InRetail Perú Corp. (INRETC1) Q4 FY2025 Earnings Call Transcript & Summary

Good morning, and welcome to InRetail Peru's Fourth Quarter 2025 Conference Call. [Operator Instructions] And please note that today's call is being recorded. [Operator Instructions] Before we begin, I would like to remind you that today's conference 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. Andrea Fabbri, Investor Relations Officer. They will be discussing the quarterly report distributed by the company on February 27. 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 the economic circumstances, industry conditions, the company's performance or financial results. As such, these forward-looking statements are based on several assumptions and factors that could change causing actual results to materially differ from the current expectations. 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 Peru for his opening remarks. Mr. Vallejo, please go ahead, sir.

Thank you, John. 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 results for 2025. Joining me today are Marcelo Ramos, our Chief Financial Officer; and Andrea Fabbri, our Investor Relations Officer. I will start with a brief activity summary, and then Marcelo and Andrea will walk you through our earnings presentation. Overall, during 2025, the Peruvian economy is in a progressive recovery, ending the year in a positive momentum, which has also resulted in an encouraging start to 2026. Condition gradually became more favorable for household consumption. Inflation remained low, the Peruvian sol continue to be strong and consumer credit as well as the formal labor market continue to increase. Additionally, the pension fund withdrawals provide greater drive starting November and during the initial weeks of 2026. As it relates to financial results for the fourth quarter of 2025, InRetail post a solid growth in revenue of 6.3% and a moderate growth in adjusted EBITDA of 4.9%, reflecting a recovery across segments, allowing us to end the year with a positive growth in revenue of 5.2% and a flat adjusted EBITDA despite all the extraordinary effect impact mentioned in prior earnings calls. Our Food Retail segment posted a solid growth in revenues of 7.1% in 2025 despite the closure of several stores, particularly at the beginning of the year. Growth was driven by strong store sales in our Mass and Makro format and by the opening of our Mass and Plaza Vea stores. Our Pharma segment maintained a stable year, posting a positive growth in both revenues and an adjusted EBITDA of 2.7% and 3.9%, respectively, with a significant cash flow generation despite the anticipated decline in revenues in the distribution business in Peru, given the strategic decision to exit noncore low-margin in high capital-intensive channels. Finally, our Shopping Malls segment had a very challenging year, given all direct and indirect impact from the [indiscernible]. Nonetheless, as the year advanced, we registered a progressive recovery, as evidenced by the results for the fourth quarter of 2025, ending the year in line with the guidance provided early in 2025, of a decline in adjusted EBITDA of around 15%, reflecting the reliability and resiliency of our Shopping Malls business. Looking forward in 2026 we expect our business segment to perform positively given the resilient and diversified nature, the current positive economic environment and the favorable comparison basis was 2025. Excluding the anticipated decline in revenues in the distribution unit in Peru, we expect InRetail achieve a high single-digit growth in consolidated revenues and adjusted EBITDA. With that, let me turn 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 fourth quarter results as well as a summary of the full year results for 2025. Now please turn to Page 4 in our earnings presentation to start reviewing our main highlights for the year. During 2025, we advanced with the execution of our strategic pillars. We invested with purpose to accelerate growth, executing our planned expansions. In Food Retail, we opened 314 new Mass stores and 2 new Plaza Vea stores, one of which represents the first modern food retail store in the city of [ Cusco ], a historically emblematic city in Peru, evidencing our compromise to bring modern retail and better services across the country. We reached a total network of close to 1,700 stores nationwide. In our Pharma segment, we opened 124 new pharmacies reaching more than 2,500 pharmacies across the country. Finally, in our Shopping Malls segment, we inaugurated a new power center in the city of Tarapoto and completed 2 expansions in our malls in Primavera and in [indiscernible]. During the year, we also advanced in our multi-format strategies. In our Pharma segment, we innovated and remodeled some of our existing formats with a purpose to capture high-growth complementary categories such as Personal Care and Beauty Care, adjusting to new customer needs and enhancing store experience. In Mass, we persisted with the transformation of our format with the objective to reinforce our value proposition of low prices, high-quality products and proximity through a lean and efficient operation. In line with that, we expanded our private label portfolio by launching over 30 new brands and we renovated more than 130 stores with an improved store experience and layout. On the logistics front, we strengthened our logistics platform to sustain future growth. First, we inaugurated our state-of-the-art distribution center in our pharma segment, located next to the main distribution center for our full retail segment. With the new distribution center, is one of the most modern and highly automated facilities in the pharma retail industry in Latin America. The project has 85,000 square meters of logistic capacity and can process 1 million units per day. We also opened 9 distribution centers dedicated to Mass to support the significant growth expected in that format. Finally, during 2025, we executed our capital structure strategy. aimed at increasing liquidity and lengthening our debt profile. Our operations continued improving cash generation, ending the year with a consolidated cash position of PEN 1.9 billion, including liquid investments. Additionally, we refinanced approximately PEN 2 billion of bank debt and successfully replaced our existing retail Shopping Malls bonds with new issuances of around $500 million in aggregate value. As a result, our current portfolio of short-term debt stands at 5%. Now please turn to Page 5 to briefly comment on some of our ESG highlights for the year. In Retail was included in the S&P Global Sustainability Yearbook for the fifth consecutive year. Also, Supermercados Peruanos and Farmacias Peruanas achieved top rankings from Great Place to Work and all of our operations obtained Carbon Footprint Stars certifications from MINAM for the progress in reducing emissions. On the social front, our flagship program, Bueno por Dentro, continued growing. In 2025, we donated more than 18 million food rations equivalent to PEN 72 million. Thanks to our program Peru Pasion, which supported more than 290 participated entrepreneurs, we generated over PEN 36 million of SME sales in 2025. Furthermore, we enhanced our supplier management program with 795 suppliers evaluated during the year on ESG criteria, reaching an accumulated coverage of 66% of our total supplier base to strengthen sustainability standards throughout the value chain. Finally, on the environmental front, we managed to save almost PEN 4 million in energy. Additionally, we reduced our carbon footprint by 12% in line with our environmental efficiency goals. Now please turn to Page 7 in the earnings presentation to review our consolidated financial results. As anticipated in our previous call, during Q4 '25, there was a progressive recovery in consumer spending partially explained by a temporary input starting in November from the pension fund withdrawals. In this context, InRetail reported a 6.3% growth in revenues with growth in all of our segments, including a solid growth in our Food Retail segment, a moderate growth in our Pharma segment and a slight growth in our Shopping Malls segment. We ended the year with a growth in revenues of 5.2% despite all of the extraordinary impacts mentioned in our previous earnings calls. In terms of adjusted EBITDA, we recorded a moderate growth of 4.9% compared to Q4 '24, explained by the growth in revenues and the stable gross margin despite the increase in operational expenses from the new stores opened, the new minimum wage and the remaining impact from the fortunate incident earlier in 2025. As it relates to net income, we registered a 14.1% increase in the quarter, mainly due to net FX gain in Q4 '25 compared to a net FX loss in Q4 '24, partially offset by onetime expenses related to the refinancing of our existing in retail Shopping Malls [ bonds ]. Overall, 2025 was a challenging year for InRetail, given the slow start of the year and the impacts related to the unfortunate incident in Turkiye. Despite this, our operations demonstrated the resiliency, delivering growth for the most part. As a result, we ended in line with our consolidated full year guidance of mid-single-digit growth in revenues and slightly below our guidance in adjusted EBITDA. As Juan Carlos previously mentioned, in terms of guidance for InRetail at a consolidated level for 2026, we expect to achieve a high single-digit growth in revenues excluding the anticipated decline in revenues in the distribution operation in Peru and a high single-digit growth in adjusted EBITDA. The solid growth is supported by new sales area positive same-store sales and the consolidation of our multi-format strategy. Now please turn to page -- now we will discuss our results by segment. Please turn to Page 10 to review the fourth quarter results for our Food Retail segment. Our Food Retail segment registered a top line growth of 7.4% in Q4 '25 with a same-store sales growth of 4.4% an improvement versus Q3 '25, given the recovery in consumption, partially explained by the pension fund withdrawals. All of our formats posted a positive same-store sales growth in the quarter. Same-store sales was driven by our Mass format with a growth above 10% and by our Makro format with a growth of around 6%. Our Plaza Vea format on the other hand, posted a same-store sale growth of approximately 2% with an important growth in nonfood categories given the incremental disposable income in consumers. In terms of categories, our food categories experienced a moderate same-store sales growth from the acceleration of our Mass and Makro formats, which have a greater share in food categories. On the other hand, our nonfood categories registered a solid same-store sales growth, mainly in electronics. During the year, we opened 300 net new Mass stores and 2 new Plaza Vea stores, both of which opened in Q4 '25. During Q4 '25, we also opened 83 net new Mass stores. This allowed us to end in line with our full year guidance for store openings. Our gross profit increased 9.8% with a gross margin of 24% above Q4 '24 due to incremental rebates in our supermarket formats, partially offset by the higher participation of our Mass and Makro formats in the revenue mix. Food Retail registered a solid growth of 7.9% in adjusted EBITDA in Q4 '25 with a stable margin. This growth is mainly explained by the increase in revenues and the improvement in gross margin despite the raise in operational expenses from the new stores opened, the new minimum wage and the higher logistics expenses associated with Mass, among other expenses. Overall, in 2025, our Food Retail operation proved its strength with revenues increasing 7.1% ahead of competition despite the temporary closure of stores. As anticipated in previous earnings calls, the change in format mix, the progress made in our organic expansion plans and the investments made in the logistics platform for us involve incremental investments and expenses some of which will remain through 2026 as we continue to execute our [ multi-format ] strategy. These are essential to establishing a solid foundation for delivering long-term growth and value in the segment. In terms of guidance for our Food Retail segment, for 2026, we expect to achieve a high single-digit growth in revenues and in adjusted EBITDA. This is supported by a low comparison basis in 2025 which included extraordinary impacts and closure of stores and by a solid growth in our emerging formats. The pressure in margins from the increased contribution of our emerging formats should be partially offset with higher fixed cost dilution and operational efficiency. Now please turn to Page 11. Our Pharma segment posted an increase in revenues of 4.3% in Q4 '25, combining a solid growth in pharmacy unit with a decline in our distribution unit. Our pharmacies unit achieved a revenue growth of 6.2% with a same-store sales growth of 5.4%, positively impacted by the growth in both pharma and non-pharma categories, the latter as a result of a successful execution of our strategy to capture complementary categories. Additionally, we opened 23 new pharmacies in Q4 '25. We surpassed our initial guidance for 2025, adding 109 net new pharmacies during the year. Our distribution unit instead registered a decrease in revenues of 4.7%. As mentioned before, our distribution unit in Peru continues to reduce exposure to noncore channels with low margins and working capital requirements. Although these changes result in a material drop in revenues, affecting the consolidated revenues for our Pharma segment. They have also created substantial efficiencies in working capital and in operating expenses. We expect this decline to continue as operation progressively finalizes this transformation through the year. In terms of gross margin, we registered a gross margin of 33.2%, slightly below Q4 '24, mostly explained by a lower gross margin in both our distribution and pharmacies unit, the latter given the high comparison basis of last year, which included an extraordinary reversal of provisions related to shrink at costs. These effects were partially offset by the higher participation of our pharmacies unit in the revenue speeds. Our Pharma segment recorded an adjusted EBITDA growth of 1.5%, affected by the slight decline in gross margin and by the rise in expenses related to the new stores opened, the renovations of our formats the gradual transition of our main logistics operations into the new distribution center as well as to the challenging comparison basis in Q4 '24. In summary, in 2025, our Pharma segment delivered a stable growth of 2.7%, primarily driven by the positive performance in our Pharmacies unit, offset by the decline in revenues in our distribution unit in Peru. Our operations, however, provided profitability and significant cash flow generation. In terms of guidance for our Pharma segment for 2026, we expect to achieve a low single-digit growth in revenues and in adjusted EBITDA with some improvement in margin from operating leverage. We anticipate a mid-single-digit growth in revenues in our Pharmacies unit, with the opening of 100 new stores in the year and supported by the continued execution of our format renovations. Revenues in our distribution unit in Peru on the other hand, will decline this year given the changes in the business model I outlined before, affecting our consolidated revenues by approximately PEN 200 million. These revenues did not contribute to adjusted EBITDA nor cash flow generation. Please turn to Page 12 to review the fourth quarter results for our Shopping Mall segment. During Q4 '25, our Shopping Mall segment still experienced some remaining impacts arising from unfortunate in Turkiye. However, as anticipated in prior calls, these impacts dissipated throughout the year, leading to a progressive improvement in the segment's performance. We registered a growth in revenues of 0.4% mainly explained by the increase in GLA from the new power center and from the expansion projects in the Malls of Primavera and Peru. Revenues were also favored by the increase in rental income given the improvement in tenant same-store sales and an extraordinary income related to rent regulations. Our tenants registered a growth of 7.5% during the fourth quarter with positive growth across categories given a progressive recovery in consumption, partially explained by the pension fund withdrawals. Our gross margin was 66.8% this quarter, relatively stable compared to Q4 '24. In terms of adjusted EBITDA, we reached PEN 135 million, a slight decrease of 1.5%, affected by the remaining impacts related to the unfortunate incident in Turkiye, offset by the improvement in performance in other malls. In general, 2025 was a difficult year for our Shopping Malls segment, given the extraordinary impacts throughout the year. Nevertheless, in 2025, our operation, evidence is resilient and predictable nature. Overall, we ended the year with a decline in adjusted EBITDA of 15.4%, very much in line with the guidance provided during our earnings call for Q1 '25. In terms of guidance for 2026, we expect Shopping Malls adjusted EBITDA to return close to 2024 levels, a strong recovery given the low comparison basis. Now please turn to Page 13. During Q4 '25, we advanced with the execution of our expansion strategy across all 3 segments. In Food Retail, we opened 300 net new Mass stores and 2 new Plaza Vea stores. In pharma, we also opened 100 net new pharmacies. Finally, we resumed our GLA expansion in our Shopping Mall segment, adding a total of 26,000 square meters of new GLA for the year. Q4 '25 showed a progressive recovery in consumption with an increase in disposal income, partially explained by the pension fund withdrawals. Consumption has maintained this momentum in the first 2 months of this year. Now please turn to Page 15 to review our consolidated net income results. InRetail registered a net income of PEN 335 million in Q4 '25, a 14.1% increase compared to Q4 '24. The increase in net income is explained by the net FX gain compared to an FX loss in Q4 '24, partially offset by the increase in net financial expenses mainly due to PEN 42 million of onetime expenses related to the refinancing of our existing EBITA Shopping Mall volumes, including structuring costs, premium paid for the tender and reduction of existing bonds expenses related to the mark-to-market and unwinding of existing derivative financial instruments, among other effects standard for this type of operations. Now I will pass the word to Andrea who will discuss our CapEx, cash flow generation and financial debt.

Thank you, Marcelo. Now please turn to Page 16. During Q4 '25, we invested PEN 401 million in CapEx for our 3 business segments. This was mainly invested in the expansion of our physical network. CapEx was also invested in renovations of our formats and in scheduled maintenance of our existing stores and malls. Finally, a portion of the CapEx was also assigned to our logistics operation, including to the new pharma distribution center and to a new distribution centers for Mass. For the full year 2025, we invested approximately PEN 1.5 billion in CapEx for our 3 business segments, slightly above the amount of CapEx invested in 2024, largely explained by the increase in CapEx in our Food Retail and Shopping Malls segments. In Food Retail, we invested more CapEx in store openings, particularly in [indiscernible] in maintenance and renovations of our existing stores as well as in the new distribution centers formats. In Shopping Malls, we resumed growth and hence, invested in expansion projects, including a new power center and preventive and corrective maintenance for our existing malls. In terms of cash balance, we ended the year with PEN 1.9 billion in cash, higher than the end of last year's cash guidance of PEN 1.5 billion. The increase in liquidity results mainly from an improvement in working capital management in our Food Retail and Pharma segments, offset by the higher CapEx investments, the slight decrease in adjusted EBITDA and onetime cash impact related to our refinancing of the Shopping Mall bonds previously mentioned. Now please turn to Page 17 to discuss our consolidated financial debt. As of December 2025, InRetail had a consolidated net debt of PEN 5,110 million with a net debt to adjusted EBITDA ratio of 1.7x. The decline in our consolidated debt balance during the year was favored by the decrease in the exchange rate. The short-term position of our consolidated debt stood at PEN 377 million, representing approximately 5% of our total debt, significantly below the prior quarters as we successfully implemented our capital structure strategy during 2025. Please turn to Page 18 to review our debt by segment. Our Food Retail segment ended the fourth quarter with a net debt of PEN 2,370 million, below the previous quarter and below Q4 '24. Net debt to adjusted EBITDA stood at 2.1x, below the comparable quarter of 2024. InRetail Pharma ended the fourth quarter with a net debt of PEN 1,409 million and a net debt to adjusted EBITDA ratio of 1x from a continued increase in cash flow generation. InRetail consumer ended the fourth quarter with a net debt to adjusted EBITDA ratio of 1.3x below the previous quarter. Finally, InRetail Shopping Malls ended the fourth quarter with a net debt of PEN 1,514 million, resulting in a net debt to adjusted EBITDA ratio of 3.6x affected by a decline in adjusted EBITDA and the increase in financial debt related to the new bonds issued in October 2025. Now I will pass the word back to Marcelo to discuss our CapEx guidance.

Thank you, Andrea. Now please to Page 20. In total, for the next 3 years, we expect to invest around PEN 2.7 billion. Excluding the investments in our new pharma distribution center, which is a project that does not occur frequently or every year, this amount is slightly higher than our recent historical investment level. The majority of the total CapEx is expected to be allocated to business growth opportunities primarily related to new store openings and renovations, expansion of existing Shopping Malls and new power center openings. The remaining CapEx is expected to be directed to the continued development of our logistics and IT infrastructure as well as to the maintenance and refurbishing of our storage. In terms of allocation by segment, we expect to invest close to 50% of our total CapEx in our Food Retail segment. During 2026, we expect to open over 300 new stores across all formats. As a majority of these openings are expected to be in our Food Retail segment with one new supermarket and around 200 new Mass stores. Additionally, we expect to open around 100 new pharmacies and one new power center. This future CapEx investments are intended to accelerate organic growth and consolidate the value propositions of our formats in our segments. This covers our presentation, and now we will be glad to answer any questions you might have.

[Operator Instructions] Our first question comes from the line of Alonso Aramburu of BTG.

A couple of questions. First, if you can give us maybe an update on [indiscernible] if there's any on that front. And second, regarding Mass, the openings for this year, 200, slow down from the last couple of years. Just if you can walk us through why the slowdown? And if you can give us maybe some color on how the new stores are performing, the Mass stores and any color also on the performance in Chile?

Sure. Thank you, Alonso, for the questions. So first, on [indiscernible], honestly, not much update there. It's pretty -- it's not clear when the mall is going to open at this point. As you guys know, the formal investigations by the authority hasn't completed yet, and it's very unlikely that anything will happen prior to that. We've been continuing to collaborate with the authorities. But at this point, the decision doesn't depend on us. That was on [indiscernible]. As it relates to the Mass openings, has to do with a couple of things. First is 200 stores is still -- we believe it's still an important amount of openings. But remember that over the last couple of years, we've opened more than 600 stores in, as I said, in the last 24 months. The main focus of management and organization in 2026 is to maximize productivity per store as it relates to revenues per store and also to the productivity in whole operations and logistics operations as well to improve working capital cycles. So this is a plan that we started executing last year, and it will continue in 2026. And the objective is to strengthen the value proposition of Mass in terms of low prices, high-quality products, proximity and as I said, through a lean and efficient operation. It implies a series of other things and many important changes in the operation, which include, for example, a process to make Mass more independent without losing the synergies of the larger organization, things like independent commercial team for better private label procurement, for example, a more independent logistic operation to better align with the format needs, organizational changes as well to decentralized decision-making to the regions, to the stores. We will continue remodeling stores. We've remodeled 130 stores. We're going to be way more than that in 2026. And as I said, overall, these are important changes in our operation, and so management will focus on successfully implementing them, looking to maximize long-term value. That was the second question. The performance of the new stores, the new stores that we have opened are being opened with this new operating model. They're actually performing better than the openings that we did some years ago. So yes, that's on the new openings. As it relates to Chile, the operation is still very early stages at this point. Last year, we made a few important initiatives in that business model. As we mentioned in prior calls, the objective for us was to take control. We did some cleaning in terms of implementing new systems. We changed the logistics operator that we had from when we bought the asset, we were able to register the brand Mass, and we changed the brand in all of the stores. We remodeled a few of the stores, about 27 stores, and we actually opened as well some stores by year end. Right now, we have about stores. And similar to Peru, to be honest, the focus in 2026 will be to strengthen the value proposition of the model there, try to bring the stores into closer to a true hard discount model and increased efficiency, increase the revenues per store in 2026.

Your next question comes from the line of Nicolas Larrain of JPMorgan.

I had a couple also. The first one is just a clarification on the consolidated guidance for the company. Sorry, I did not catch it quite clearly, but you mentioned the guidance is excluding or including the expected decline you will see on distribution top line? That's my first question. And then the other one is on working capital. So we saw very relevant improvements, I would say, on the fourth quarter of this year on Food Retail and also on the distribution. I understand, of course, that as we put more Mass stores into the mix, these have better working capital and also you've been working quite a lot on the distribution side to unlock for the working capital gains. I wanted to see if there are any other maybe nonrecurrence that help working capital, particularly on the supermarkets on this quarter? Or this should be the recurring level going forward? Those are my questions.

Sure, Nicolas. Thank you for the question. So in terms of the guidance, just to clarify, its high single-digit growth in revenues, and that guidance excludes the decline of approximately PEN 200 million in revenues in distribution in Peru which is a decision that we already made. It's an issue of a comparison basis and where distribution in Peru. This year in 2026, we'll have about PEN 200 million less in revenues. As I said in the call, these are revenues that did not contribute to EBITDA nor to cash flow generation. So excluding that, growth will be high single digit. And the high single digit in adjusted EBITDA includes the whole consolidated numbers. That's for the guidance. And the second question on working capital. So the working capital that you see in pharma, it's pretty much what you should expect going forward as it relates to the cash conversion cycle. And that has to do basically with efficiencies made in distribution and also some efficiencies made in pharma. We had a slight pickup in inventory at the end of the year and starting this year but pretty much has to do with the new distribution center, given that we send security inventory to the new distribution center to make sure that we didn't lose any sales, but that's going to be temporary and should be -- should dissipate going on. So what you saw in the fourth quarter should be pretty much what we expect going forward in pharma. And in Food Retail, it's a combination of a couple of things. One is efficiencies in working capital as well as Mass grows, as you said, that's going to favor the working capital cycle but also in the fourth quarter, particularly in December, given the strong demand, there were also some stock-outs in certain categories, which ultimately in the Mass calculation shows a decline in inventory levels and inventory days that should increase slightly a bit. There is a factor affecting it because of the stock out of the high demand that we had in December, but still versus the fourth quarter of 2024, there is a significant improvement in the working capital cycle in Food Retail.

Thank you. With no further questions on the telephone at this time. I would like to take questions from the webcast. Rafael?

Thank you, operator. Well, the first question says, what is driving the foreign exchange gains?

In terms of the FX, there's a couple of impacts. One that has to do with the U.S. dollar debt portion in the balance sheet, which is partially hedged through the hedging instruments that we have. But still, there is a portion that's not covered, and that creates some movements in -- when the FX moves, but it's balance sheet and noncash. And the second one has to do with the lease liabilities related to the rents and the leases that we have in the stores. In all of the segments, a portion of the scores are rented in U.S. dollars. For example, in pharma, it's roughly about 45%, 50% of the locations that actually rented in U.S. dollars. And given IFRS 16, we had a liability for that and that liability moves as the FX moves. But again, it's noncash as well.

The second question, why were interest expenses higher, excluding the PEN 42.1 million related to shopping center liability management?

So the higher financial expenses related to -- excluding the PEN 42 million has to do with a couple of things. One is the incremental debt. Remember that when we refinanced the bonds in shopping malls, we issued a slightly higher portion than the actual refinancing for CapEx and general corporate purposes which created an incremental financial expense for the organization. And 2 is we refinanced as well PEN 2 billion in local bank debt that we had from structured debt that was actually refinanced in 2021 when rates were pretty low. And so the refinancing was actually with rates were a little bit higher than that. So it's a combination of incremental there in Shopping Malls with slightly higher interest rates given the refinancing in the structure debt with the local banks.

The third question, could you please give us more color on the recent arbitrary closures of Intercorp stores in Miraflores? How many retail stores were affected? Are they going to materially affect 1Q '26 results?

Sure. So this was caused by a legal dispute between the controlling shareholders and the municipality of Miraflores. The stores affected were one Plaza Vea, one Vivanda and 2 Mass stores. As of today, the Plaza Vea and Vivanda stores are open and Mass is expected to open probably this week or in the next few days. So this will not have a material effect on our 1Q '26 results.

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

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

Thank you all for participating in our fourth quarter earnings call. As a final remark, I just wanted to underline that 2025 was a challenging year for InRetail given the unfortunate incident in Turkiye. Looking ahead, we are confident that 2026 will be a good year for InRetail, expecting to recover solid growth in revenues and in adjusted EBITDA in our core operations, thanks to the strength of our value proposition in our formats. You have any follow-up questions, please do not hesitate to contact any of us.

This concludes today's conference call. You may disconnect.