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

Good morning, and welcome to InRetail Peru's Second Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode, and please note that this call is being recorded. [Operator Instructions] 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 Peru are Mr. Juan Carlos Vallejo, Chief Executive Officer; Mr. Marcelo Ramos, Chief Financial Officer; and Mrs. Vanessa Danino, Investor Relations Officer. They will be discussing the quarterly report distributed by the company 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 the discussion during this call. If you need any assistance, please contact the Investor Relations team of InRetail Peru. 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 differ materially from the current expectations. For a complete note on forward-looking statements, please refer to the quarterly report, which was issued yesterday. At this time, I would like to turn the call over to Mr. Juan Carlos Vallejo, Chief Executive Officer of InRetail Peru for his opening remarks. Mr. Vallejo, please go ahead, sir.

Thank you, Ryan. Good morning, everyone. I'm Juan Carlos Vallejo. Thank you for joining InRetail's second quarter earnings call. Today, we will discuss the main highlights of InRetail's second quarter results for 2024. Joining me today are Marcelo Ramos, our Chief Financial Officer; and Vanessa Danino, our Investor Relations Officer. I will start with a brief executive summary and then Marcelo and Vanessa will walk you through our earnings presentation. During this quarter, the Peruvian economy experienced a mild recovery in economic growth, favored by the revamp of primary sectors affected by the harsh climate condition last year. Consumer-related sectors, however, lagged behind the recovery with private consumption still depressed. Despite the easing of inflation and the progressive decrease in interest rate by Central Bank, general prices and interest rates for household families are still high, while formal employment generation and hence incomes are yet to recuberate. Forcing household to continue prioritizing their spendings. In recent weeks, we have seen signs of improvement in construction compared to earlier in the year, although partially attributed to the availability of income from the pension funds and from the compensation time accounts, withdrawals, which generally create a temporary hike in consumption. As anticipated in our prior earnings call, the general slowdown in consumption, combined with the Holy week calendar effect affected demand across our segments. Nevertheless, InRetail continues to show strength and resiliency, posting a minor decline in revenue of 0.6%, an important increase in adjusted EBITDA of 6.8%. Our Food Retail segment had a softer quarter, growing 1.1% in revenues and 1.6% in adjusted EBITDA. Growth was mainly driven by our hard discount format and by the recovery in nonfood categories, given the low comparison basis from last year. During this quarter, we continued consolidating our leadership position in the more Food Retail channel. As anticipated in our prior earnings call, our Pharma segment experienced another challenging quarter, showing similar trends compared to the first quarter, with a contraction in demand in both Pharma and non-Pharma categories. Overall, revenues decreased 3.3%, while adjusted EBITDA increased 4.7%. Finally, our Shopping Malls segment had a solid second quarter with revenues and adjusted EBITDA growth of 4.8% and 8.4%, respectively, still improving in occupancy levels. In terms of guidance for InRetail, we remain in line with the guidance given at the beginning of the year. With that, let me pass the word to Marcelo, and as always, we look forward to answering your questions by the end of this call.

Thank you, Juan Carlos. Good morning, everyone. Thank you for joining us on this call. Today, we will review the main highlights of InRetail's second quarter results for 2024. Now, please turn to Page 4 in our earnings presentation to start reviewing our consolidated financial results for the second quarter for InRetail Peru. In the second quarter of the year, InRetail reported a minor contraction in revenues of 0.6%. This results from a moderate growth in our Shopping Mall segment, a lower growth in our Food Retail segment and a decline in our Pharma segment. This minor contraction in revenues is partially explained by the general slowdown in consumption and by a calendar comparison effect due to the absence of Holy Week, as well as by a challenging comparable basis of Q2 '23. In terms of adjusted EBITDA, we recorded a strong single-digit growth of 6.8% compared to the same period of last year, mainly explained by an improvement in gross margin in our Pharma and Shopping Mall segment, combined with operating efficiencies and cost control initiatives in all of our segments, resulting in an expansion of 100 basis points in our adjusted EBITDA margin. Moving on to net income. We registered an 18.8% decline in the quarter, mostly from an exchange rate effect. This quarter, we recorded a net FX loss compared to a net FX gain registered in Q2 '23. As of June 2024, the exchange rate was PEN 3.837 versus PEN 3.721 as of March 2024, a depreciation of around 3%. This compares to an appreciation of 3.5% registered in Q2 '23. As a reminder, movements in FX, we generate an FX loss or gain are mainly related to our dollar-denominated store leases registered on our balance sheet under IFRS 16, which are not hedged. We also have approximately 50% of our debt in USD. However, these do have several hedging structures in place, which reduce our FX exposure within a specific range. All these effects are non-cash. As anticipated, Q2 '24 showed similar trends to those seen in Q1 '24, with a general contraction in consumption and a calendar effect from Holy Week, despite the early signs of a slight economic recovery in non-consumer related sectors. This was another challenging quarter, particularly during April and May with a progressive improvement towards the end of the quarter, partially explained by the start of the winter season and to a lesser extent by the increased disposable income from pension funds and compensation time accounts withdrawals. Even in this context, our segments continue to outperform peers in the market. As mentioned earlier by Juan Carlos, we remain in line with the initial guidance given in prior quarters for the full year 2024. Now please turn to Page 5 to review our financial and operational snapshot of our consolidated figures. In terms of contribution by segment, these have remained similar to recent quarters. Our Food Retail segment continues to gain participation in revenues relative to the last 12 months' figures in Q2 '23. On a consolidated level, during the last 12 months, InRetail generated almost PEN 21 billion in revenues and more than PEN 2.8 billion in adjusted EBITDA with an adjusted EBITDA margin of 13.6%. Now please turn to Page 7 to give you a short update on our continued ESG progress. We feel extremely proud that InRetail was recognized as the leading sustainable company in Peru in the ALAS20 ranking during this quarter, witnessing the results of our constant efforts to continue improving the quality and impact of our share value projects. Moreover, our Shopping Mall segment obtained the sustainability management company distinction by Peru Sostenible due to its commitment and high standards in sustainability practices. Finally, our 3 business segments were also included in the diversity, equity and inclusion ranking of Great Place to Work, emphasizing our duty to create safe and diverse work environment. These awards, together with our membership in the Dow Jones Sustainability Index and Yearbook are a reminder of the continued improvements and milestones we're achieving in ESG. Highlighting some of our accomplishments this quarter. On to the social front, our flagship program, Bueno por Dentro continued growing, promoting the reduction of food waste nationwide. During the second quarter, we donated more than 4 million food rations equivalent to PEN 17 million, benefiting more than 100,000 people on a weekly basis. Through initiatives such as Peru Pasion and Placita del Emprendimiento, we remain committed to supporting SMEs, promoting economic growth and encouraging entrepreneurship within our communities. Altogether, we generated more than PEN 5 million in SME sales in our channels and malls. Finally, on the environmental front and in alignment with our environmental and energy efficiency goals, we managed to save over PEN 1 million in our Food Retail stores by implementing best practices in energy management. Additionally, we recycled and reused over 3,000 tons of waste and more than 12,000 tons of organic waste were recovered through 8 Plaza Vea stores, which were later transformed to compost and reused in benefit of the community. Now we will go over our operating results by segment. Please turn to Page 9 to review our second quarter results for our Food Retail segment. Our Food Retail segment had a more challenging quarter, explained by the general contraction in consumption and by a tougher comparison basis of Q2 '23 due to the absence of Holy Week and a strong demand in that quarter, when we registered a 9.9% growth in revenues. In spite of all, revenues increased 1.1% in Q2 '24, with a negative same-store sales growth of minus 1.8%. Our food categories experienced a negative same-store sales growth this quarter in the context of lower inflation and of consumers looking to generate efficiencies in their budgets by prioritizing value for money alternatives. On the other hand, nonfood categories registered a moderate recovery, given the low comparison basis from last year and the beginning of a strong winter season, favoring both textile and electronic categories. In terms of performance by format, revenues were driven by a double-digit same-store sales growth in our Mass format, favored by the current preference of shoppers to satisfy purchases in proximity channels, given a tough household economic environment. On the other hand, both Makro and Plaza Vea were affected by the slowdown in food categories, together with the calendar comparison effect. In the case of Makro, demand from HoReca clients and food trade establishments continued depressed as economic activity in that sector is yet to recuperate. Finally, Plaza Vea same-store sales performance was partially compensated by the improvement in nonfood categories as commented before. Revenues were also benefited by the contribution of new stores opened in the last 12 months, representing 61,000 square meters of additional sales area. This includes the opening of 307 net new Mass stores and 1 Plaza Vea store in Lima. In Q2 '24, we opened 111 net new Mass stores, mostly outside of Lima, surpassing the 1,000 store footprint. Our gross profit increased 1.2% with a gross margin of 23.6%, in line with Q2 '23, despite pressures from the higher participation of our hard discount format. Additionally, we were able to maintain stable margins, despite the recovery in nonfood categories. Since the lower margins from the electronics category were compensated by the higher margins from the textiles category. In terms of adjusted EBITDA, Food Retail's adjusted EBITDA grew 1.6% in the quarter, with a steady EBITDA margin of 9.2%, explained by the stable gross margin outlined before and by operational efficiencies and admin expense controls, allowing to compensate for the additional expenses related to the new stores opened. Our omnichannel Food Retail proposition continues to progress. In terms of our digital sales, we recorded a 6.2% growth, combining a strong double-digit growth in food categories with a slightly negative growth in nonfood categories due to the less promotional activity compared to last year. Our growth in digital food category sales continues to be levered in our last mile platforms, which in June represented over 50% of our food sales in this channel. As of June, our digital sales represented over 6% of total sales of our formats with an active digital channel. As anticipated earlier, our Food Retail segment had a softer quarter in terms of growth, given the high comparison basis from last year and the persistent contraction in consumption. Consumers are still prioritizing proximity and price formats, resulting in a decline in average ticket sizes with an increase in frequency. Although, we have seen some signs of recovery over the last weeks, consumption is yet to materially recuperate. Now please turn to Page 10 to review our second quarter results for our Pharma segment. Our Pharma segment posted a decline of 3.3% in revenue this second quarter, with similar consumption patterns as experienced in Q1 '24. Same-store sales for our pharmacies unit decreased 4.2% due to the general contraction in consumption, which affected both Pharma and non-Pharma categories. This unit was also affected by the calendar effect of Holy Week and the high comparison basis of Q2 '23. Pharma category sales were impacted by slow consumption trends in April and May, with a slight improvement since June, given the start of the winter season. This positive trend has persisted during July. Additionally, as mentioned in our previous earnings calls, recent quarters incorporated a decline in sales of pharma products from a more active participation of public institutions in the dispense of medicines, affecting the private retail market in general. Non-Pharma categories posted a softer decline in same-store sales than Pharma categories during the quarter, affected by a continued slowdown in more discretional categories, given the lower spending capacity of consumers, namely nutrition-related items such as dermal, vitamins, supplements and baby care products. The decline in these categories was partially compensated by a positive growth in consumer categories, in particular, beauty and personal care, as a result of the effectiveness in the execution and implementation of the new format conversions and openings, which increased the display of these categories. Revenues in our distribution unit declined given a generalized slowdown in demand in Ecuador, while our operation in Peru continued its recovery, fueled by sales to public institutional clients. In the last 12 months, we opened 92 net pharmacies. And during the second quarter of 2024, we opened 45 net pharmacies. Year-to-date, we have opened 68 pharmacies and closed 4. The upfront phasing of our openings responds to executing on a pipeline of stores that remain from last year when we mostly focus on new format reconversions. We expect to end this year with closer to 100 gross openings. This is more than earlier anticipated, as we continue to capture opportunities in zones where our presence is lagging. In terms of gross margin, we registered a gross margin of 32.3%, above Q2 '23, mainly due to the change in sales mix towards higher margin products and pharmacies, as customers continue to prefer more economic alternatives. Additionally, we raised the lower shrinkage levels compared to last year from an improvement in inventory management related to our reverse logistics operation. This growth in gross margin was partially offset by lower gross margin in our distribution unit compared to Q2 '23, as a result of a change in channel mix from public -- towards public institutions. Our Pharma segment recorded an adjusted EBITDA margin of 16.4% higher than Q2 '23. The increase in margin is primarily explained by the improvement in gross margin outlined before and by operational efficiencies and admin expense controls, despite the increase in operational expenses from the new pharmacies opened. In terms of our pharma and digital sales, we continue to record a strong growth of around 30% this quarter, driven by an increase in the number of customers transacting in the channel compared to last year. As of June, our total nonphysical sales represented approximately 5% of total sales in pharmacies. And finally, 55% of our digital sales were fulfilled through our click and collect network, taking advantage of our unique capillarity nationwide. Please turn to Page 11 to review our second quarter results for our Shopping Mall segment. Our Shopping Mall segment registered a growth in revenues of 4.8% versus Q2 '23. This growth was mainly explained by the expansion in GLA by the increase in contractual rents and by the improvement in occupancy levels of about 2%, including in malls like Centro Civico, Salaverry, Cusco, among others. Our tenants registered a same-store sales reduction of 1.7% during the second quarter, showing a slight improvement versus the previous quarters. Similar to our Food Retail and Pharma segments, April and May were the most challenging months, given the general contraction in consumption. However, during June, we experienced a recovery that translated into positive same-store sales for the month for our tenants, fueled by the start of the winter season and to a lesser extent, by the availability of pension funds and compensation time account withdrawals. Although this was a generalized positive trend, tenants in gastronomy, clothing and department stores were particularly favored. Our gross margin was 66% this quarter above Q2 '23, primarily due to a lower comparison basis that included an extraordinary provision expense related to a supplier of parking lot services in our malls. This extraordinary provision compensated an increase in marketing expenses to promote traffic within our malls during Q2 '24. In terms of adjusted EBITDA, we reached PEN 121 million with a higher net rental margin of 83.3%. The increase in net rental margin comes from the higher gross margin and the continued fixed cost dilution. Now please turn to Page 12. This slide summarizes our openings and same-store sales performance for each business segments. As highlighted before, this quarter was we accelerated the expansion of our sales area in our Food Retail segment, particularly in the expansion of Mass, as well as in our Pharma segment. Additionally, this lag evidences the general contraction in consumption experienced since the last semester of 2023. Now please turn to Page 14 to review our consolidated net income results. InRetail registered a gain of PEN 121 million in Q2 '24, an 18.8% decrease compared to Q2 '23. As mentioned before, the decrease in net income is explained by the net FX loss of PEN 47 million compared to a net FX gain of PEN 78 million, leading to a negative effect of PEN 125 million compared to last year. Again, this is a noncash accounting effect. Excluding the exchange rate impact and the mark-to-market loss from the valuation of investment properties, net income for the second quarter would have reached PEN 215 million, a 27.9% growth versus Q2 '23. Thanks to the improved operating performance and the lower net financial expenses. Now I will pass the word to Vanessa, who will discuss our CapEx, cash flow generation and financial debt.

Thank you, Marcelo. Now please turn to Page 15. During the second quarter of 2024, we invested PEN 231 million in CapEx for our 3 business segments, above the previous quarter and the comparable quarter of last year. CapEx was mainly invested in growing our store network and in improving our logistics platform. In our Food Retail segment, CapEx was invested in the opening of 111 net Mass stores this second quarter and in scheduled maintenance of existing stores. In our Pharma segment, CapEx was invested in the construction of our new distribution center and logistics platform as well as in the opening of 45 net new pharmacies and in scheduled maintenance of existing stores. Finally, in our Shopping Mall segment, CapEx this quarter was invested in the purchase of a land bank adjacent to one of our malls for expansion purposes as well as in scheduled maintenance in several malls. In terms of cash balance, we ended the second quarter with PEN 1,029 million of cash, considering the PEN 268 million held in short-term liquid mutual funds for cash management purposes, slightly below the end of last year's cash balance, mainly explained by the higher CapEx investments and by the PEN 90 million ordinary dividend, which was distributed in May, which temporarily reduces our cash position. Now please turn to Page 16 to discuss our consolidated financial debt. As of June 2024, InRetail had a consolidated net debt of PEN 6,760 million with a net debt-to-adjusted EBITDA ratio of 2.3x, 0.3x below the comparable quarter of last year and in line with the previous quarter. The increase in total net debt on the balance sheet compared to Q2 '23 is fully explained by the depreciation of the local currency, which affects our U.S. dollar-denominated bonds related to our international bond issuances, which represents 50% of our financial debt. However, as you know, our exposure has been hedged through different hedging structures until maturity, which are detailed here and in our quarterly reports. If we exclude the FX effect on our balance sheet, our total debt would have decreased approximately PEN 145 million compared to Q2 '23, despite the increase in growth CapEx in our 3 business segments, as I outlined before. Now please turn to Page 17 to review our debt by segment. Supermercados Peruanos, our Food Retail segment ended the second quarter with a net debt of PEN 3,112 million, slightly above the previous quarter, but in line with Q2 '23. If we exclude the exchange rate effect on the balance sheet, total net debt would have decreased by approximately PEN 100 million compared to Q2 '23, despite the acceleration of our expansion plan. Additionally, as we have seen in 2023 and in previous years, leverage in our Food Retail segment historically increases during the first semester of the year and presents a faster deleveraging towards the end of the year. Despite this, net debt-to-adjusted EBITDA stood at 2.8x below Q2 '23. InRetail Pharma ended the second quarter with a net debt of PEN 2,024 million and a net debt-to-adjusted EBITDA ratio of 1.5x, in line with Q2 '23, even with the pickup in CapEx related to the construction of our new distribution center. Total net debt remained stable compared to Q2 '23, excluding the exchange rate shown on the balance sheet. InRetail Consumer, which consolidates our Food Retail and Pharma segments ended the second quarter with a net debt-to-adjusted EBITDA ratio of 2.1x below Q2 '23. Finally, InRetail Shopping Malls ended the second quarter with a net debt of PEN 1,521 million, with a solid cash and cash equivalent position of PEN 568 million, resulting in a net debt-to-adjusted EBITDA ratio of 2.9x below the previous quarter and almost 1 turn below Q2 '23, mainly explained by a strong increase in adjusted EBITDA and a reduction in debt from scheduled debt amortization. Overall, for 2024, we expect to conserve a healthy consolidated leverage ratio while maintaining a diligent investment plan. As such, we anticipate InRetail's net leverage ratio to remain relatively in line to 2023 by year-end, combining a slight deleveraging in our Shopping Malls segment, with a stable leverage ratio in InRetail Consumer, in spite of the acceleration of our expansion plan and our investments in improving our logistic platform. Now I will pass the word back to Marcelo.

Thank you, Vanessa. Overlaps as we have seen in our consolidated financial numbers and as anticipated in our previous earnings call, the second quarter of 2024 was more challenging given the persistent contraction in consumption. Although we experienced initial signs of improvements in consumption during June and through July, these were partially explained by the start of the winter season and to a lesser extent by the extraordinary income in households from the pension funds and compensation time account withdrawals, benefiting some nondiscretionary categories. In spite of that, during the quarter, our business segments continued to outperform peers, gaining grounds in the respective sectors. As such, we feel confident in our strategy and in our ability to continue to perform going forward as economic growth and consumption resumes. This covers our presentation, and now we will be glad to answer any questions you might have.

[Operator Instructions] Our first question is from Alonso Aramburu with BTG.

Yes. I have a couple of questions. First, on the Pharma business, we saw this acceleration of store openings. You mentioned it was a little bit of a catch-up from last year when you were doing conversions. Just wondering if this pace is sort of sustainable maybe for next year? So I think you were guiding towards 50 openings, but you're saying 100? And which formats are you opening? And where are you opening them? Are you also growing outside of Lima like you're doing with Mass? And then my second question is regarding your comments on July. Are you -- does that mean you're seeing positive same-store sales both in Pharma and in Food Retail about the growth in July.

Thank you, Alonso, for the question. So on the first one, in terms of related to the Pharma openings, you're correct on the call, we've accelerated -- it's an upfront acceleration of openings. Basically, we had a pipeline of openings from last year and earlier this year when we focused more on the reconversions and that's why we did not execute on the openings. But now that, as we've mentioned before, around 40% of the store footprint that we have has been already reconverted, we don't necessarily expect further material reconversions on the existing stores, and we've resumed the openings. The guidance for this year is that we feel we're going to close closer to 100 gross openings, which, again, a big portion of that is just a pipeline of stores that we already had from last year. Going forward, we expect to go back to, I would say, the 50, 70 stores open per year. So this year, it's going to be 100, which has to do mainly with catching up with stores that we did not open last year. And then going forward, as in 2025 and onwards, it should be more around 50 to 70 stores per year. In terms of the format that we opened, it's diverse. I mean, it's been both traditional stores, kind of the smallest ones that we have. And it's been a little bit skewed as well on the Mifarma Beauty stores. And that's as well one of the reasons why, as we mentioned in the call, we've been favored in beauty categories and categories that are included in those stores. But in terms of the format, it's been diverse. And for the new formats, a little bit more skewed towards the Mifarma Beauty ones, which had to catch up compared to the Inkafarma ones. And on locations, it's been nationwide, a little bit skewed as well on provinces, but it's been pretty much nationwide. Again, tapping in areas and zones where we did not have the same presence as we have in other areas in the country. That's on the first question. And on the second question, in terms of July. As we mentioned in the call -- the second quarter, it was a combination of performances. April was probably the worst month of the year so far. We saw a slight improvement in May. However, it still very much depressed compared to last year. And in June, we saw a progressive recovery across segments, correct. Same-store sales in June in Food Retail were positive. Pharma was pretty much flat, slightly negative, and then Malls was positive. And those trends have translated into July. The only difference I would say is that Pharma same-store sales has been a little bit more positive as the winter has been pretty strong, and that has a direct correlation with our Pharma categories as well. So June, positive same-store sales with the exception of Pharma, which was pretty flat. July, positive same-store sales for all the segments.

The next question is from Fabrizio Lavalle with CrediCorp Capital.

I have just one question on the Pharma division, and it's related to the gross margin performance. So given the recent strong gross margin performance, should we expect this performance to continue going forward? Is this improvement structural due to the shift in sales mix?

Thank you, Fabrizio, for the question. So the gross margin has a couple of things going on. One is the change in sales mix towards higher margin products, as we mentioned, namely our own brands as well and private label. And that has to do more with structural things in the company, has to do with structurally what's going on in consumption, and it's consumers prioritizing and looking for more economic alternatives, which again has a downside effect in same-store sales because it affects the ticket prices, but it helps us on the margin. Our expectation going forward is that the difference that you see in margins so far with last year, as long as consumption trends don't change, should be pretty much as what we have seen so far. However, we don't see a lot of margin improvement quarter-over-quarter, meaning in the third or fourth quarter relative to what we've seen before and going forward. However, comparing to last year, we do see that improvement given that consumption trends are going that way, meaning consumers are looking for more economic alternatives.

[Operator Instructions] The next question is from Josseline Jenssen with Lucror Analytics.

Hello, do you hear me?

Yes. All good.

I have 2. One is regarding the revenues and EBITDA for each segment. Do you -- are you maintaining the guidance that you provided in the last call for every segment? And my second question is regarding the shorter debt. I have seen that it has increased significantly. And I would like to know if you are looking for a liability management exercise or how do you expect to do or to proceed with this increases in short-term debt?

Thank you, Josseline. I'll take the first question, and then I'll send the other question here to Vanessa. So in terms of guidance for the segment, as we said in -- on the consolidated front, it's going to be pretty much in line with what we mentioned before. The expectation for each segment, we're seeing mid single-digit growth in Food, correct, as well as in our Shopping Mall segment and a slight growth in the Pharma segment. I mean, if you look at the 6 months of the first semester, Pharma is negative, we think that during the second summer that's going to recover, and hopefully go into slight positive grounds on a yearly basis. So that's kind of what we're seeing on each of the segments, which, again, should translate with a mid single-digit growth on a consolidated front, both in terms of revenues and EBITDA. That's in terms of guidance. For the short-term debt, here, Vanessa will answer the question.

Yes. Specifically, as of June, we have increased our short-term debt compared to March. But this is not explained by an increase in working capital lines or short-term lines. It's actually by the -- explained by the reclassification of a part of Pharma's long-term debt, specifically from our -- some soles Pharma bonds that we have, which will mature in May of 2025, as well as a portion of a medium-term facilities from Pharma. So overall, we are already in the process of refinancing that and that will significantly reduce the short-term debt that we have now. But I just wanted to clarify that it's not an increase in short-term working capital lines, but just the maturity of these long-term debt that we had. And to complement as well just to give guidance on the fact that in terms of availability of short-term lines with banks, we always have non-important availability of lines, more than $1 billion for our 3 business segments, of which more than half is still available. So overall, a lot of different alternatives to refinance that short-term debt as well.

A follow-up question is, are you expect like to issue a new bond to replace the bond in soles?

Look, I mean, we've looked at every alternative. Right now, as Vanessa mentioned, we're having different discussions with financial institutions. And replacing that bond has been one of the alternative. The reality, though, is that right now, as of today is not necessarily available given what's going on in the Peruvian capital markets. But yes, it's one of the alternatives we're always going to be looking. Right now, it's the most tangible ones that we have and the ones that we think make more sense are the discussions that we have with local financing institutions so far.

And do you have a time frame now to complete that refinancing?

Yes, it should be in the next month, the next few weeks.

[Operator Instructions] At this time, we will take the webcast questions.

The first question is, in Food Retail, seeing the hash tag of openings in the second quarter '24, what caused this increase in openings for this quarter? Do you still expect to open 300 stores or can that guidance increase towards year-end?

So, I mean, the -- again, similar to Pharma and Food, the front openings has to do as well with pipeline of locations that we had from last year that we transferred to this year. And again, we've accelerated the openings. The expectation is to end the year with more than 300 locations. Originally, we were thinking 300, we're going to end with more than 300 this year.

Thank you. At this time, I'm showing no further questions. I would like to turn the call over to the operator.

There appears to be no further questions at this time. I would like to turn the floor back over to Mr. Vallejo for any closing remarks.

Thank you. Overall, as anticipated in prior calls, the same quarter was more challenging given the lack of private consumption, despite a mild recovery in economic growth fueled by primary sectors. Even in this context, InRetail shows strength and resiliency in diversified multi-format platform with undisputable leadership in its segment. With this, we are finalizing the second 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 concludes today's conference call. You may now disconnect.