-regarded private label brands. We will continue to focus on developing our multi-format strategy in our Food Retail segment, strengthening our value proposition for our professional and individual clients, to continue offering everyday low prices to the Peruvian population, and investing in the development of modern retail in Peru. Now please turn to Page 6 to comment on our main sustainability highlights of the year. Our InRetail sustainability forms part of our core values. Over the last year, we have worked hard to strengthen diverse initiatives in the environmental, social and corporate governance dimensions, leading important and transformational initiatives for industries throughout the year such as becoming the first retail company to partner with food donation bank in Peru back in 2015. In the environmental dimension, in our Food Retail segment, we were recognized in 2020 with a National Environment Award for our waste management efficiencies program. This award recognizes the effort we have put over the last years in developing a comprehensive program, which includes implementing and training environmental leaders in all our stores, implementing and continuously improving recycling stations in our stores among other several initiatives. In 2020, we were able to recycle 68% of the waste we generated and reduced 70% our energy consumption in our main distribution center in Punta Negra through new light and movement sensors as well as artificial intelligence technologies. Furthermore, in our Pharma segment, this year, we implemented reverse logistics to reduce cardboard and plastic in all our pharmacies. In our Shopping Malls segment, we received the final EDGE certification for Real Plaza Puruchuco Mall, being the first mall in Peru to obtain this green certification for its sustainable design, with efficient water, energy and embodied material usage. We also relaunched 14 recycling stations within our malls and launched the first recycling program where clients received cash in exchange for their plastic bottles. Overall, in the environmental dimension, we will continue to focus on responsible consumption and production and climate action as part of our sustainable development goals. Moving on to social dimension. We continue to focus on the well-being and working conditions of our employees with all our business segment leading several Great Place to Work rankings this year as we had in previous years. Additionally, in our Food Retail segment in 2020, we supported more than 1,000 independent recyclers with protective equipment and executed the largest recycling campaign nationwide. From Perú Pasión program, which looks to impose and develop SME producers, we have impacted directly and indirectly more than 7,000 people this year, operating mentoring from our management and accelerating the entrance of these small producers into the digital space with access to our marketplaces. And finally, we donated 7,000 tons of food for this year, reinforcing our strategic partnership with the food donation bank, benefiting more than 15,000 people weekly. In our Pharma segment, we actively helped to relieve the sanitary crisis in the country by donating an oxygen generation plant to a local hospital and with massive donation of masks and health kits to diverse institutions. Additionally, we helped implement a bakery training center for low-income and vulnerable young people to teach them technical capabilities and achieve economic independence. In our shopping malls, we also supported SMEs by working together with 25 entrepreneurs at our co-working space. Overall, in the social dimension, we will continue to focus on gender equality, decent work and economic growth, zero hunger and good health and well-being as part of our sustainable development goals. Finally, in terms of corporate governance, since 2018, InRetail forms part of our local corporate governance index in Peru. Our Board counts now with 2 independent directors, out of 6 under the criteria set forth by the applicable Peruvian Regulation. We have implemented as well over the last couple of years an Audit Committee with 2 independent directors, a strong compliance and anticorruption program with a corporate internal auditor and continue to strengthen our whistleblower line, which is operated by a third-party provider. Going forward, we will continue to strengthen our sustainability efforts focused on our different stakeholders and align with our core values. Now please turn to Page 7 to review our financial and operational snapshot of our consolidated figures. In terms of contribution, considering the full year 2020, our Food Retail segment accounted for 48% consolidated revenues and 36% of consolidated adjusted EBITDA, with an adjusted EBITDA margin of 9.8%. Our Pharma segment accounted for 50% of consolidated revenues and 53% of consolidated adjusted EBITDA, with an adjusted EBITDA margin of 13.9%. Finally, our Shopping Malls segment accounted for 3% of consolidated revenue and 10% of consolidated adjusted EBITDA, with a net rental income margin of 71.3%. If we consider pro forma numbers for the Makro acquisition, the contributions from each business segment do not vary significantly. Food Retail's revenues contribution increases to 53% from 48%, Pharma reduces its revenue contribution to 44% from 48%, and Shopping Malls maintained its smaller revenue contribution. Similarly, EBITDA contributions are not materially changed. Food Retail's EBITDA contribution increases to 39% from 36%, Pharma reduces to 51% from 53%, and Shopping Malls maintained its approximate 10% contribution. We will now continue with our results by segment. Please turn to Page 9 to start with our fourth quarter highlights for our Food Retail segment. Our Food Retail revenues recorded once again a strong double-digit growth of 22.4% in comparison to our fourth quarter of last year. This growth is explained by a record same-store sales growth of 20.2% in the quarter, positively impacted by a strong increase in both food and nonfood categories and across all formats. Additionally, revenues were positively impacted by the contribution of the approximately 17,000 square meters of sales area we opened in the last 12 months. In the fourth quarter, we opened 1 new Plaza Vea store in the city of Chiclayo and 54 net Mass stores, accelerating the pace of openings in comparison to last quarter. Our gross margin reached 26.7% this quarter, a decrease of 20 basis points, mainly due to the higher penetration of new formats and e-commerce in the sales mix. In terms of adjusted EBITDA, Food Retail's adjusted EBITDA grew 17.1% in the quarter, reaching an adjusted EBITDA margin of 10.3%, decreasing 46 basis points in comparison to the same period of last year, negatively impacted by a onetime write-off expense of PEN 10 million related to our remodeling and expansion of 1 of our top 10 Plaza Vea stores. If we adjust for these write-off expense and for onetime expenses related to the Makro acquisition, adjusted EBITDA margin would have increased 20 basis points in comparison to the comparable quarter of last year, evidencing improved fixed cost dilution as in previous quarters of 2020. Finally, we ended the quarter and the year with the acquisition of Makro on December 23, 2020, adding 16 new Cash&Carry stores to our footprint with a total of 65,000 square meters of new sales area. As I explained at the beginning of the presentation, the results were -- the results we present here do not include the Makro operation. Overall, we registered a fourth quarter with a strong positive trend as registered in the previous quarters, with a solid performance in all our formats, which reinforces our multi-format strategy. In particular, the COVID-19 context has strengthened the positioning of our hard discount and Cash&Carry format, Mass and Economax. Mass has continued to perform well due to its conveniently located stores, adequate product assortment for the basic daily consumer basket and low prices. Economax has also continued to respond well in this context, serving the professional client but also being close to the end consumer, looking to stock up at every day low prices. Both of these formats are positively contributing to adjusted EBITDA this year. In terms of sales performance, for full year 2020, our flagship format, Plaza Vea, represented 81% of sales. Our high-end supermarket format, Vivanda, represented 5% of sales. Our hard discount format, Mass, represented 10% of sales. And our Cash&Carry format, Economax, represented 5% of sales. On a pro forma basis, including Makro's revenues, Plaza Vea would have represented 64% of sales beyond the 4%; Mass, 8%; and our Cash&Carry format, Economax, and Makro together, 24% of sales. In terms of e-commerce sales, this quarter, we continue to experience an important demand for food and nonfood categories versus pre-pandemic levels, however, with a more stabilized month-to-month growth rate. Now please turn to Page 10 to comment on our full year 2020 highlights for our Food Retail segment. Our Food Retail segment experienced a significant growth in revenues and adjusted EBITDA in 2020. Revenues increased 20% with same-store sales growth of 17.7%, with a strong performance in all categories and formats. And our adjusted EBITDA increased 28.9% in the year, above revenues growth due to the improved fixed cost dilution which compensated additional expenses related to COVID-19. This year, Plaza Vea ranked once again among the most valued brands in Peru. In 2020, we continue to strengthen our multi-format strategy and continued our legacy of taking modern retail to unpenetrated cities in towns outside of Lima. We opened 1 new Plaza Vea store in Chiclayo and opened 67 new Mass stores net of closings, which includes the opening of the first Mass store outside of Lima in the city of Arequipa, consolidating a chain of 472 stores by year-end. As I commented before, we registered a significant growth in Economax and Mass this year, improving EBITDA margins of this format, and finished the year with a successful acquisition of Makro to strengthen our value proposition in the professional client -- to the professional client. 2020 was also an important year for e-commerce, increasing our sales more than 4x in comparison to last year and strengthening our online leadership in both food and non-food categories. During the year, we quickly reacted to increased demand, inaugurating 2 new dark stores, 1 for dry food and 1 for fresh food, exclusively for our e-commerce operation. We closed the year with a penetration of around 4% of total sales, considering our total Food Retail operation, which includes Mass and Economax that currently do not have an e-commerce operation. As I commented earlier on, we implemented strict protocols in all of our businesses, focused on employees and clients becoming a best practice benchmark for our industries. Specifically in Food Retail, AmCham awarded us the Leaders of Change ABE 2020 award, in honor of our security, health and experience for employees during the COVID-19 context. In line with this, Great Place to Work also honored us in the caring category, recognizing the benefits and care we have shown towards employees' physical and emotional health during the COVID-19 context. Finally, we formed part of several rankings and projects in the sustainability front, but -- which I have already touched on previously. In terms of guidance for our Food Retail segment, for 2021 under IFRS 16, we expect to achieve around a 25% growth in revenues and around a 20% growth in adjusted EBITDA due to the incorporation of Makro. This incorporates a gross margin reduction at the consolidated food retail level due to the increased contribution of the Cash&Carry format, which operate at lower gross margin, but with a lower impact on adjusted EBITDA margins, due to a higher fixed cost dilution and the execution of synergies from the acquisition. Please turn to Page 11 to review our fourth quarter highlights for our Pharma segment. Our pharmacies unit registered a top line growth of 10.4% in the fourth quarter with a solid same-store sales of 8.7%, in line with the third quarter, which was positively impacted by the pickup in food traffic due to the relaxation of the strict lockdown measures imposed by government since the beginning of June. The increased traffic has positively impacted both pharma and nonpharma categories, with a recovery in personal care products this fourth quarter. This quarter, we opened 63 new pharmacies net of closing. Our gross margin reached 36.5% this quarter, impacted by the increase in sales of lower-margin products in the context of COVID-19, but ending with a higher margin than the third quarter of this year. In terms of adjusted EBITDA, we recorded an adjusted EBITDA margin of 17.7% due to the lower gross margin and the incremental expenses related to COVID-19, despite the cost-saving initiatives that we executed since the beginning of the quarantine. Finally, in terms of e-commerce in our pharmacies unit, we also continued experiencing a strong demand versus pre-pandemic levels, however, with a more stabilized month-to-month recovery. Now moving on to our MDM unit. This quarter, we reported a revenues increase of 6.8%, mainly due to recovery in demand from independent pharmacies. Gross margin was 12.8% in the fourth quarter, lower than the fourth quarter of last year mainly due to a change in channel mix in the context of COVID-19 and higher than the third quarter of this year due to a recovery in sales of higher-margin products. Finally, in our MDM unit, adjusted EBITDA margin reached 4.3% in the quarter, in line with previous quarters of this year. All in all, at a consolidated level, our Pharma segment revenues registered an increase of 9.9% in comparison to our fourth quarter of last year with an adjusted EBITDA growth of 1.5% and a consolidated adjusted EBITDA margin of 14.5%. Now please turn to Page 12 to comment on our full year 2020 highlights for our Pharma segment. Our Pharma segment showed its resilience during this challenging year, negatively impacted by -- negatively impacted in the second quarter of the year due to the strict lockdown measures imposed by government, but showing a strong same-store sales growth recovery throughout the second half of the year with the reactivation of both pharma and nonpharma categories and leverage on wellness and nutrition categories, which have become more relevant for consumers in the context of the pandemic. Overall, during 2020, we continue to reinforce our every day low price strategy, strengthening our commitment of delivering affordable health to Peruvian families. As in previous years, InkaFarma ranked #15 among most value brands in Peru and both in InkaFarma and Mifarma led top of mind among the retail pharmaceutical industry in Peru. During 2020, we continue looking to accelerate top line growth on the existing footprint, taking advantage of the strong traffic of our stores with the aim of increasing sales and profitability per store, adapting pharmacies to new consumer habits. More than 280 of our stores were adapted to incorporate smart pallets at store entry to better display personal care and consumer products. We also managed to open 111 new pharmacies, net of closing, nationwide in this challenging scenario and launched the first e-commerce B2B platform to offer a better experience to our distribution business. In terms of e-commerce sales, 2020 was also a relevant year for pharma online sales, more than doubling our sales, improving delivery and service time. During the year, we quickly reacted to higher demand by increasing capacity and coverage of our dedicated delivery center, implementing 23 new mini distribution centers and increasing the number of pharmacies that attend digital and call center orders to 68. We also implemented 1,086 click-and-collect pharmacies. We closed the year with a penetration of around 4% of total sales, considering sales from our exclusive app, web and call center. Finally, during 2020, as in our other segments, we put strong effort on implementing best practices in the COVID-19 context, focused on our employees and customers, strengthen our corporate culture and participated in relevant social projects. In terms of guidance for our pharmacies unit for 2021 under IFRS 16, we expect to achieve a mid-single-digit growth in revenues and adjusted EBITDA, with the opening of 100 new stores in the year and supported by a faster growth in consumer and personal care categories, as well as better trends in pharma categories in comparison to the first half of last year. In terms of pharmacies margins, we expect them to remain relatively stable throughout the year. For MDM unit in 2021, we expect to experience a low single-digit growth in revenues and adjusted EBITDA as some of our sales channels still remain temporarily closed due to the pandemic and will take additional time to reopen and normalize. With that, on a consolidated basis for the Pharma segment, this should translate into a mid-single-digit growth in revenues and adjusted EBITDA for full year 2021 under IFRS 16. Please turn to Page 13 to review our fourth quarter highlights for Shopping Malls segment. As a reminder, since June 22, nonessential retail stores started gradually reopening within our malls as soon as authorized by government. During Q4 2020, our Shopping Malls went from approximately 76% of GLA opened at the beginning of the quarter to approximately 80% of GLA opened by the end of the quarter, with a slight increase due to the opening of some gyms and entertainment tenants. Within this context of progressive recovery in GLA under operation, but with temporary rent reductions, revenues picked up in comparison to the second and third quarters of 2020, registering a 23.9% decline versus the previous comparable period and a 32.3% decline in adjusted EBITDA. In terms of mark-to-market, we registered a loss of PEN 60.8 million in the fourth quarter compared to a gain of PEN 157.7 million in the same period of 2019. This mark-to-market loss is directly associated to our restricted GLA and rent discounts within our malls, which affected the projected cash flows and therefore, impacted mark-to-market valuations and compares with our relevant mark-to-market gain in the fourth quarter of 2019 due to the opening of Real Plaza Puruchuco. In terms of liquidity, as of December 30, our Shopping Malls segment had PEN 169 million in cash and equivalents, above the PEN 135 million we had as of September 30, since we are generating positive operating cash flows since malls were allowed to reopen by the end of June 2020. And we also have an investment in -- an investment of PEN 194 million in InRetail shares as additional sources of liquidity. Furthermore, as a reminder, our Shopping Malls segment has no relevant maturities of financial obligations due in 2021. Now please turn to Page 14 for a further update on our Shopping Malls. On January 26, 2021, the Peruvian government announced new quarantine measures for the country, applying different measures in each region according to 4 different risk levels: extreme, very high, high and moderate. Measures were applicable for 15 days from January 31, 2021, to February 15, 2021, and were extended for an additional 15 days until February 28. Extreme risk regions were only allowed to operate essential retail, including home centers and e-commerce for nonessential retail and restaurants. The use of private vehicles was restricted, and curfew hours went from 6 pm to 6 am. Other risk level regions were allowed to operate both essential and nonessential retail, but maximum visitor capacity was reduced. Under these measures, our GLA in operation during February stood at 50% approximately, with 13 malls out of 21 in extreme risk regions. On February 24, the government of Peru announced a lifting of the quarantine measures in the country starting March 1 until March 14. During this period, all shopping centers will be allowed to operate both essential and nonessential retail, but with restrictions on maximum visitor capacity between 20% and 60%, which varies depending on the tenant and risk levels in each region. Under these measures, our GLA in operation will go back to operating at levels of around 80%, in line with the end of 2020 and in line with January as well. Now please turn to Page 16 (sic) [ Page 15 ] to comment on our full year 2020 highlights for our Shopping Malls segment. 2020 was a very challenging year for the shopping malls industry in Peru, given the strict 3-month lockdowns in Peru and the constant changes in government measures. During these challenging times, our shopping Malls business showed strong resilience, quickly reacting to our restricted government measures and strengthening the relationship with tenants offering rent discounts to tenants not legally allowed to operate and to tenants from most affected categories. Since the partial reopening of malls on June 22, our most have sustained constant and progressive recovery throughout the second half of the year, closing the year within the guidance range for revenues and adjusted EBITDA, given in Q1 2020 for full year 2020, evidencing high predictability and once again strong resilience. During 2020, we focused on preserving liquidity with the immediate postponement of all nonessential CapEx and rigorous expense control to generate savings and efficiency. We capitalized on our strong relationships with banks, disposing of available working capital lines and growing an additional medium-term loan of PEN 110 million in August of 2020. Our sound financial management, combined with our resilient business model, strong relationships with tenants, top management and strong corporate culture and employees, allow our Shopping Malls segment to navigate the challenging context with its own financial strength. During 2020, we also implemented strict protocols for the COVID-19 context, in line with our other business segments. We were the first mall operator in the industry to receive the AENOR certification for COVID-19 protocols. Our protocols included real-time control capacity within each mall, strict temperature control and cleaning of hands and shoes at entry, temporary closure of common areas within malls and adoption of more protocols for increased use of last milers, among many other protocols. During 2020, we also implemented new digital initiatives to improve customer experience and provide tenants with additional sales channels. We were able to launch our new marketplace Real Plaza Go in record time, closing the year with 450 sellers and 150,000 SKUs on the platform. Additionally, we implemented our personal shopper, click and collect and now, to-go services. Finally, our Shopping Malls segment continued with its commitment of having a great place to work environment and participating in social and environmental projects I highlighted at the beginning of the presentation. In terms of guidance for 2021 under IFRS 16, we expect Shopping Malls revenues and EBITDA to grow between 35% and 45%, expecting a stronger recovery towards the second half of the year. At this growth rate, we expect to reach 2019 revenue levels by the end of 2021 and adjusted EBITDA levels by the end of 2020. Now please turn to Page 16. This slide sums up our food retail sales area, number of pharmacies and shopping malls as well as our same-store sales by quarter. In the Food Retail segment. In 2020, we opened 1 Plaza Vea store and 67 net Mass stores, exceeding our opening guidance of 16 net Mass stores in the year. Additionally, with the acquisition of Makro on December 23, 2020, we added 16 new Cash&Carry stores to our footprint. With these, we ended the year with 109 supermarkets, 472 Mass stores, 21 Cash&Carry stores and 477,000 square meters of total sales area. In our Pharmacies unit, we opened 117 stores in Peru during 2020 and closed 6 stores, opening 111 net pharmacies nationwide in a challenging scenario, exceeding the guidance we gave of opening around 100 net pharmacies. With these, we ended the year with a total footprint of 2,165 pharmacies. In the Shopping Malls segment, there were no material openings in 2020 given the postponement of all nonessential CapEx. In terms of same-store sales, on this slide, we kind observe the strong same-store sales growth of food retail, the strong recovery of pharmacies throughout the second half of the year and the progressive recovery of shopping malls as tenants reopened and recovered sales towards the end of the year. Please turn to Page 18 to review our consolidated net income results. InRetail registered a gain of PEN 114 million in the fourth quarter of 2020 compared to a gain of PEN 271 million in the same period of 2019, mainly explained by a mark-to-market loss of PEN 53 million in the fourth quarter of 2020 as a result of adjusting the fair value of the investment properties under the pandemic context, compared to a gain of PEN 133 million in the comparable quarter of last year as a result of marking the investment properties to include the inauguration of Real Plaza Puruchuco. In terms of FX, we registered a net exchange rate loss of PEN 22 million, of which PEN 16 million related to the FX loss on dollar-denominated lease liabilities as per IFRS 16 compared to a gain of PEN 21 million in the comparable quarter of last year, of which PEN 20 million related to the IFRS 16 effect on lease liabilities. Excluding exchange rate, impacts and mark-to-market from valuation of investment properties, net income for the fourth quarter would have reached PEN 167 million, a 2.1% increase versus the comparable quarter of last year. Now please turn to Page 19 to discuss our CapEx and cash flow generation. During the fourth quarter of 2020, we invested PEN 118 million in CapEx for our 3 business segments, a significant reduction in comparison to pre-pandemic investment levels. During 2020, we invested PEN 369 million, a 60% reduction versus 2019, if we consider total CapEx in 2019 or a 40% reduction, if we exclude the investment of Real Plaza Puruchuco in 2020. Overall, the strong reduction in CapEx is mainly explained by the temporary suspension of projects in the Shopping Mall segment, and the delay in the execution of projects in our Food Retail segment in the context of COVID-19. In terms of cash balance, we ended the year with PEN 936 million of cash incorporating the acquisition of Makro Peru in December 23, which was financed to a bridge loan facility. Please turn to Page 20 to discuss our consolidated financial debt. As of December 2020, InRetail had a consolidated net debt of PEN 7,017 million with a net debt-to-adjusted-EBITDA ratio of 3x, higher than the previous quarters due to the incorporation of the $375 million bridge loan used to finance the acquisition of Makro on December 23, 2020. Additionally, the leverage ratio increases since we are only -- we are not considering Makro's results in the 2020 EBITDA figures. In terms of our dollar exposure, we are showing a temporary increase to levels of 21% due to a bridge loan used to finance Makro. However, this will go back to pre-acquisition levels in March of this year when we finish our liability management to refinance the bridge loan facility. Please turn to Page 21 to review our debt by segment. Supermercados Peruanos, our Food Retail segment, ended the year with a net debt of PEN 2,184 million, which includes the debt used to finance the acquisition of Makro. Net debt-to-EBITDA increased to 3.2x, considering this additional debt, and that Makro's results are not considered in our 2020 EBITDA figures, as I previously commented. We will start deleveraging through 2021. As expected, synergies from Makro will start to materialize. On the other hand, InRetail Pharma ended the year with a net debt of PEN 1,629 million, with a net debt-to-EBITDA ratio of 1.5x, slightly below the 1.7x net debt-to-EBITDA ratio of the previous quarter due to a recovery in EBITDA growth. Finally, InRetail Shopping Malls ended the year with a net debt of PEN 1,832 million, with a net debt-to-EBITDA ratio of 8.7x, mainly explained by the almost complete closure of our shopping malls in Q2 2020, which impacted EBITDA; the reduced operating levels of GLA at which we currently operate; and the temporary rent discounts granted throughout the year. In 2021, we expect leverage to further increase as last 12 months EBITDA completes the full year effect of the pandemic. We expect to start deleveraging beginning the second quarter of 2021 as GLA under operation begins to stabilize and tenants continue to recuperate sales as they did towards the end of 2020. Now please turn to Page 23 for our 3-year CapEx guidance for period 2021 to 2023. In total, we plan to invest around PEN 2.3 billion in our 3 business segments for our next 3 years. Our Food Retail segment will incur an approximately 69% of our total CapEx budget. For supermarkets, we expect to remodel and expand 3 of our relevant stores in 2021 and open 2 to 3 new supermarkets per year in 2022 and 2023. For our Cash&Carry format, we expect to open 2 new stores in 2021 and 2 to 3 new stores per year in 2022 and 2023. Finally, for our hard discount format, Mass, we expect to open 150 new stores this year and 150 more per year in 2022 and 2023. Our Pharma segment will incur an approximately 17% of our total CapEx budget with the opening of 100 new stores per year in 2021, '22 and '23. Finally, the Shopping Malls segment will incur an approximately 14% of our CapEx budget, with a small budget for the second half of 2021 to finish the expansion of our Real Plaza Cusco mall and with 5,000 to 10,000 square meters of expansion GLA in 2022 and 2023. Additionally, our budget considers starting a new shopping mall development only in 2023. As we have demonstrated in 2020, our budget is discretional, and we have the capacity to quickly react and postpone CapEx investments if necessary. In terms of type of investment, we will spend 46% of our CapEx budget in increasing our footprint, 22% in logistics and IT and the maintenance of our 3 formats, and 14% in refurbishing and expansions. We expect the CapEx budget to be slightly more concentrated in 2021 given the pickup of investments as to the slower investment levels in 2020, and then register similar amounts of CapEx levels in 2022 and 2023. This covers our presentation, and now we will be glad to answer any questions you may have.

[Operator Instructions] We'll take a question from Alonso Aramburú of BTG.

Gonzalo, can you comment on the level of synergies that you expect from Makro? And what's the timing to realize them next couple of years, 2 or 3 years? And regarding the Mass new stores opening, is that 150 stores number? Is that a net number or is that a gross number?

Thank you, Alonso, for the questions. With regard to the synergies related to acquisition of Makro, we are still in the process of finalizing the assessment of real opportunities. What I can tell you that as we did with the acquisition of Quicorp, we have implemented the same methodology to guarantee the capturing of synergies. We have confirmed a senior management committee that meets on a weekly basis to follow up on the process of identifying, evaluating and executing those synergies. What I can say is that we are excited and what we have identified is even more positive than what we anticipated when we executed the acquisition. And I gave guidance with regard to the expectation of Makro EBITDA for 2021 on our last -- on our previous conference call, saying that we expected PEN 120 million from Makro in terms of EBITDA generation. And without getting into specifics yet, because we're in the process of fine-tuning the size, amount of synergies and timing, particularly for execution this year, I can confirm that we feel very comfortable with that guidance, and probably it's going to be better than that. But in terms of timing, I would say that we should probably end up executing the synergies by the end of second quarter of this year. So the full year impact is going to be seen only in 2022, but the synergies will -- probably will be almost fully implemented by the end of the second quarter of this year. So as opposed to the Quicorp acquisition, this is a much more straightforward acquisition. This is a single business unit, 16 stores in a business segment in a format where we were already present with our Economax format. So in general terms, it should be faster than the acquisition of Quicorp in terms of integration. And as we fine-tune the assessment and the timing, we will share it probably with you in the next quarterly earnings call. With regard to Mass openings, the guidance we have given is gross, Alonso, although we do not anticipate closing a relevant number of stores, given that part of that exercise of closing down, particularly the smaller Mass stores that we opened at the beginning of the development of a format back in 2016 and '17 has already been done. We have already identified some learnings with regard to the right size of stores, location and other attributes, and we feel more comfortable with the quality of stores that we're opening and we've been opening over the last couple of years.

[Operator Instructions] We'll move next to Joaquín Ley of Itaú.

I have one question on competitive dynamics. Looking at your same-store sales performance in the supermarket business in the fourth quarter, once again, you outperformed materially your main competitors. And I was curious to hear from you what do you think this is -- it's a matter of pricing study, increasing pricing gap? It's a matter of being more focused on hard discount and Cash&Carry? So your are appreciated. And on that regard, and on your online business, how do you differentiate from the offering of your competitors in that particular business, please?

Thank you, Joaquín, for your questions. With regard to the competitive landscape, yes, indeed, we've been growing faster than our competitors in terms of same-store sales. It's difficult to give a single explanation to that. I would say that it's a combination of many factors, including the execution at the point of sales, our clear focus on our every day low price strategy, a strong conviction with regard to our multi-format strategy and the well-positioned brand recognition of our different formats in general terms. So I would say it's a combination of factors that add up to a good execution, consistent with what we have been doing over the last few years. We have strong teams that have remained pretty stable over the last several years as well. As you know, we have managed some of our regional competitors to attract top talent not only locally, but from abroad as well. And I believe that the combination of the factors I mentioned, led by a strong well-experienced international team as well has helped to sustain this advantage. And with regard to our online strategy, I would say that we have done well in terms of consolidating our leadership position in the digital channels as well given that we have put a lot of effort in terms of expanding our capabilities to improve the different aspects that make a good customer experience in the online world, which is progressively improving user experience, trying to shorten delivery times and giving more flexibility in terms of delivery methods, offering the full array of delivery methods, click and collect, home delivery and express delivery as well and putting a lot of effort as well on being strong in categories that sell well in the e-commerce space as well. We have strengthened our value proposition and leadership in nonfood categories as well in the physical world, but that helps and contributes to the good performance of our digital sales as well. So I believe it's a combination. In Food Retail, as we have already mentioned, we tried to react as quickly as possible to the significant increase in demand we experienced, particularly in the second quarter of last year when Peru implemented very drastic lockdown measures, and we implemented 2 dark stores to better serve that significant increase in demand. And in the Pharma business, we have done similar things, implementing more than on 20 mini distribution centers, expanding our dark store or dedicated distribution center for e-commerce and call center sales and increasing the number of click-and-collect stores in our pharma platform as well. And finally, in the Shopping Malls business, we launched, as we mentioned, the Real Plaza Go platform to give alternative sales channels to our tenants first and also to consolidate marketplace platform for third-party sellers as well. So in general terms, I would say, we're having a clear focus on progressively improving the different attributes of online platforms, UX/UI and logistics to better serve end consumers.

Congrats on the results.

Thank you, Joaquín.

Next question is from Nicolas Larrain of JPMorgan.

Most of them have been answered, but I wanted to guess from you, Gonzalo, how you've seen personal trends during January. And also, what it's favoring with the new lockdowns as bad as to the second quarter of last year? Or things have been a bit better then? I just wanted to get your sense on the latest you've been seeing on the grounds.

Okay. Sorry, Nicolas, I couldn't get the first part of the question. If you can repeat it, my apologies.

No worries. It was mostly to understand how you've seen trends -- or how you saw trends during January and in February during the lockdown was as bad as the last year?

Okay. Great. Thank you. Yes. What we have seen is the trends remain pretty positive for our 3 segments. And actually, I would say that January was a very strong month for different formats, even better than what we have been reporting in the third and fourth quarters of last year. So we started the year with the right foot -- on the right foot. February, evidently with new temporary lockdowns imposed by government ended up being slower than January. But with that, if things -- as we expect return to the trends that we have been seeing in the second half of the year and of last year and in January, in March, given that government has already lifted the restrictions imposed in February, the first quarter should be another strong quarter. That's what we are seeing. Again, January was very good for Food Retail, Pharma and Shopping Malls segments. February definitely was lower. In Food Retail, in particular, February was a little bit slower as well in some categories related to the back-to-school campaign, but it's nothing that should worry us. Probably in January and February, we are still going through a very, very strong first quarter. And in the Pharma business, again, January was very good. February was a little bit slower, given the lockdowns imposed temporary for that month. And the fact that February has as well 1 less day than the previous year, but nothing again to concern and again, the first quarter should be a good quarter for Pharma as well. And same story for our Shopping Malls. Shopping Malls were recovering pretty well as we have seen during the second half of the year. January was a very strong month. There are several tenants that are even selling better than in pre-pandemic levels, evidently, not all of them but food retail tenants, home centers, some service tenants, tenants selling technology and so on. And as we have shared with you in previous quarters, there are some that are evidently, it's lower like fashion-related -- fashion and accessory-related tenants. But in general, in terms of the performance of Shopping Malls have been pretty healthy as well in January, better and stronger than the fourth quarter. In February, evidently with the lockdowns and restrictions for our shopping malls, as we have commented, we went down temporarily again to about 50% of GLA open. But in March, we should get back -- again, we have gotten back already, again, to 80% GLA open, which is in line with January end of year. So again, we believe that demand is there. Our formats are well positioned and strong. And the big challenge will be some of a comparison basis that we will face in the second half of last year throughout the year. But despite that, we have already shared the guidance we have given. So 2021 should be another strong year for InRetail in general terms, particularly for Shopping Mall should be a year of recovery, no doubt about it, but for Food Retail and Pharma should be another strong year as well.

Congrats on the numbers.

Thank you, Nicolas.

[Operator Instructions] And at the present, we have no further questions at this time. I'd be happy to return the call to our hosts for any concluding remarks.

Thank you. As a final remark, I just wanted to highlight again that 2020 ended up being another good year for InRetail, with a double digit growth in revenues and a positive growth in EBITDA despite the very challenging context. Going forward, we remain optimistic about the ability of our resilient format to continue growing and improving profitability metrics. With this, we are finalizing our fourth quarter earnings call. If you have any follow-up questions, please do not hesitate to contact any of us. Thank you very much for your participation.

This does conclude today's conference. You may now disconnect your lines. And everyone, have a good day.