Lojas Renner S.A. (LREN3.SA) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to Investor Day 2025. I'm Fabiana Oliver, Investor Relationship Manager. Our event is held -- being held in a hybrid form. So thank you so much for coming here to the Porto Alegre and thank you all who are online. So the event -- this event is being streamed and simultaneous interpretation is being provided. It will be recorded and both the English and Portuguese slides are available on the RA website. This morning, we have had several executives here to present to you our strategies, our ambitions for the coming 5 years and how we're going to get there. Well, this is our agenda. How we put together this agenda for today. And in the end, after Daniel's session, we're going to have a Q&A segment. For people who are here, of course, just raise your hand, and we're going to have like -- we'll be able to answer your questions. And if you're online, please just click on the Q&A button. Now I would like to invite the President of the Board of Directors, Carlos Souto, to come to the stage.

Good morning, everyone. It's loud, better now. I was so emotional today. It's a great honor to have you here in the Investor Day 2025, a very important moment to reinforce the essence of the culture of Lojas Renner S.A, which was built upon transparency, discipline and trust. These are values that have always guided our relationship with the market, along with a long-term view, which is shaped by decades of decisions -- pioneering decisions and a leadership that has consistently placed ahead of the trends in the sector. Our history in the capital market began in 1967 and reached a milestone in 2005 when it became the first Brazilian corporation, whose 100% of the shares are negotiable in the stock exchange in the capital is fully pulverized. This same movement not only changed the company, but has also inspired the Brazilian market. Year 2025 is particularly significant. And now we celebrate 60 years of our existence in 20 years of this milestone in the capital market, which redefined our identity . A history, which has been marked by cycles, transformation, constant evolution, discipline to grow, encouraged to innovate. We have always been anchored in the purpose of being a reference in fashion lifestyle in Brazil by making clients happy and promoting responsible fashion. Since I joined the Board as a president in 2024 with our Vice President, Jean Pierre Zarouk and all the other members of the Board of Directors Juliana Rozenbaum, Chris Edington, Andrea Rolim, André Castellini, Marcilio Pousada and Adriano Seabra. Our focus has been very, very clear. To strengthen the strategy, to preserve the culture and ensure the generation of sustainable value to all stakeholders with our -- we always providing support to our administrators and the company itself. We are independent, rigor. We're responsible and the perspective geared towards the future, guided by our values and aligned with the highest standards of corporate governance. The role of the Board is to ensure the continuous growth -- sustainable growth of the company by defining the strategic decision, anticipating structural changes, promoting innovation and strengthening our culture of leadership. The -- we have seen up close the strategic initiatives of the company, ensuring that the opportunities became in results aligned with the interest of the shareholders and generation of value in the long run. Among the important stages -- smarter things we did this year, we have reached a milestone, which I would like to mention the approval of our long-term incentive plan. A plan that aligns Renner with the best global practices all over the globe, reinforces our commitment to meritocracy and the alignment to the interest of our stakeholders and also strengthen our capacity to attract and retain the talents to carry out the following cycle. What you will see today with our executive leaders. It's a company that is getting ready only for the next cycle before the next decade, which is more -- will be more digital, more integrated, more data-oriented and more geared towards sustainable growth profit. In 2025, we have redefined the strategic priorities of Renner through a clear integrated plan, which reinforces brand reinforcement based on an incomparable understanding of Brazilian customers, strengthening our position as the major reference of fashion in Brazil. A structure of unique products, differentiated and insight-oriented structure, which -- in which we use data, artificial intelligence and a model of execution that improves the margin. It reduces remarcations and speed up the time for release. An omni ecosystem, which is continuous and scalable, which expands its reach through new stores, better insertion into the digital sphere and better productivity. It's a strategic facilitator promoting more engagement and providing support to our expansion into new markets, disciplined financial management which ensures efficient capital with a solid cash flow leverage profile, which is conservative and a flexible structure which is efficient as well. In 2026, we're going to see the important beginning of a new cycle of growth and generation of value. On behalf of the Board of administrators, I'd like to thank you all for being here. Thank you for your trust and your continuous work. And I would like to thank you all. Thank you, all our staff members, our administrators. All of them under the leadership of Fabio have put together the Investor Day, which I believe you'll love it. They dedicated. They were so fully dedicated. Thank you so much and thank you not only for the Investor Day, but for all the days in 2025 with their competency in high-quality work, you dedicate ourselves tirelessly to make Renner better each day. Now I would like to invite Fabio to come to the stage. Thank you.

Good morning, everyone. I'd like to thank you for being here, both online and in person. Souto, I would like to say that for us, both for the Board and for me personally, for all the executives are focused is on sustainable growth and generation of value for our company. We're focusing on that. That's why we're here today -- but this is a goal. The goal is to share with all of you, some of the ambitions that we have for the coming 5 years, which are related to growth and generation of value. And also, we're going to share over this -- this morning, we're going to share with you guys how we plan to achieve those results thus maximizing the potential of our assets. Now we have to reinforce to you that this is our starting point. We are leaders in the market. We are getting market share. We can get even more and expand our leadership position, leading position, we can leverage even more in our market differentials, competitive edges. We know a lot. We know consumers a lot. We have strong brands, which are recognized by everyone. We are unique in terms of the omni model, we have the largest capillarity in Brazil in terms of physical stores with a digital relevance, which is very strong. So putting these 2 things together makes us very, very unique in the market. And by leveraging all that, we have a team which is highly competent and engaged. And all of that mix is ahead of our competitors. Well, by going straight to the point, we started this period from -- we'll start the 2026-2030 period with a platform, which is ready. We have invested in it, and we're going to talk about it. I know we have invested in infrastructure, technological platforms, CV, artificial intelligence, algorithms, database. And we -- our installed capacity is big, and we can grow with profits -- with profitability. So this is the moment we've been growing and getting in our performance has been really good since mid-2024, but as Souto mentioned, in 2025, we start and look at that, okay, what else? What then? We have installed capacity to accelerate, to speed up even more and continue growing and gaining more profitability and revenues. So I just want to show you this. I saw it earlier before the Investor Day, we have published some of the figures that you can see here. And you'll see throughout this session today, with notices, relevant data about the indicators of expectations for the coming 5 years. So this is on our website. We have the expectation with these investments that we did with the initiatives that we will speak of today have an average growth in the next 5 years between 9% and 13%. More than that, with a gain in profitability gain and profitability above this coming through scale, through gross margin, but reduction of expenses, we have an expectation in this period during these 5 years of reducing our commitment of expenses on the net revenue to 2, 3 percentage points coming from the growth, gaining efficiency, also reduction, specific reductions. Another important point, talking about investments we did before, we came from a cycle of investment 9% CapEx on our net revenue, investments geared towards this platform, this infrastructure, the installed capacity in the database in this model that is ready to grow, ready to grow with efficiency and profitability. So we go to a phase now that our investment goes -- it is more normalized. We have an expectation of a CapEx on net revenue around 6% to 7.5% in this period -- annually in this period, but the investment is geared towards growth more or less 2/3 of the investment is for new stores, refurbishing stores and digital journey. Three points of growth, direct growth. When we align growth in sales reduction of the commitment of expenses on revenue and a CapEx that is more normalized, it allows us also to be ambitious with a ROIC around 20%. And with a generation of cash free that is very important that allows us to do all these investments, operate the company and having an expectation to continue to have a distribution of value to the shareholders in a high level. Daniel is going to explore this more, but we have an expectation to distribute a value between 50% and 80% of the profit to the shareholders doing the necessary investment and growing. Besides this, I mentioned that today this morning, we published these indicators, these and a few others, but we also published a new repurchasing program and a new distribution of interest rate on our own capital. You can have access to this. These are examples that -- our new program of repurchasing once again, in an interesting amount, the new distribution of interest on our own capital are examples of the trust that we have in our company and the generation of value that we have for the shareholders. Well, and our strategy, I was talking about numbers, but it was guided in our purpose. Our purpose is to delight everyone. We want to delight our customer to go above the expectation of our customers and our shareholders' expectation, generating more value. We do this guided also by an obsession in the centrality of the customer, delighting the customer is essential for us, aligned to our value proposition to be a reference ecosystem in lifestyle and fashion. In the past, we talked about our strategic pillars we call the 3Rs. The 3 objectives where we want to be a reference, we want to be a reference in lifestyle and fashion in delighting journeys of our customer and responsible brands. These are the 3 references that we have worked on for a few years. The published strategy here is to accelerate and make potential, maximize what we were doing with a few other initiatives. It's not a change in the route. It's a continuity with an evolution and acceleration. Regarding the 3 pillars that we're going to talk about this morning, this is how to win. And the things that make it feasible are the innovation, artificial intelligence. Also, we are working over 10 years with this, not just database algorithm developing of an end-to-end system to use this. The operational excellence that we have and our team, our people and our culture. But I would like to call here. I ask you to play a video to see what Lojas Renner S.A. is today. [Presentation]

Well, we saw the numbers now, what Renner SA, some of our brand concepts. We're going to see this in numbers. When we bring here, we are the leader ecosystem of fashion and lifestyle in Brazil and a few numbers of the last 12 months of September, these are public numbers. We have, in this period, over 20 million active customers purchasing in the last 12 months that purchased with us BRL 13.7 billion in merchandise and retail. We generated net profit of BRL 1.4 billion and generated a free cash flow of BRL 1.5 billion. Besides being the main fashion brand in Brazil, the most important brand in fashion in Brazil quite far, we have a global recognition also especially in our ESG practices. We are a reference in some of the main rankings and levels such as Dow Jones Sustainability Index, and we are AAA in the rating -- in the Stanley rating for ESG ahead of our peers -- domestic peers and global peers. And with some of the competitive advantages of Renner are related to what we speak about the 3 pillars, the 3 Rs. When we talk about the 3Rs, fashion and lifestyle, big competitive differential we have. We invested a lot during these years, and we continue to evolve is our execution of fashion, our capacity to create incredible delighting, products assertive, capturing the best trends translating this to the customer to the taste of our consumer of the Brazilian market, Argentinian and from Uruguay also. Another important point is this issue of the supply chain. We have the best suppliers domestically, an important chain -- it's an asset, a competitive advantage, and we have a long-term relationship with them. This is very hard to be built. We have over 20 years of relationship with our main suppliers. Besides this, we also have the flexibility of a global matrix of sourcing 2 important assets that we have here. Connected to this, execution of fashion and network of suppliers that's a differential or supply system, 100% omni, 100% SKU based. We have the flexibility, the scale for physical and digital working piece by piece, bringing speed, granularity, optimizing our assets and our stock also, reference in delighting journeys, we have the issue of capillarity or physical capillarity, incredible, integrated to the digital. The omni is very important to be present, 100% of our customer journey, not just in the physical journey or the digital journey in both integrated, we have the biggest proximity with all of our customers and the best experience with the omni players also. All of this is made even stronger with a digital platform that booms with AI data. We invested a lot in the last few years. When we talk about data and artificial intelligence, it's present in different moments of our model on the platform. For example, our database that I mentioned, the knowledge of our customers that drives the journey and with a certainness in product is leveraged by [indiscernible] that potentializes this convenience and recognition of our customers, not just that. We go to the end-to-end model. When we capture the trends with more assertiveness, the decision of sorting the supply, distribution, journey in the store, journey online, recommendations, content and productivity of the team. All of this, we use a lot of AI content database and this continues to evolve. Besides this, we have also a part of responsible fashion. We are #1 brand in value in Brazil. We are referenced also ESG globally and also financial stability and financial security for safety. When we talk about the market that we are positioned, Brazil, Argentina, Uruguay, the majority of our market is Brazil, we sell fashion, clothing, shoes, accessories, beauty. Here I detail the estimate of the Brazilian market in terms of garments. We have -- we are in -- or apparel, we, in '24 an estimate of BRL 132 billion in terms of consumption and the estimate of Euromonitor is that this market will continue to grow 6% every year in the next few years because we are positioned in such a big market. This is an asset, a competitive advantage also more than that. If we look at the formal market, the 3 biggest players only have 20% of the market. It's also a potential, not just in terms of growth in the market. But again, I've shared in terms of the biggest players. We must remember that we are the leaders with 10% of formal market. No, it branches when we do benchmarking is a lot higher. Our potential is a lot higher due to this. We must remember that we're talking about the formal market, it's hard to estimate exactly the size of the informal market. The majority of the estimates talk about 40% in informal market. So the formalization of the market brings this to the main players without even mentioning that we are positioned as the player that has the greatest potential to capture this market and grow even more for market share. Besides this, in this market, our positioning is a big asset, a big differential. We are positioned in accessible fashion, where we have Renner, Camicado, Youcom and we see a lot of space to be able to grow and grow more in the concepts we have, the brands we have, we see more space in the same positioning to grow with new concepts. The numbers that we mentioned today that we published that we're going to talk about are about the current assets that we have, the current concepts we have, the current brands that we use we have, the current geographies we have in the countries where we are already at. There is potential for more, yes, there is potential for more. We are always paying attention to this. We evaluate all opportunities with diligence, we're focused to generate value to the shareholders. We pay attention to concepts. It can be organic or inorganic. Inorganic, the complexities of integration -- possible complexities of integration that are important and overlooked sometimes or a new country also, the geopolitical issues. The possibilities are out there. It's not about this that we're modeling today's numbers, additional opportunities for the future. What we guarantee is we always will evaluate with discipline and focusing to generate value to the shareholders at every moment. Well, we have, in the last 10 years, let's detail the cycles a bit more. We have an important growth. And this important growth, a part of it comes due to the square meters, physical expansion. In the last 10 years, around 5% concentrated in the beginning of the period because in the last years, we almost did not grow in square meters, but we grew with gain of efficiency, the sales grew more 10%. The profit and cash will increase also. And we did this with market share increase. We brought different indicators to compare, but PMC and Euromonitor, PMC we grew over 4x the market average. Euromonitor, we grew over 100% of the indicator gaining market -- even more market in the last few years. Obviously, when we look at the main players, we have a different event in the beginning of 2020 with the pandemic the entrance of new business models, indigenous growth of other players cross-border that have a higher increase or growth in the market. One, when we look '23 on '24 and '25, there is a stability of the other business model and a continuity of our growth. When we look at the path beside it in terms of productivity, looking at omni players, the data is public, complete sales compared to the area. Sometimes there are many publications of results adjusted here just at their category X or Y? What's valid in total, we agree total sales that's generated on top of the assets you have. So we're gaining -- we were a reference when you look at before the pandemic, we increased our advantage 2 times. We increased the gap. So we need to see how we can continue in this trend. While when we look at also -- it's important to bring context to see the cycles, the moments where the growth is coming from the profitability where it's coming from and what we see for the future, I brought from 2010 to 2019. It was a moment that we grew a lot especially due to the geographic expansion in Brazil. It was a moment where we advanced throughout Brazil. There was a boom of shopping centers inaugurations, a lot of stores, a lot of square meter, a lot of our growth, especially in the beginning of the period came from this. Besides this, we started to grow in new countries, new geographies. Close to the end of the year, we opened Argentina and Uruguay or Uruguay then Argentina. In the beginning of the period, we started to test and see the opportunities. We understood of new concepts. So Camicado was purchased earlier this week in the cycle. Youcom was created in the beginning of this cycle, too. And so they begin growing and contributing. Minimally, at first in some countries in this period. When we look at the 2022-2023 cycle, we made major investments in infrastructure. This platform that is ready now with installed capacity to grow with revenues, profitability. It was built in this cycle, 2020-2023, not many stores were open. I mean some of them, of course, we managed our portfolio. We closed some stores, we opened others. But in terms of area growth, no, didn't have much. We grew digitally, of course, but in the moment, we are investing in efficiency of our digital platform, it was diluted, but the investments that we made allowed us to getting to the following cycle, and I'm talking about 2024-2030. We're talking about the numbers, figures from 2026-2030, but it started in the middle of 2024 and will be leveraged in 2025-2030. But in that period, we saw that we finished our investments in infrastructure. We diluted expenses on income and improved profitability. Daniel is going to show you a little bit more of that. And now we're ready to do even more to accelerate our expansion and other points. So the growth we had from 2024 to 2030, it will be based on efficiency. And on top of that, it will be combined with the acceleration of expansion digitally, of course, with good profitability when we have capacity to do so. When we talk about strategy, we believe that there is something that says culture is a strategy of breakfast. We believe if they are not aligned, yes, it could be. But we get really, really -- we're really concerned about working with culture and strategy together. So they don't like overtake the other, but they can go hand in hand. And both of them can succeed. So we've developed our strategic plan, we made adjustments to the essence of our culture, but we made adjustments in terms of the evolution of culture aligned with the strategy. Also, the metrics as you say long-term, short-term incentives, they're all aligned with these strategic plans, the new organizational strategy, process date and sustainability. They all converge. They're all stated in this plan. But to talk more about this, I'd like to invite our Vice President of People and Sustainability, Regina Durante. She's going to talk a little bit more about it.

Good morning, everyone. I'm Regina. I'm going to talk to you about our people and sustainability strategy. Our strategy is grounded in 4 pillars. We'll start with the idea of cultural evolution. Our cultural evolution is line with the corporate strategy. So that's why strategy and culture go together. At Renner, we have established new organizational values as we have revisited them in a short period of time. And among those values, we chose 5. It's important to remember that our purpose here will not change. We want to delight customers. This is what we're here for. And because of that, we have strengthened one of the most important values that we have, clients and customers. That's what we are here for. They are at the center of our decisions to give them what they really want with technology and innovation. The second value is high performance. We know our culture at Renner SA is a culture of bidding expectations and high performance elevates that even more, raises the bar even more because we want to deliver results with more quality, speed and assertiveness. Third value is people. This is one of the values that most important for us because we are a company of people, to people, and we need to take care of our staff members, giving them an environment, a diverse, inclusive and environment for high performance. Forth value is sustainability, which is today a future, which builds our future. This value that ensures that we're going to be there longer and the fifth value leadership. The value, which is the propelling agent of all the others and all the behaviors that are associated to it because leadership is the role model, is a guardian of our culture. Leadership is what makes develops our talent for today and the future and also ensures that we are always leaders at the forefront. Second pillar is performance management here. We have 2 major types of incentives that are aligned with the interest of stakeholders. And the corporate strategy and executives and staff members' interest. These are important leverages to retain people. The first incentive is the deals with short-term goals. We have a trigger. The operating results or EBIT, same thing as main indicators, we have the net operating revenue, free cash flow and net income. In terms of long-term incentives, we have the following indicators: [indiscernible] ROIC and relative TSR. Our third pillar is organizational structure and processes. This pillar is embraced by our corporate strategy and evolving. It has been giving good impact of results. We also have the right team. Our team is engaged with 89% of engagement. We have a team that wants to be in the company with 95% of retention among leaders. And our team grows and develops with us with 66% of internal performance in the leadership positions. Fourth pillar is sustainability. It's got ramifications in 3 major areas. The first one is Sustainability and Climate Solutions, Climate circular and regenerative solutions, our main goal is to its resilience. And we are very proud to remember that we were the second company -- #2 company in the world to adopt voluntarily the FRS to report. We are also very proud to say that 8 out of 10 PAR pieces made by us are sustainable. The second pillar is human and diverse relations. Our goal here is to have a real image of Brazilian society in our staff. So we can offer them elections and experience that are even more delighting and more assertive to them. Today, we have 62% of women leaders, 48% of women in high leadership positions and 34% of black leaders. Third pillar is the pillar of connections that amplify. It deals with our long-term partnership with our supply chain at national and international level. The strategic partnership is important because it makes our suppliers have a unique methodology with us. And so they can get all the support they need for them to have like social environmental practices, but also managerial practices. Like globally speaking, the best that we have to offer to those suppliers. And their management improves too. Today, 100% of our suppliers are certified both nationally and internationally. And so with all that strategy that I have just mentioned to you and with all the indicators, people indicators, we are certain and we're sure that we have the right strategy and the right people and the right team to deliver even more value to stakeholder and carry out this strategy with assertiveness. Now to talk a little bit more about the strategy and give you details about what's next with Renner. Please, let's see, my colleagues will be here with you. Fabiana Taccola, Renner VP; Renata Altenfelder; Gustavo Yuasa; Paula Mazanék; Alexandre Aires, Our Supply Chain Director.

Thank you. Good morning, everyone, welcome. Now we're going to drill down together at BU Renner, because BU -- but that's our brand. And to talk about Renner, I would like to remind you what we're talking about. Let's talk about this company, this brand. The heart of our fashion here. In Brazil, we are the largest fashion and lifestyle brand in Brazil. Remember, we work together with our customer. We love them. We connect with them deeply, and we are recognized as a company with a feminine tool. And to talk about feminine, I'd like to remind you, most of our customers, over 75% of them are women or females. And they are more or less like, they are ranging from 25 to 50 years old, vast majority of them, and they live and they're like upper middle-class and middle-class individuals mostly. But we also cater not only to famine audiences, we are a family store. We work with things for men, Cologne and perfumes, beauty products, accessories, shoes, kids. So we're very comprehensive. And what -- what's unique about Renner in relation to our competitors. I think people -- it's important to remember that what makes us unique is the way that we translate collections. That's what we call the lifestyle methodology. This is more or less like how do you get information that is out there in several systems on the planet and translate that into assertive collections that relate to our customers. Now that methodology, the consistency of this methodology year after year with makes us unique. Fabio mentioned it, sales per square meter is so high. How do we get that? But that's not enough? It's more to it. We -- there's a nice part, the Brazilian aspect of it. Now what makes us Brazilian is the deep knowledge that we have of our clients or customers. You cannot make carry catchers with that. We look real hard to translate fashion with the Brazilian influence. Something very important too. We are recognized by our customers for the quality of our product. This is a reference. We are a reference. And of course, not least -- equally important for our customers, our value. Our products have an aggregate value that is really, really high. And this gives us -- this mix is accessible to them. And what does that mean? People just as a reminder, this translate is not only the largest brand of fashion and lifestyle in Brazil, it's not just the largest retail -- fashion retail store. It is the most valuable market in Brazil about brand in Brazil in terms of fashion and lifestyle. We're the most loved store and brand. We have the largest number of followers on social media. Our top of mind is almost twice as big as large as the second, the runnerup. Our competitive NPS among the omni players, we have the largest NPS, clients recognize with certain -- and our share of voice, of course, is really big. Fabio mentioned the cycle. What comes next? How are you getting ready for that? What's the cycle of growth? And to talk about it, the major goal of this new cycle is to evolve from a recognized retail brand to a fashion brand. There is something I would say here internally. We talked about purchasing at Renner -- purchasing at Renner to purchase Renner. And then there are 3 pillars in this scenario. We're going to work with the product in delighting experiences, and we're going to deal with the responsible fashion brand. What do we expect to get out of it? To continue growing in terms of number of customers, to continue growing and having a loyalty to our customers, increase the conversion and average expenses. We're the largest store in Brazil in which customers spend more. You know what else, we're going to be loyal to them when it bring them to us, but mostly we're talking about, of course, increased stock, the margin and other things. But the most important thing here is to be the most relevant fashion company in our customers' wardrobe and -- in their closets -- to have the largest number of pieces in their closets. This is what we want. And to talk a little bit more about, it is very important. Our first pillar, Renata, is going to talk about the first pillar in a responsible fashion.

Good morning. I'm very happy to be here with all of you. And to start, I would like to talk about the brand, Renner, the brand. I'd like to show you a video. [Presentation]

So that's it. This is where we're going to stay in the middle of a wall between desire of being myself and the fear of being myself. When is -- when did our major expression toll became this?. Let's imagine the fashion that we love. Let's imagine, so let's take risk, let's mix, let's try out, that's revolutionize. You can reinvent how to do the passion. Renner has been around for a while, and it will help you how experience fashion your way, your rhythm, lease yourself, fashion is just the beginning. Well, this manifesto was released in March this year. It's an invitation for our customers to recreate the way they see fashion, bit more authenticity, originality, lightness with the freedom who they are. I'm very proud to say that all the images that are in the video, which you just saw are images of campaigns that were released after this new platform, be yourself, [indiscernible]. But we're here to talk about the strategy. How are we going to construct this new moment? How are we going to evolve into this fashion brand? First of all, we're going to work on delighting experiences in every single point of contact and omni experience. I know customers -- we don't use the words on and off anymore. They are -- they have merged. These experiences bring us some narratives to talk about fashion, behavior, sustainability which is something that has been growing in importance in terms of purchasing decisions. Almost 70% of the people in Brazil today consider fashion attribute, consider retainability when they connect to a fashion brand. And so we gain a lot from it. So we are the favorite of these customers when we do that. Also, we're going to reinforce our fashion expertise. We know a lot about fashion. Our lifestyle fashion, we translate fashion for our customers or what they want. And we're going to do that by connecting with cultural moments and moments of the cycle of fashion in the country because you know fashion is culture. Also, we're going to use several data, artificial intelligence to boost, the emotional connection with them and talk to these customers even more. How are we going to connect with them? How are we going to give them relevant information that you need? Customers today, their journey is not like -- it's not like steady. Today's things are very fluid. And also, we know who these customers are. We know these girls. How do we know them? How do we activate our raters? First, we're going to look inside purchase information, market information, demography, what's happening on social media, what is happening in culture. Also, we also do research, a very specialized research in the fashion NPS, what they expect -- what customers expect? What they believe -- what do they believe? We always say that fashion is an expressed -- tall of expression. When we get dressed. When we want to communicate something. When we believe we're not thinking about it. And so whenever we talk to these women, what are they telling us? They're telling us that their journeys are fluid, they're multifaceted. Fashion is something very important for them. Yes, it is. And they know that Renner is the most important brand connected to quality. These figures here on the left makes us very proud when we release our platform in March this year. We did some research. And since we released [indiscernible] be yourself, it grew 25 points in recognition as a brand and not only sales close, but is authentic. We know fashion, we are original. We have a lot of quality. Knowing who is this woman, this consumer and what they are looking for, how do we get to them. First, we create these clusters, don't worry, it won't be one in each box. You changed the box during the day. But we create these clusters of behaviors of the consumer with great content based on this, and we distribute the content in different points of contact media, point of sale, digital, SAC, an event like this or every point of contact, you need to bring this information and this has brought results. Our base of customers here. I'm talking about the brand Renner. Fabio was talking about 20 million customers because we're talking about all of our brands, 19 million customers is the brand Renner. It's a base that grew 16% in the last 2 years, grew our omni base, also the consumer that buys on digital and physical. And very important data, we grew 33% our base of loyal and ultra-loyal customers, they come more to our stores, the brick-and-mortar or online. They buy the -- average expenditure is over 4x as high. We have a very strong brand. We know a lot about our consumer, and we're doing, we're making this invitation to recreate and transform the way it uses fashion and Renner should be his tool for expression so they can say who they are. I'm sorry, the audio is very low. Here I want to take a step back, remember a bit or normal curve of fashion trend. So I can show a bit where Renner is positioned. When we look at the normal curve of fashion, Renner is exactly here. What is Renner? Renner is a trend launcher in terms of fashion. We are positioned before the hype. So it is not -- the trendsetters so-called the fashion creator and we approach the entire mainstream, but we position ourselves here due to 3 important reasons. First one, the majority of our competitors is in the mainstream, the majority of them. So being here in the launch before the hype, you have capacity to capture value that is higher. The second important point of this is that we are always testing product all the time. And you can discover. There's a lot of analytics here. Many tools to find out what are the products that will go up, that will explode that will become hype high the potential products that will become hype. And having this before the hype, it's an avenue of an opportunities and advantages. And there's a third point more important for me and for us is more relevant, the mind of the consumer, he starts to perceive that Renner has products that are trained before the competitor, the visits are more frequent and you have that mindset of the customer, the brand -- fashion reference and lifestyle reference for this customer. Talking about the productive process, how is Renner, we must remember we have long term, big collections. It doesn't have to be urgent. We prepare for what we choose as a trend, forecast and plan the next season of our collections, big volumes, essential products. This isn't long and you have the in-season. And on in-season, basically, we have 2 big blocks of creation of products and collections. First, is short term. Short term are smaller collection produced and deliver in that season. Why we have collabs, you have a space that you leave in your portfolio to be able to react. The more in-season, the better to be what more assertive regarding the consumer expectation. The consumer is being super bombarded. It has information about fashion all of the time. The companies don't have the exclusiveness of information and some get prepared for this. And many things happen in that season itself in this process is important, open portfolios that we work strongly on, and we have the reactivity also. Then we're talking about the fast trends. Eventually you see Concert of Soap Opera Series, people that are doing some -- cultural events worldwide, that sometimes something explodes a certain trend, something more -- somebody wore something that exploded as a fashion reference company, that's very important to bring and make available to our consumer. Then we use reactivity. But not only for that, we use reactivity also when we're testing all the time in the productive process, we're understanding in small batches, what is a nice product before the hype. We also scaled these products that were assertive. So reactivity for us is to scale product and it retrofits the short and eventually, depending on the trend that we observe, it can become even a long-term next season in larger scale. Guys, against reactivity, I'll give you a few numbers. We started with 5%. Now we're 20% of domestic. The big objective is to be between 30% and 40% here. Of course, gaining margin, stock, turnaround, conversion that is stronger, bringing sales increment also. Capturing trends. We produce the productive cycle of availability of the customer analyzed very fast. This is an important tool. It's not just analyze the past. Remember, this is forecast. It's looking to the future and scale. I want to call Alexandre Aires to tell us how supply is supporting this strategy. Thank you, Fabi.

Good morning, everyone. It's a pleasure to be here to present supply chain as a competitive advantage, not just for Renner, but for Lojas Renner SA or supply chain area has the ambition to connect the strategy of collection development product that Fabi just mentioned, with production, distribution and delivery for all of our stores in all of our channels. We do this divided in 3 big areas: an area of sourcing, responsible for the management, development of suppliers in the domestic chain and international chain. The planning area and supply that makes the best decisions in terms of distribution of product using technology, artificial intelligence to potentialize the use of our supply model through SKUs. Finally, a logistics area that is able to use in the distribution centers and transportation, making the product arrive at the right time in all of the points, stores and channels also. It's important to say that -- this supply chain is available to all the business units of Lojas Renner SA. With this, we can develop an area that supports the entire company with scale, synergy, becoming a competitive differential. I'm going to talk a bit about sourcing. Investor Day of '23, we signalized what would be the areas that we would act in the following years. I would like to share the advances we had in these areas and the results that we already captured. First, we work a lot in an active triangulation of the acquisition of cloth from the raw material suppliers and finished material suppliers integrated in our collections with this reducing the time that we have to develop the collections and have them in our stores. Also, we work intensively integrating the system and supply chain domestically, having visibility end-to-end, being able to allocate orders with the capacity according to the capacity of the supplier more efficiently reducing issues of lack capacity or inefficiency or making the chain anxious. We do this for over 50% of the domestic supply chain. Finally, we work also on the development in the local suppliers investing over BRL 16 million through partners, 80% -- BRL 80 million that generated the adoption of processes that are more efficient, renewal of our manufacturing domestically, we have 20% gain in productivity and an increase of gross margin of 1.5 percentage points in the 20 major suppliers of the company. If we add this, we have many benefits. I would like to highlight one, reducing 26% the time of production of a collection until it's available. It's a strategic differential for the company, as Fabi just presented the capacity to react fast trends and products that perform in a positive way. Another focus of action of the company during the last few years was to work their supply model. We adopted a supply model through SKUs for all the products in the company, it's a winning model adopted by the main retailers in the world in terms of fashion. And it presupposes that we stop allocating or supplying the stores using packs, which are predetermined packs that we sent all the company stores. These are inefficient to meet the different demands that we see in the consumer market according to each store. Now we operate with an SKU model that allows us to customize specific grids for each store adequate for the standard of demand that we have in each store. The company doesn't do this now. We're doing this for many years, especially for the base and the middle of the pyramid products, basic products, where we captured the gains that we mentioned. The gains generate an increase in sales because I don't have a stock break in a few sizes, and I push sales in the stores -- and I stop having -- I have bigger margin. I don't have too many sizes that are not being sold, but this I improved the turnover in stock. With the new distribution center in Sao Paulo, completely operational since '24, sized to support the growth plan that we see today we can increase. We already increased the business model, the SKU business model for all the products. With this, the middle of the pyramid products and the top of the pyramid products, the more fashion products operate 100% SKU. This implementation brought gains, increase of the availability of products in stores resulted in sales over 10% fashion products increased, an increase of over 10% of the pieces, these type of products. To reinforce the benefits of the supply model, we prepared a video that explains the benefits compared to the per pack model, the previous model. Let's take a look. [Presentation]

In this way, omnichannel distribution that uses the scale we have to supply stores, the capillarity that we have in all the states of Brazil. Adding this to the e-commerce operation that has a relevant impact associated to the supply model that's precise according to SKUs, allow us to support and is essential to capture the opportunities for growth that we have ahead of us. I'm going to mention a bit how this strategy. The combination of the 2 factors, the 2 strengths will leverage the strategies we have. When we talk about the increase in productivity in stores, the fact that we are able to have the sorting adequate for each store will result in a per square meter sale higher, avoiding access and break in stock, we have a better result in each store the same way, the same supply model that's precise, allows us to have a gain in sorting in all the sizes of stores. But the smaller sizes that suffered by pack supply that generated access and did it allow to restock in a certain size and now is more up, these have the higher benefit. We're going to see that in strategic leverage for organic expansion of the company for non-service areas, these size -- smaller sized stores are fundamental. Therefore, the supply model is an important enabler for them to be efficient and to support the future plan of the company. Finally, we have a leverage, which is the increase of penetration of digital with omnichannel supply that uses the scale that we have in terms of stores, synergy, technology operating integrated both channels, we reduced expressively the cost of the operation, the distribution center and the transportation. This is very important for a digital that does not dilute results to grow more in a relevant manner. Finally, when we enable it's 2 components: omnichannel and precise SKU supply, not just for Renner, but for all business units, we create a competitive differential for the new units for the other concepts to grow in a relevant manner in a meaningful manner for the company. I would like to finish here reinforcing that many results have been captured in this supply chain model, but the complete potential of the model has not been reached. We're going to reach the full potential of this model in the next 2 years. And with this create competitive differentials, not just for Renner, but for all the business units and the channels that the company has. Fabi?

Aires, thank you. Guys let's look at our third pillar in delighting experiences. And I think at this point, it's important to mention that customers, let's talk about experiences to talk about customer experience, customer behavior. It's unpredictable today. It's just unpredictable. You're not in that standard journey like a process, then you go there and then take your cloud and then take inspiration, it's different. It is just different. It's chaotic, it oscillates. And when we look at it, look at a company in a company like ours, we want to delight our customers. We want to beat expectations. Renner has decided to be an omni-retail, an omnichannel company because we want to ensure the same standards of experiences regardless of the moment when customer enters the store. And regardless of the channel they are using for each moment, we can't predict. We're going to have to work address everything and everything, what is it? Is it about being a company that not only addresses and resolves problems? No, it's not like that anymore, but also to be a company that simply generates. It makes things convenient, in light creates and generates, let's say, a company that creates and generates a sensation of accomplishment and pleasure in consumption and in fashion specifically. This omni retail today is very much related to that. And by being an omnichannel company, we know that -- we realize great value in our customers. I want to give you some examples here. We opened stores in the countryside, in big cities. So whatever we open stores, we get like a 10%, 20% acceleration of -- in terms of the increase in digital sales. When customers purchased us, there's still a 35% of that, they prefer to pick up in store, because it's convenient and 15% of that, they pick leads, they carry out of additional purchase and 70% of the people who want to exchange their products, normal it's only natural, they try something out. They want to use a different color or the size out of those individuals, 70% of that of the exchanges. They -- when they request, they absolutely want to go to the store in person and then 20% of them buy additional items. Our omnichannel base for clients who are in several channels, we grew over 11%. This customer spends 3x more than a single channel customer. If they are Realize customer, they'll spend 6x more. And so here in Brazil, this is the reality. It's really, really important. Of course, here, we got a snapshot of this in our company. But for us, this is part of the process. This omnichannel retail, our digital sales reached over BRL 2.4 billion, 15% of the -- of our company. We also have over 7 million clients -- customers who are monthly very active. And for the 6 times, we are the best e-commerce company in fashion. Something very, very important here, too, we have accelerated. Digital sales have maximized the company, has contributed a lot. Fabio mentioned it earlier, but it more than contributed it has become, it has materialized in the revenues. We see those images there, those bigger, if we look at the market, we have 15%. But when we look at Brazil as a whole, the local omni players, we are way ahead of that almost 3x ahead go from 5% or 7%, go to 15%. But if we look at the opportunities in Brazil, in terms of fashion, we can get -- the digital sales can get in. We have the pure digital players. We have room -- there is room for us, and there's a lot more room when we look at the outside of Brazil. There are more mature countries than Brazil that's accelerating, that has reached numbers, very high numbers. But I think the most important point here for us is our digital sales. It's not sales anymore or not about sales anymore. It's the largest window shop -- which is window for a company. We give inspiration that we have a new trend almost every day. Today, we work with digital platforms and influencers. Influencers what goes to the runways and also on the store -- physical stores, visual merchandising, this is fully connected to it. And most importantly, even more important is when we look at it, it drives technology a lot. So of course, we talk a lot about artificial intelligence and still, I want to give you an example. We have images and pictures of babies here, baby models. Of course, we have images with babies, of course, but most of them were like still images, like kind of using AI to humanize this model. It drove over 60% in terms of visits, walk-ins and conversion, especially in babies products. So it maximizes a lot. When we had a recommendation engine, it's always evolving. This is important tool. It's basic, but the most important thing here is to know how to use it and how much it is evolving into assertiveness. And we have also had -- I mean, last year, we have over 135% of revenue growth driven by recommendations. And so, of course, we have like a virtual assistance, but -- we are getting ready for the most important point that is coming, which is agent commerce. So we're going to start to experience a reality in which we are not going to provide assistance to the end customer, but provide assistance to this customer's agent, and this is a reality now. And if you look at Renner, we are the #1 in terms of ChatGPT searches. Good. Now I want to invite -- let's talk about -- continue to talk about experience, and now we have Paula from Realize. Paula is going to maximize all that.

Good morning, everyone. It's a great pleasure to be here with you. I see some familiar faces. I've had a chance to talk. Some of you is really nice to open our doors for you. So we saw that Realize was in very important moments of the presentation thus far. When Fabio mentioned, the lighting experiences Realize is a boot in our ecosystem. When Renata mentioned the idea -- the importance of paid for and loyal customers for us to connect with them better and as Fabiana has just said, we should talk about the importance of Realize in the omnichannel strategy. But before we add into it, it's important to recap on what -- what Realize we had in 2023, Realize today after 3 years. In 2023, we had a funding company with a hybrid strategy, whose goal is to support the sales of our ecosystem, but also explore opportunities in banking and banking industries. And from then, we understood that, that was a moment to revisit that strategy because is our vocation, of course, is to have our financial aspects totally geared towards the ecosystem. Why is that? We know we are in an environment with 20 million customers traveling around the store. And that's precisely for this type of public audience that we want to have the best financial aspects in Brazil. And how we're going to do that? We're going to explore this, how we're getting ready for it to support this move and this growth for the coming 5 or 10 years. So let's start with the -- talking a little bit about loyalty. Realize clients today, now they come to the stores physically 50% more in relation to other customers who purchased financial product. They visit us more frequently. And whenever they go to our store, they spend 150% more in terms of annual spending. So this has proven that how much the financial product is actually a powerful booth or spending for expenses in our ecosystem. It's important to remember to that 55% of our clients of the loyal and ultra-loyal customers of BU Renner today, they have our card -- they all have our cards. This proves that how financial services can move and propel sales and loyalty in our ecosystem. When we go to the omnichannel strategy that Fabiana mentioned, it will become more and more relevant in Lojas Renner SA and BU Renner, right? Today, we have the Realize app. It's embedded into the Renner app. If you use the Renner app, you'll see something like an app card. And this leads to a high-quality flow. There's over 15 million accesses in the Renner app. And every time they go there to check out the balance, see the limit, you see they have an opportunity to contact our -- connect with our products and offers and this can convert into a sale, but also our customers, those who have the cards, they are much more engaged than the others 3x more. Now in relation to those pay in different ways. And today, e-commerce sales comparatively to the customers who use other payment methods is 93x higher. This means that Realize Omni is like a perfect match. And we want to boost that even more. Will make it even stronger as a financial strategy. And when we talk about data, Realize brings data, data that retail itself wouldn't be able to achieve if there wasn't a financial company embedded. We have over 4.8 active customers and 99% of high reachability. What does reachability mean? That means that customers -- Realize customers, they really interact with the messages we send them either push notification, WhatsApp, e-mail. And this is a very high reachability, way above the market. And this makes us look like Realize ads as we can offer our customers, the offers, new collections, and they actually interact with them. And also, as I said, today, we have 2 products, 2 different cards. And so for the cards with like Visa or MasterCard, they can also spend outside of Renner. And so their expenses, they're spending outside of Renner -- it's really important because we know how much they spend in fashion. These are very valuable insights for us so that we can move on with our credit model, but also to translate that into commercial insight for Renner, in view of the law, of course. Another important point is the expansion of physical stores. This is a very interesting piece of information. And when you look at the participation of Renner cards, you look at the consolidated perks share. But in medium-sized cities, the penetration is 5% higher than in larger cities because in those cities, the population has -- the population doesn't necessarily have like bank accounts and this increases the purchasing power. When we talk about Realize in terms of expanding stores to smaller cities, this is a relevant boost and very strategic, especially because our credit policies, they're not only -- they're not single for Brazil. We have evolved in terms of our models. And today, we have credit models per region in some states. And a sensate of Brazil, too, because our behavior, behavior of clients up north -- it will behave different from the clients here in the south, cost of living, per capita income, employability in the state. So this allows us to take a different action and be more assertive in terms of credit granting. And lastly, we also have a novelty here for 2026, and you're going to see it for its hand. We're going to release a new card in the second semester next year and this new card is sustained by a complete revision of our strategy and model because it will have -- it will be embedded and so the Renner app, but also like in other digital card like Apple Pay but there will be an annual policy -- annuity policy, which is different from other clients know it can be easy. Now they will be able to purchase using face ID only. They will have a card. But when they get there, they will not need the card, they'll just show their pay using face ID. And exclusive rewards. They will become completely embedded. Now we're talking about rewards that will be in our ecosystem. And how do we do that from the structural perspective? Let's talk about have some connection of a financial company. I know most of you are bankers and you know that very, very well. First point here is quite innovative. This new card is a unique card. It's 100% like comes with like Visa or MasterCard, et cetera. There are 2 credit limits, which are independent. One for them is for client customers to use in the ecosystem and another limit for them to use outside of it. It's innovative because no retail financial company is that in Brazil. We're going to be able to calibrate things. Our exposure to risk to each profile client, but also going to be able to adapt the credit concession to the consumption profile of those customers. Our credit appetite in our policy, it will be oriented to expanding in the ecosystem. We're going to prioritize that. We're going to have like more limit, of course. But obviously, if you want to improve our proposal of value for our most loyal customers. And for those that make sense, we're going to be expanding credit to them because we believe it's important, as I said earlier, this brings information that feed our credit system and brings important insights for Renner. And we have like evolved a lot in terms of governance. And I can assure you that today, we have -- our governance is compatible with the major banks, and this makes you guys feel really, really safe as we can support the -- our movement of growth. Lastly, I think it's really, really important to talk about the SG&A perspective. More and more, we're going to look for automation and AI more and more because we understand that this is an opportunity that we have to drive operational efficiency in the company. And obviously, obviously, it will reduce costs. This exchanges that we're doing these replacements -- it takes a while. This transition will take a little while, and our costs will be duplicated in this moment. So from 2027, you'll see that this will bring us more efficiency in terms of SG&A. And when we talk about the technological platforms, we're talking about preparing this company to a be more scalable and have better performance. And lastly, our segmentation model, it's innovative. I come from the banking industry, and we use banking information, real information, credit behavior to model the offer. And how do you grant credit? Here, our model is more advanced. We have the traditional model that banks use. We also have -- began using a different perspective, the customers' behavior into retail. We know the parts they purchase, how frequent they purchase things and this is important for decision making. And we're going to continue to be focused. You're going to continue focusing -- we have evolved a lot, but we're going to focus on low-risk customers, but it's really, really important to leave a message here with you. The financial company is fully prepared to support this growth for the coming 5 or 10 years. And speaking of growth, Gustavo Yuasa will be here with you, our Strategy Director.

Thank you, Paula. Well, I'm going to talk about omnichannel. We had excellence in digital sales. Our physical stores are and will be very, very important for Renner for the ecosystem, and we believe that the digital and the physical should go together. So we are always evolving. Every year, there's something new. And since 2021, we have the [indiscernible] model. It flows better. The use of technology, for example, is a global reference. Many have approved and the highlight to the product to fashion connecting what we said, but physically -- but for physical experience in our stores the brick-and-mortar store is a competitive advantage. Inside the [indiscernible] model, we have 2 models, RA+ essential that has all the attributes of RA remise with the choice of materials that's prepared for an expansion on the choice of finishing, wood, lighting allows us better results -- have better results. We already have to separate the municipalities between 100,000, 200,000 inhabitants. We have 90 stores that perform above average, stores that we were already able with client to have a model that brings ROIC that's positive higher than average from compared to other stores. The central model does even better, 15 stores in Brazil up to now that have this journey of [indiscernible] that brings the CapEx with better -- even better results. Of the 15 stores, a few examples, we have Americana, Passos, Caldas Novas. Cities with a high potential of purchasing, and we're doing this expansion in Brazil. [indiscernible] brings the essential [indiscernible] with another experience, sophisticated store that's evolving little by little. It's going to be the store that brings not only the experience of [indiscernible], but build image positioning brand fashion, a few examples like there's a lounge when and [indiscernible] and social media, stores that are more sophisticated, maybe not over Brazil, but we already have 70 of these. Every year, we enhance the model. Since the first store until the latest evolve, and we continue to evolve. It's very dynamic. We have Morumbi, [indiscernible] , Park Shopping Brasilia, and Parque Dom Pedro, the most advanced store, more complete stores that we have in this model -- this concept model. [indiscernible] Essential brings returns above average we're refurbishing store, the existing store, where we apply this remodeling. We invest in the store. It brings sales, brings ROIC 5% to 10% incremental sales every store that we refurbished to see this model better with -- than these 2 images. I'm going to play a video for you. [Presentation]

Invite you all to visit our stores that are online also, the Americana store and the Morumbi store are 2 examples of the -- of what I showed here in the back, Americana store is essential as the same model that we're going to use to expand in the next 5 years. We want to open between 140 to 170 stores -- only Renner stores only in Brazil, it's a part of the acceleration of the expansion. When we do so, we're going to reach -- we're going to fill 100% of the cities above 200,000 inhabitants. So we're going to be present in the biggest cities of Brazil, starting from 90 to 100. We're going to fill this space. And the focus of the expansion will be between 100,000 and 200,000 inhabitants, considering micro regions where we are already present, as I said before, we have 90 stores in these municipalities and we will reach 70% coverage in the municipalities bringing a qualified demand -- additional qualified demand of BRL 20 billion. This is the market profile, a social class that we understand that is addressable. That is very similar to what we have today. It gives us the trust that is an addressable market, reachable possible that will be -- will bring a lot of results to the company so much so that the 15 stores that we created the essential model are bringing the results. We monitor this in a very disciplined way because as we saw today, these are new municipalities. We don't have comparison to other existing stores, we potentialize the digital store, the omnichannel, [indiscernible] where the card is even more relevant, the supply model per SKU for this is even more important. The precision of sorting in each city that we enter is even more relevant. Everything that Aires explained for this model is a difference. Is it differential. The expansion is a pillar -- strategic pillar. As I said, physical brick-and-mortar store is important for the composition of the omni strategy. We're very -- it's the highest capillarity brand. It gives us steps ahead of the competition. It differentiates us from the domestic players and the native digital players. Fabi, the floor is yours.

Thank you, Gustavo. And here we finish. But before we finish, let's talk a bit about results. We said many things. It gave you some numbers, but let's do a wrap-up, so we can understand a bit. Fabio mentioned, and this is very important that we already have collected the results since '24 the results of the investments we made. So we can clear this looking at the 9 months, taking as a based on 9-month base -- customer base, I'm going to use 12 here. We as the active base, active base last 12 months. We grew over 16%. We already increased the spending -- average spending of our consumer in 10%, 24% increase in the inventory turnover, and we're talking about growth, continuous strong growth of sales per square meter. You might say -- you didn't grow in brick-and-mortar only accelerated digital. Guys, omni retail, it's on the omni brand. It's the future of the business. This is relevant. This is our proposal for our consumer. And here, it's over 20% growth. The main thing is what's to come, what we expect of Renner BU going forward. Again, evolving as an objective for a fashion brand, besides retail -- fashion retail, it's a reference fashion brand accelerating our expansion to continue to enter in Brazil that has our target audience ABC. It exists, and there's a lot of potential out there. Growing our total base of customers, not just conversion, grow, grow the base, grow the base, grow the omni base, having opportunities, especially graining productivity. Sometimes you might not see it, but we see it since 2024, we're capturing, and we will be able to scale even more going forward. And of course, supporting in a big gigantic space of digital -- with more profitability now having the possibility to increase growth -- also thank you so much. I'll finish now you BU Renner or brand Renner now invites Gustavo and Barone to talk a bit about the other concepts in Youcom.

Let's go, as you saw -- we have a detailed strategy for Renner SA that we saw more details of the strategy of Renner, which is one of our concepts for the strategy. Part of the strategy is how to expand the core, not just Renner. Renner is very important, yes. But for us to expand the core means also to evolve the other concepts. Because this way, we can meet demand and opportunities that are specific of our customers, over 20 million customers that Fabio explained and even more going forward. The concepts are a strategic pillar, and we do this in a disciplined manner following 3 big stages. The first one, the understanding of the opportunity, how we can understand the customer. We are the fashion brand that understands the most of the customer, the trends of our base and the potential of Brazil from there, we can do experimentation. We have a fortress of international sourcing that we can use to test experiments, be it in existing concepts or new potential concepts for Renner and its capillarity can be used to do a store-in-store, a way to experiment fast using all of the capillarity that we have. To scale the concepts -- existing concepts and possible future concepts, we use this investment platforms, technologies, digitalization and data, entire supply model that we apply in all the concepts, it leverages the ecosystem. We have a unique position in the market to accelerate the current concepts and potential new concepts for the future. Youcom is an example, an organic example, created many years ago that is successful that went through these 3 stages. Youcom is a case. It's a way to look at the process in a way that works and can be replicated. We don't have just Youcom and Renner. We have an ecosystem with different concepts each one servicing a different public with a growth strategy that's adequate. Today, we're talking about Renner and Youcom because these are the ones that we see in the next 5 years generation of value, growth in a more accelerated manner, but all of them contribute for the growth of the ecosystem. To talk about Youcom, I invite now Barone to explain the Youcom strategy for the next 5 years.

Thank you, Gustavo. Thank you, everyone. My name is Claudio Barone. I'm the Director of Youcom and Ashua. It's a joy to me to talk about our Youcom. Youcom was born from a world reading of behavior especially a reading of opportunity -- market opportunity. It's this pyramid, the starting point. In the past, when we started to design the brand, this was the structure that started to connect the dots and started to make sense for us. Youcom was born exactly in the middle of this pyramid. But initially, we divided the pyramid in 2 blocks. The top part, we put the specialized brands, brands that had certain characteristics and the public that has certain characteristics, normally with a strong aspiration with a very high experience, exclusiveness, higher prices. In the lower part of the pyramid, we put the big chains, the big networks. Here, the competition for price is higher. Elasticity is harder. Scale is important and brands that have a high reach. They reach many people, many consumers, as I said, Youcom was born exactly in the middle of the pyramid, not as a middle ground between the 2 universes and the 2 worlds. But yes, as a big opportunity, a territory where we can deliver an experience and an aspirational that are so strong as the top group, quality perceived that is interesting and simpler, that for our team and for our public, prices that we understand are higher than the lower group, but more accessible than the higher. With time, Youcom starts to gain a bit of the strength from the bottom group with more scale and more reach. Youcom is getting to more people -- young people. Now an important design for the brand, our heart or for everything that we do in the company, we do through this design that initially was done in 2018, 2019. In the middle of the heart is a word that defines Youcom, which is young. Around the heart, we have the main attributes and all the areas of Youcom, when we think about creating anything we read from here. I'm going to talk about some attributes, and I won't list all of them, but Youcom is fashion and lifestyle. Our target audience is between 18 and 24 years old. Obviously, they interact and buy the brand, 13 years old, 14 years old, 28, 38, 48 years old because they identify with the young lifestyle. I also bring to everything we do is looking and what happens in the world. We have a lot of global inspiration, always bringing for a local translation. Why? Because you from Brazil has their own code their own DNA, Youcom understand and speaks this language. Destination genes is our key category. We are moved by jeans is a young, fresh raw material that's 7 years old, but it continues to be relevant in the young people's closet. It's a big -- it's a great peak for the fashion for this public. What makes us very proud is responsible fashion because the public commitment from Renner SA, our public commitments of Youcom. Moving on, I remember you that the first stores, Youcom store started in 2013. To test our hypothesis, the same hypothesis we had in the center of the pyramid. Once we tested the hypothesis, we start to scale the brand. This slide shows the evolution from 2014 to 2025. Sales are in concepts, September LTM. In yellow, we have the evolution of the stores. Plots that show a constant evolution, how much the model is strong and how the model is scalable. Now this speed was only possible because we have worked a lot to make things happen more than talking about the past. It's important to talk about the next cycle. We have 4 big pillars, 4 big avenues that will pave our future. First one is the opening of stores. We understand that the next cycle will arrive at 260, 290 stores in operation. We have 152 currently. We understand that the digital has an important in Youcom, it will gain more importance for the youth, it starts [indiscernible] connects to the world, digital. Regarding the brand, the brand is gaining strength, it's becoming robust. The brand evolved a lot. We have a clear plan, robust plan so that the brand continues to gain strength and reaches new territories with the years. And lastly, I would like to highlight to you the importance of productivity and the increase in sales areas. We have a large number of new stores. This year only, we opened 17 stores. When you look at the -- all the new stores, there's like 30% of those stores are at the initial cycle of evolution in terms of productivity, but they will continue growing because we're going to invest in it. On the other hand, we or our all stores. They have enormous potential with major results, major sales per square meter and with profitability. In these cases, we can negotiate -- we have some ambition something really important for the brand. I'm going to show you something here. In 2013, we opened a store in the Anália Franco Shopping Mall with 110 square meters. After some time, it evolved. It grew in productivity, became more profitable. And then after 5 or 6 years, we got to 190 square meters. We evolved a lot. We increased the area, get bigger and larger. And the store became more profitable in terms of sales and few months ago, this store was reopened with 350 square meters. So we have done very important things to increase the size, extend physical spaces of stores. This happens because the brand is more mature and also because the market mix has been evolving. Also, all of that was only possible because Youcom is part of a robust ecosystem, which is very, very strong, offering several advantages -- very important advantages. Some of them are here like SKU 100% -- fulfillment 100% by SKU, international sourcing, technology and data and shared services, those are some of the examples. On the other hand, Youcom plays a leading role in the ecosystem. We make things fresh. We have a young base and then bring them to the ecosystem, and we contribute to with a number of things, but the most relevant of all those things is that Youcom has created a model which is specialized -- specialized store, which could be replicated. This is as important an exchange between brands and ecosystem. And when I look at the exchange, the evolution, I see the future and the future can be brilliant and bright. And now just to wrap up, I want to bring you some figures, which make us very proud. Our base, we have over 1.7 million customers, an active and solid base. It's been growing in terms of quantity and quality. When we look at NPS, either transactional, either competitive? We operate in the zone of excellence better than the other players -- specialized or massive players. And NPS shows how much clients -- customers recognize our efforts or dedication and most importantly, the consistency of the brand. In relation to social media, Youcom performs a lot better on social media. And I'd like to mention something here, when you look at 2025 TikTok, Youcom, among the specialized fashion brands. We are the brand that shows more engagement than the others. With regard the customer base extra information, but Youcom is much more than that. It's much more than numbers. We have building base on our everyday line. We've got a very large base of young customers. They interact, they purchase, they buy, they take an active role and they identify the brand. So that's all I had to say. I would like to invite you guys to watch a video of our brand of Youcom. [Presentation]

Now I'm going to wrap up with this session, and I would like to invite our CFO, Daniel Santos come to the stage.

Good morning, everyone. Okay. Let me make adjustments here. First of all, thank you for being here. It's a great pleasure to see you here in our home. Well, I want to talk a little bit about how this financial journey is going to look like, how we can monitor that to generate value. And first, before I touch on the -- talk about business cycle, I would like to invite you to talk about the past because the growth cycles that we had in the past will help us understand what we expect from this new cycle. The first cycle runs from 2010 to 2019. In this cycle, company grew 14% and mostly by sales areas. We almost -- our area expansion got almost 3x as large. We opened stores in new cities, in major cities, major urban areas, it became really dense. And when these things dense, sales per square meter in physical stores, they grew less than the inflation because we had cannibalization, the new stores and up like taking over the old stores, the investments invested 9% focusing on the new stores. And on the next cycle from 2020 to 2023, we grew 8% which was mostly boosted by the digital sales. That -- it went from 4% to 14% digital share, almost 3x as much. Another feature of this characteristic of the cycle that Fabio mentioned earlier was the investment -- were the investments that we made in new capabilities. Those capabilities were intended to make the company more agile, more flexible and more competitive. And I'm going go through some specific details here of this new investment cycles, where do we invest investments -- where we made investments in? We had total investments of BRL 2 million in that cycle. We invested in CapEx and OpEx also. And when we look at the investment blocks here, for digital share in terms of capabilities, we're investing in the new omnichannel platform. We invested in it. We invested in new features either on the website or on the app. We digitalized our fashion development in logistics. As Aires mentioned earlier, we have a new distribution center, but not only the center, but the new model like the fulfillment by SKU and our distribution center of Cabreúva. It supports our expectations for this new cycle until 2030 and has been built purposely for that. And then data analytics. We use artificial intelligence applied to automation, process automation, and decision-making and structures and skills. We have a new data service, technology, service, technology to business to support the AI journey, CRM had a studio, yes, this very building. This video makes like very several content, several videos, and we made investments in the digital structure. And I'm going to build on what Fabio mentioned. Well, these investments, they give us a result. But when we look at the evolution of the past 2 years, we grew more. Our total sales as a group, the omni sales combining retail physical, retail and digital source. It grew 19% per square meter. We became more profitable with a gross margin of 2% in the same period. Expenses on sales reduced -- decreased 1.1%, and our EPS grew 59% in the period. When we look at the capital structure, higher returns. Our cash flow went from BRL 0.7 billion to BRL 1.5 billion. The financial cycle, of course, specifically inventory days, less 15 days and our ROIC aligned with our structured capital, it grew 4.6%. So that's an evolution that makes us really confident that with the new cycle, which I'm going to bring information for you now. What do we expect from this new cycle? Well first of all, we expect to increase, generate growth, generate value, have more profitability. And as I said earlier, we expect to grow from 9% to 13%. And this growth will be basically come from BU Renner like in terms of area expansion, store productivity. It will result from area expansion, store productivity and increased digital sales. It will also be boosted by BU Youcom with investments of 6.7% over the course of this period. Now I would like for you to take a look at this slide. Let's talk about these growth levers, the expansion model in new cities. Gustavo present -- said something about it. We can see opportunities from 150 to 170 cities in which you can open a new Renner store, this is a high-quality demand. High-quality demand is like a demand involving the social group that we will operate on. And so if we apply the average share, we can have like an incremental opportunity of over BRL 2 billion, incremental sales without cannibalization given that in these cities we're getting into, there is no -- in cities that don't have a Renner store. Something very important here, 90 of our stores, we have stores over 90 in cities with a population of over 200 million people. This is not a new model. It's been going on for a while, very successfully. Some indicators here that I can talk about the profitability indicators, when we talk about this group of 90 stores in those 90 cities and compare them with the others, and now first of all, they have a gross margin, which is superior. Second, they have a cost of operation per square meter, which is smaller, lower than the other stores. And combined with the fact -- combined with the idea of essential store, they have all those features, all the items that are necessary for us to succeed to delight the customer with a CapEx per square meter super competitive. And the combination of all those factors allows us to have a ROIC return on investments, which could be up to 2% above the other stores. We -- obviously, we have an SKU model of fulfillment, which propelled this new model of expansion. We now have a capability to feed the stores with more precision with like a personalized assortment for them without a shade of doubt, this is going to propel the performance of these new stores. Another point here is our omnichannel. So let's think a little bit about the evolution of this omnichannel. When we look at the past, the digital channel had like a 3% share in it. And one of the characteristics of that is the cost of serving above the physical store. Several investments that we made in -- from 2020 to 2023. And actually, the last movement that we made when we internalized the digital into the Cabreúva distribution center, it allowed us to reach the end of 2025 with a cost of serving, which is similar to the cost of serving in physical stores. So for the company, for the journey that we have ahead of us, the company will be -- it doesn't matter for us. Customers can decide where they want to buy and purchase either in the digital store or the physical store. Our expectations, well, in terms of growth, we want to grow with the digital channel above the average. And this will propel all the other items that my peers have mentioned earlier. Another growth -- point of growth here is the productivity gain. Well, productivity, omni productivity, and Fabi said something really important about it in her talk. Omni productivity is a combination of our growth from the digital aspect with the increase in growth in physical stores. Why is that important? We see over -- throughout this journey in the first cycle, we -- if things became really, really dense, got new stores very close to the existing stores. In the second cycle, we converted the clients. They began to share their sales journey on social media. And then lately, the manage managed to boost they managed to show a productivity gain in omni productivity, of course, which is quite relevant for what we expect. And we are confident that it will continue to be this way. And on top of that, in addition to the productivity gain in mature stores and digital sales, we have the expansion into new cities, which I believe Gustavo and we mentioned earlier, and this productivity gain is a major element of our journey, profitability journey. This productivity gain will allow us to boost our operations and allow us to continue reducing the expenses on income, on revenues. Let us not forget Realize. Paula talked about it. First, the major focus of Realize is to help retail is to boost propel retail with an integrated journey, as Paula mentioned, we have the integration of Realize with the retail bringing experiences and benefits to clients in a way that Realize could help us increase our customer base and make this -- the existing customer base purchase more and more frequently. Another point that Paula mentioned is the execution of this strategy. How are we going to do that? First, we're going to look for low-risk customers focusing on the -- on portfolio, focusing on the purchase, on the sale at Renner at the store. And our expectations to -- concerning the operating results is that it will be around from 8% to 12% of the total EBITDA in the coming 5 years. Youcom, as I said earlier, sales growth higher than Renner. We expect Youcom to grow above the average and increase profitability. So basically, expansion of stores is the example that [indiscernible] mentioned, the older stores, we need to expand them. And so we have an incremental sales, incremental share in the digital channel. As for profitability, we have gross margin gains and then operational leverage. This is the fruit of our labor, we can see here. We almost have like twice as many stores over these past years. We expect from Camicado a growth above the average of the market where Camicado is located because it's home decor, this growth will come from expansion of stores, selection of stores and remodeling of stores and continuous increment of the share of digital sales inside Camicado. Regarding profitability, we expect that Camicado will follow to continue to grow in profitability. Camicado, we remember in the last Investor Day, we presented the team had a great success in the execution strategy through their own brands, exclusive brands also today from the sales of Camicado, around 85% of sales are their own brand or exclusive brands. This allowed besides the customer experience that is a lot more delighted with the sorting that we have. That's different, allows a differential of the sorting we have versus what we have in the market, gain in profitability or sales per square meter when we compare it to the base of 22 increased in almost 27% and our gross margin increased 5.2 percentage points in the period. Adding now looking at the indicators that we follow in this journey, first, reminding you the big objective of the strategy is to scale growth and value generation with profitability and the indicators that will guide our journey that we shared as a relevant fact earlier today was, first, the annual growth of retail revenue of 9% to 13% during these 5 years. Second, continuous gain in gross margin, the representativity of retail expenses on top of the expenses in retail. We have -- we expect a reduction of 2.5 to 3.5 percentage points from 2030 compared to 2025. This journey is the objective we have until 2030 margin, EBITDA retail pre-IFRS close 2030 in the range of 15% to 20% above 18% to 20% above the period pre-pandemic, more efficiency of capital, be it as you observed, CapEx that we expect is lower than the growth in sales. So we have efficiency regarding the fixed capital of the company, also the financial cycle, especially motivated with the gain of inventory days. With this, we reached a return on capital of 20% by 2030. This is -- when we add all the indicators, brings us to this big evolution in return of capital. Talking about capital structure. Now first, let's look at the trajectory of the company. First, the company has a strong balance sheet when we observe the last 4 years. There was a lot of work of lowering the level of debt and keeping the level of cash flow that we believe is adequate to run the operation, be it the retail have a strong consistent cash generation above BRL 1 million, we were able to do a strong distribution of profit to the shareholders. If we look at the last 4 years, this shows that we returned BRL 4.6 billion through interest on our own capital, IOC or through repurchasing plan. In the year of '25 was BRL 1.7 billion when we add everything that we did this year with JCP that we communicated this morning earlier, we have BRL 1.7 billion, more than 100% of the profit expected for the year of '25. Moving on, when we look at this new cycle of growth that we expect, first, growth with gain in productivity, gain in profitability, CapEx around 6.5% to 7%, what we have as a result. This will generate profitability. We generate strong cash flow, and we believe we will do a capital distribution of profits to our shareholders above the market average. How will we do this? A bit for us to understand the logic of how we're going to do this first. We have -- we will continue to have a strong balance sheet that allows us to have flexibility and prudency. We want to execute first the plan that we presented to you and the eventual opportunities that we can see in the next 5 years. At the same time, have consciousness of the cyclical business seasonality. It's a characteristics of our business, and we must be flexible. Besides this to deal with political environment or macro environments that are diverse that we can have in Brazil, all of this gives us the clarity that we need to have a strong balance sheet and have flexibility to operate in this environment. The plan that we presented to you is a plan where the generation of cash that we have in the period, we can sustain it with the cash generation itself, 6%to 7.5% CapEx is absorbed with a strong cash generation that we have in the period. This way, we don't need to leverage to execute the plan that we presented to you. What would be our strategy of capital distribution? First, we will prioritize JCP IoC. So there is a fiscal benefit that's important. We will exhaust the IoC first. We will complement the distribution of dividends and/or a repurchasing plan, always limited to the profit reserves that we have and/or our minimum cash. This is necessary. The company believes it's necessary for the retail operation and the financial institution operation. Another important point, we have seen some provocation regarding leverage for an eventual distribution or capital. Continuously, we do internal exercises to look at our capital structure to see if it's optimized or not to see the best way to give return to the shareholders, especially leveraging and reducing capital, we evaluated and the conclusion was it doesn't make sense. It doesn't bring benefits for the company and for the shareholders in this moment given the high interest rates of the moment. What we expect for the next 5 years is that we can have a distribution of our profit from 50% to 80% and an example of the trust and commitment with this logic that we just presented to you, we communicated this morning. First, the finishing of the plan that we started in February '25, we executed 94% of the plan, exhausting the reserves that we have to be distributed. We exhausted BRL 1.7 billion allowed us to distribute in this period, exhausting the reserves that we have for distribution. relying on the profitability, profit generated in the next periods, we communicated a new plan at the same size as the previous plan that will be executed in the next 18 months as we generate new reserves that can be distributed. I finish my part here. I invite Fabiana to talk to us about the next steps. Thank you, guys.

Thank you, Daniel. Well, we will start now our Q&A session. [Operator Instructions] I invite to the stage, Fabio, Daniel, Fabi, Paula and Aires. All the executives that came up here today are very close to us available to answer specific questions you might have.

Congratulations for your presentation. Fabio, how do you see the evolution of the market structure? And what competitors do you have? Where do you see white space as a new concept? And how we should think about the addressable market, incremental price points and lifestyle of a new brand?

Thank you for your question and for your presence. I think that the market is making a movement. The biggest movement was in the pandemic and the post-pandemic moment, the entry of players, different model players, digital growth was very strong. The market reorganized itself. We see growth -- a higher growth of the formal players and the big players, entry of new players, as we showed the market is huge. It's still very polarized. It's still very informal. So there's a lot of space for the entrance of formal players and for growth and there's space for everyone. We are positioned better than any other player, I believe. If we look at Brazil, 18% of the fashion sales is in digital, 82% is in brick-and-mortar. We are in brick-and-mortar and digital. We see a few players that are just digital or just brick-and-mortar. We have the potential to capture both. Another important point when we look at the others that act on top of this. We invested more. We have bigger capabilities, installed capacity to grow with efficiency. It allows us to have an important potential in terms of growth for the current concepts that we have and future growth of other concepts. We brought the case of Youcom here because sometimes we hear some narratives of, oh, you cannot create a brand. We created the youngest fashion brand, the strongest youth fashion brand in Brazil internally. Camicado was an acquisition was also Youcom and Ashua was -- are born of a youth lifestyle. We have many lifestyle segments inside Renner with the growth potential in Renner. We showed this and the guys, but also that's a lifestyle. There are many others, for example, the ones that we have worked on in Renner and the future concepts of specialized business with the same potential for growth also. Your opinion about makeup and perfume, when we talk about fashion and lifestyle, these are correlated segments inside Renner and future opportunities. We see, especially in Renner, the potential to grow, be it fashion, be it beauty. It's our core. We have potential in what we already do and what we can do in our core, expanding our potential.

Thank you, Bob.

Thank you for the complete update from Citi. I have 2 points, more financial. First, I want to explore a bit improvement in the expense retail, 2.5 percentage points. How much of this comes from operational leverage? We understand that up to now, the big part of the message regarding the expense improvement, the dilution would come through operational leverage and less the cut of expenses. I want to hear a bit if it changed a little bit, if you're seeking efficiency, it would be important, Fabio, Daniel, to mention this here, Fabi. Sorry, Paula. They're similar. Yes, they are related. Paula from Realize. It would be interesting to talk about retail also. Just one more quick thing, 70% of payout that we think you're giving soft guidance for the next years. It's important to understand looking at next year, especially the discussion we have in terms of tax, how much this can be an extraordinary dividend? How much buyback what is buyback? I think it's very relevant. We've seen many companies talk about this. I'm sorry, Paula.

Thank you for your question, João. The first part of the question is a bit of everything you talked about part is dilution due to growth and leverage, part is a reduction in specific points. A part is Paula said in [indiscernible] the optimization of Realize. I'm going to ask Daniel to convey the numbers that we already mentioned before and a part distribution also what Daniel made clear for this year, we exhausted the reserves, but we can talk about the following years. Daniel?

Yes, yes. Let's talk a bit about the distribution issues. Well, first point, we saw a strong movement of a few companies doing exceptional distribution now, but all distribution is done with existing reserves. That's why I was very emphatic in saying that BRL 1.7 billion and we exhausted all of our reserves. So there aren't new reserves that can be used this year because we distributed all of them in the year '25 with the results that were published now. Now we are forming new reserves. When February, March, when we published T4 and compose new reserves, as we mentioned, the priority is IoC, even with the new taxing JCP continues to be the first most advantaged option to distribute results. And after -- as we communicated this morning, in the first moment, we have our repurchasing model that is activated will be a way to distribute our reserves. Regarding expenses, it's a component of both. We have a part of reduction, a part of Realize. Paula mentioned, right, Paula, that the balance sheet, you want to talk about '26 and '27 onwards?

Of course. It's important when we look at Realize in the last 3 years, we observed there was, in fact, a growth of M&A that's important. What happens today in the finance year, we are in the middle of a digital transformation where we are having a technological catch-up because there was a technological issue in our platform. When you're doing a digital transformation, you continue with the -- run the business expenses while you're doing the investment of change the business investment. This should finish these parallel expenses between the second semester of '26 and the beginning of '27. And from '27 onwards, you will be able to observe that we will gain the capturing of efficiency from there on our level, especially the variable expenses related to processing costs, how much we can be efficient in our core business, no doubt will bring a volume S&A in total expenses of Realize to a healthier level than we see today. It's important to remember, even in the years where we are a little bit more compressed in terms of expenses, we are growing aligned to the inflation. So there's no relevant detachments that implies that we are concerned today with the financial expenses. We know we have opportunities, and we're working strongly to capture them as fast as possible.

Even with the platform change in case of Realize, there's nothing detecting from inflation, and we see an important reduction opportunity. The others, Daniel sometimes gives us a range of how much comes from reduction and scale. It's difficult range in reduction, a part of scale comes on scale, we're prepared to grow. If the growth comes on the lower range, it comes on reduction. If it comes on the upper range, it's more scale.

I have a quick question. I'm Pedro Pinto from BB. Fabio, I want to say thank you for your presentation, clear, but building upon his last question in terms of expenditures. Let's look at it from a different perspective. Daniel said earlier, we're talking about capital distribution. Let's talk about the -- it may not -- growth may not reach like 9% or 13%. There several reasons. There might be several reasons for it. And so our expenses will grow way above the revenues. How can you clarify that the expenses? It's very much related to what he said. I'd like to understand this a little bit better. We have like downturn cycles, it's so cyclical. Would it be possible still to be efficient. And the second question is about the -- I mentioned earlier -- mentioned about supply chain. Supply chain was really big over these past year, few years. But today, the capital deployed has converged into the 20% of ROIC. Out of the 20%, I'd like to understand a little bit about your stock demand. How much flow do you have there, like? So these are the 2 questions that I have.

So I want to start -- Daniel, you can start answering the very first part.

Yes, even if there is fluctuation in terms of demand, yes, that is why our metrics we use rents as indicators, but we have the potential to reduce expenses over revenues even if it's difficult for us, we anticipate our scenarios. But if that happens, also, there will be situations and conditions to take this path. We have like more initiatives for reduction. But for your second answer, let's talk about expenses. What I think is important, Pedro, is if we do not grow as much as we expect, we know that retail -- part of it is variable. So basically, it's -- I always talk to Fabio about it. And this is discipline, right? If you have volumetrics, obviously, you will adjust your structure to the volumes we have. Obviously, part of your expenses are fixed, but they're fixed, but they're not untouchable. So depending on the expectations you have, it's a cyclical thing or something that will take longer given some macroeconomic perspectives, you'll have to make decisions to adjust it. But I think the important point here to remember is, I think I mentioned it, the company had the intentions to increase expenses. Why? Why did we increase it? Because we were a company that operated 97% of our sales came from physical retail, and we need to put together a digital structure for us to succeed and be competitive in an environment which is completely different from the environment of 5 years ago. It's important to talk about these intentions. Sometimes we treat these expenses as something we're not -- maybe we might think we're not careful in our management. No, we were. We wanted to highlight new structures that we have created our new capabilities that we put in the game. And obviously, yes, they added pressure to our results. We know that. But at the same time, they allow us -- we see these results from these past 2 years show that we have put together a structure that allows us to continue growing and grow even more. Our distribution center addresses the need of, let's say, the coming years. It can support the demand of the next 5 years. Several of these structures of today have allowed us to get into the digital beer. 15% is much higher than our competitors. And as I said earlier, we managed to reduce the cost of operation of our digital platform. We expect that the power of continue growing. Yes, we are ready for it. We are ready to generate growth and address this growth without increasing expenses. But obviously, there is efficiency in the game. Paula mentioned the example of Realize, but we also have that in retail. And out of all the structures and the forms of operations that we have, we -- there are many things we can explore there are internal discussions to execute and carry out these plans. At the same time, we can rely on growth depending on us, but also depending on the macro perspectives, we can also have internal discussions to generate efficiency and this in this road map is within the mission from 2.5% to 3.5% of leverage for the coming 5 years.

You also mentioned like stock flow.

We want to reach like 4x. We want to evolve our stock. We have been very successful in that. All the supply things related to supply chain that I just mentioned will allow us to operate our stock more efficiently. The idea is to profit even more. Our benchmark shows that we have like a 4% per year, but we're going to try to take that path.

From BBA, Daniel got a question. Some people ask me, I just want to make it clear, from 50% to 80% of payout up to 2030. Does that include buyback and JCP?

Yes, it does. That's why I didn't call it payout. We call it profit sharing.

And so I got a question. If you simply replicate JCP figures that you mentioned earlier this morning, like BRL 800 million, the approximate profit for next year will be BRL 600 million, something major figures, it will be -- if you look at JCP alone, we're talking about like almost 50% of your payout. You must use that to maximize the results. So the implied rating is the 2025 buyback will not be as relevant given that the JCP alone, you get like 50% of your payout. Does that make sense? Am I right?

Your calculation. Yes. But Fabio mentioned earlier, we still have the T4 results whose reserves will be available in February or March. I don't know. We're going to double check it, but you also have the reserves that you will generate at the end of the year. And so T4 is a very important year for the generation of reserves. And as I said earlier, JCP, it consumes like a very specific place in the surpluses. We can -- the idea is to execute the purchase plan road map, except unforeseen conditions, of course, the purchase plan, we got a history in our company. We have been very successful. But if there's like an external factor that makes us refine it or revise it or take a look at it, we are going to do it. Why not? Due to external factors. But the principles is the -- we're going to repurchase the surpluses, and we have 18 months carried out, including the year's reserves up until those that will be available in the 2027 T1 reference to the 2026 T4.

So we carried out 2 in their full capacity. And so we announced the second and we executed like 94% of it. And as we were almost done and had a chance to -- we announced the fourth that we want to carry out in 18 months. The third one, basically, the first one, we did in up to 10 months, like almost 100%. So we are the fourth period of 18 months. And as the reserves come in, the priority will be on the IoC and then depending on the stocks and shares, we will try to repurchase and this is very available to our stakeholders.

And question from this 50% to 80% up to 2030, is it like a linear average linear figures from 2026 up to 2030 or maybe it could be bigger in 2026 and lower in 2030?

Well, I would say that in these past few years, we reached over 100% in its entirety. Maybe every year, it will be like from 50% to 80% obviously, is an estimate with our current plans, current road map. There is a plan that will generate a lot more value, some for stakeholders, shareholders. So the trend is we -- it should be within this range.

A second question is related to the guidance. Today's guidance with the new long-term tax relief incentive plan. What are the most important metrics you've been using for this long-term incentive plan? And what about the guidance that you're using today? Do they already have an impact on the long-term plan?

I'll do the second part.

Yes, they have an impact, absolutely. I think our short-term and long-term remuneration are in line with the plan, with the road map. We can -- so said earlier, we are working on -- right now, we're working on what we think is challenging, but possible, of course. We're working on a plan -- road map that generates value to our stakeholders, and they must be in line.

What about the metrics?

Well, the metrics, Regina mentioned earlier, we have 3 metrics. Let's talk about the long-term plan, TSR relative -- relative TSR, ROIC. And the third one is CAGR per share. So if you think about in the period of 3 years, the strategic plan we have put together today and the metrics that are going to be used for them, they are all integrated somehow. So the goals as I said, obviously, it's going to be a long journey. They're going to be part of the metrics that will be presented later to the Board to be approved and analyzed. So they're going to be making a decision in the beginning of the year for this 3-year cycle. Every year, obviously, we have new metrics and looking at what just happened and the new estimations of what is coming next.

Sorry, one last question. In practical terms, the 3-year CLP. So there is -- one of the metrics that you mentioned is that you assume in place explicitly a CAGR per share of 9% and a margin from 18% to 20%. Is that incorporated into it?

Yes, it is. It's embedded into it.

I've got a question.

Irma, she's online. She's from Goldman Sachs.

Here, we have the examples of Youcom and the trust we have in the concept through the opening plan. We believe the time to scale of a new concept will be shorter if we believe so. What are the takeaways in this sense? I just got a second question, which is not related. I want to read it to you. Could you give us more details about whether we should think that productivity growth in our plan would be more driven by volume or price?

I'll answer the first. You answer the second. Thank you for your question, Irma. I would say that, yes, we learned a lot. If you look at Youcom, we presented to you earlier, Barone gave a presentation on it. It officially came to life in 2013, both Youcom and Camicado, which we purchased in 2011. I think those were the very first takeaways from the new concept. We understand the way we see it is a growth leverage, very, very important growth leverage. We were learning. We're trying things out. We tried a lot, and then we scaled. And Barone said that Youcom not only is an example of a brand, powerful brand. So it's, of course, but they show that our platform is ready for new concepts and new opportunities that could be scalable.

So in the beginning, we learned a lot. We tried things out. We did things we have never done before. Of course, from this moment on time to be shorter. We're going to have like shorter time. We learned a lot. We are ready. We learned a lot from both to try them out to scale them. And in the future, a new concept will be a new concept will be in place and grow even more. Price and volume, right? There is a component -- a real price component, which would be the inflation and the rest would be like a combination of volume and mix. On the one hand, we know there is volume in the game, but several initiatives that we have -- we are proposing, we could improve our sales mix is the value per part per piece per item. So it's a combination of both.

Now I'm from XP. I have a follow-up on the margin dynamics. I don't think you mentioned about the gross margin and also supply, the data that Fabi has shared, it so that the model -- there's a reduction in the market down. But if you could give us some more about the gross margin. I know it has grew a lot, but I would like to hear from you guys. And my additional question is about Realize. -- gave me the impression that, okay, you're focusing only on us, but you brought something related to co-branding, like more flexibility to offer of us. Why is it? I see you brought the data to Fabi, told them over the data, but it could have the environment to better explore. And then can you connect it with the credit appetite? Now we're obviously talking about volatility, but lower interest rate. How do you see that? What would make you increase your appetite?

Margin, you cannot talk about margin without talking about Realize. I think in terms of margin, we have been talking a lot about it. We see great potential for a slight growth in a higher -- an elevated point, of course, with all the gains of this model that allow it, we could have more stock. We have gained a lot from it. But we see opportunities here. We try to show you more data on the things that we didn't talk much about before. I talked about profitability, which results from the reduction in expenses and commitment, but also comes from the gross margin growth. I think this is a kind of a growth that is slight, but we can grow even more.

About Realize, of course, thank you for your question. Very smart. As we said earlier, we have a new product, it's important that you guys understand the dynamics in your operations. Today, we have a portfolio that is concentrated on any co-branded card. Customers have a limit to spend outside of the company and in the company. But from 2020 up until now, grand concession, concession cards is very much focused on the private label. Why is that? It's important to share it with you that private label is unique. It's very important for credit modeling. It allows clients -- customers to purchase things on the ecosystem and I can monitor their credit behavior. So today, out of 10 cards that we give in the store, this has been a while, a reality for a while. So 8 of them are private label. So for some other cases, we have some upper middle class customers. They also have like Visa or Mastercard in those labels, but they operate either only as a private label, there's going to be a limit, which is independent as consumption, and they'll have the prerogative to enable it at any time and increase the limit. So that's innovative in the retail sector because it reduces friction today when I give a customer private label, a lot going to have new plastic that same cost. So in terms of G&A, it's very good. So for risk management, you've got the possibility, gives me the possibility to give customers private label with the honest limit enabled. And as I see their credit behavior can open and they can expand this limit. It's very, very important, both for the proposal value proposal generation and -- but it also gives me the prerogative of knowing their behavior in terms of consumption, bringing those insights to my credit model and also showing important elements for fashion consumption. And this will allow us to have a very adequate operation connecting retail and financial services. As for risk appetite, we have been working on a credit policy, which is being able to support still with things very effectively. We were like 28% or 29% of the sales. And we see there are opportunities here to expand this credit as the macro environment allows. Financial institutions, we are here to have a good risk management. We are ready for it. We have capital. We have an adequate model. It will depend on how we will move on. And remember, have more volatility next year. We are very consistent in terms of model. And with this new product, we are even ready to support the sales expansion.

Thank you, Danni.

Congratulations for the event. I have 3 questions.

Can you speak a bit louder?

Joseph, JPMorgan. Three questions. Looking at the last 1.5 years with the that you presented to us, future growth, usually for guidance, we have implicit a true growth of 4% to 5% without distort seeing that the area -- incremental area of store is smaller than we saw before due to the profile. What I wanted to explore with you, looking at the tooling of CD, we're in more or less 1 year with CD almost full power. Looking at the level of efficiency, where do you imagine that you are? You talk about improvement of 3 points, availability of product at store to where can we bring this to understand what it brings in terms of productivity. Asking to Fabi, she talked about freshness, 23% between the collection, where we can do more when we look at the climate issue, it wasn't an issue as it has been in the last 2 years. We have an algorithm evolution, what failed do we have the comfort that in the next 5 years, we have 9%, 13% growth. It was a consensus, maybe it was 1, 2 points below your guidance with similar expansion.

Thank you for your questions. I'd like to use the presence of the executives here. I can answer the first question about productivity, distribution center, Fabi, you can talk about perhaps responsiveness to climate issues. Okay. Thank you for your question. Do you hear me? Thank you for your question. It's important. I mentioned the distribution center is operational since '24. It was an important stage this year to finish the migration of e-commerce of bringing it to the distribution center. When I look at the efficiency that we have in the supply to the store, the curve is very advanced in the productivity capture. The productivity of e-commerce this year is maturing. We concluded the migration. We're going to capture gains in productivity. The next year, you will see an improvement in the logistics on top of revenue. We will be seen next year with the evolution with the maturement. This also happens with the sourcing the supply part. We have a curve I showed the integration of systems with the suppliers is 50% in our supply base domestically. We want to increase this. This will bring important gains also in productivity in the sense of suppliers and connection with development and collections. We don't have an exact number of what is the curve, but I can tell you that e-commerce, there's still maturity to be reached in logistics operation, sourcing also, we're going to evolve the integration with the suppliers, gaining productivity in the domestic chain -- supply chain.

Yes. If we look in terms of capabilities, the company has it all installed, has models, predictability, data have a system, functional system of building collections with methodology that's very strong. I would take a bit care to say the error was ours in terms of the decision, not the capability or the condition. You talked about an error, and I want to go back to this. We made a decision to buy excess in the winter. It's not always good. You know deal with the next season always well. Looking at the short term, okay, it might have been an error in our minds, a loss in competitive advantage of that with that quarter with the growth of competitors. When you look at the full picture, and I'll draw your attention, you look at the film, the movie of the evolution of stock, the construction that's engaged and the productivity that we leave open for the portfolio to really react in season capacity we have. We made a decision. You talked about a pain in the third quarter, you were talking about that, right? In the long term, we gained 20%, 25% of turnaround in the last 9 months. We increased 1.9% gross margin with one of the highest margins in the fashion retail. And there's still evolution that Fabio has left. We continue to project for this cycle, greater gain in turnaround, more reactivity. We depend on the productive capacity, but reducing the productive cycle is important and that we are having help, we have cases with 20 main ones. We have a relevant percentage of reactivity. And of course, we will increment more. We gave the guidance of more or less leaving reactivity, but not only reactivity. The productive cycle, we expect a gain in terms of speed that will bring us the flexibility.

To add here, as Fabi said, well, it's a decision when we make a decision, we evaluate risk and return. You can lose a bit of sales, but you gain in margin or gain in turnaround, as we said before, maybe looking at today, we can risk more, gaining more sales. Yes. This is an evolution for the model. We're talking about evolution. When we look at what will happen, we adjust and evolve in the processes and in the evolution, we see how we capture even more the risk return relation.

I have a question from online Daniela from HSBC. I think it's interesting, the feedback and increase in sales that the refurbishing of the stores has brought. The other information, if you can share how many stores we want to refurbish in the last years. And her second question about the implementation of the FID, I want a summary of the gains that implementation brought to the company. If you can tell us the areas and processes that count on this tool, if it's already 100% implemented.

Well, I'm going to start with the last one, FID. It's hard to say the gain. It's an end-to-end model that made feasible since 2017. We started I'm not mistaken, we started and finished implementation of RFID 100% in the brand in 2017 and a brand since then 100% implemented. It's not now in 2025. It was in 2017. The others, we're still evaluating the cost benefit and the return. What are the gains? I think it's an enabler, enabler to have stock accuracy. We have seen the importance of having inventory stock, that stock that's inventoried frequently to have accuracy of information to manage the stock. Stock is one of our biggest asset, people, asset product. It's a huge initial gain that we had in 2017, 2018. After that also, it allowed us to have more speed in the cashier queues, we were able to reduce the lines having more products at once and the work that allowed granularity in the DC to work SKU to SKU, you need to have stock accuracy. I would say it's a big enabler of the digital journey of sorting of stock turnaround, accuracy, governance, many points. But I don't think there's one indicator. It's an old project actually for us. The first part of the question, the refurbishing or renewals. We're going to give annual guidance of the investments per year. We validate this in the shareholder assembly. We propose this in each assembly, we're looking for a horizon in terms of expectation of what we have of CapEx on top of revenue. Probably 2/3 of it will go to store opening, digital journey and refurbishing or remodeling. And the 2/3, probably a good part is for remodeling or refurbishing maybe in the beginning of every year, we can have a new horizon, a range of new stores. This year, we're going to meet the range that we gave. We're opening some new stores at the end of the year. We've talked about 30, 37 stores, and we will meet this. And if we look at the range for the next years that we didn't give a total per year, but we have a potential that we will let you know in the beginning of each year, maybe even be twice as big. It's not the same number every year, but it's an important potential. So refurbishing also bringing good results. We want to intensify the investment in refurbishing renewals. We decreased the cost per square meter. We decreased the cost of the renewals per square meter. We can renew more stores spending less. If I can add, there's an important gain it would be of RFID. It will bring productivity of per store, operational. RFID allows us to get into the phase in management in the operation of the stores, all the part pricing of the product or repositioning of product, operational parts of the store based in people, we gained a lot of productivity and it will give us a gain in productivity. It will help the dilution of expenses, for example, the phase that we are using to gain the productivity. It's still a base. It leaves the customer end and enters our operation and our gain.

We got to the end of the Q&A. We're a bit late. I pass the floor to Fabio for his final words. Thank you, Fabio.

Thank you, everyone. I would like to add, we received a few questions and our intention here was to show what are our expectations and ambitions for the next years. I can answer a few questions to see how it's possible, if it's possible. Our intention was to show the ambitions showing it's possible. Three questions that we received a lot, and I hope we answered here to give an example about that. One was more constant story of growth of profitability or distribution of value. If you grow, you burn profitability, if you give profitability, you don't grow, if you distribute, you don't grow. We're trying to show here and make it very clear a story of growth with profitability that's increasing and with distribution because we generate a lot of value, generate so much cash and value that we're able to grow with profitability and distribution. This growth of profitability comes from the investments that we made in the past, the tests that we ran in the past, the things we did in the last years, that's why we brought these cycles also and a question that some asked, well, but it's implicit here because in the previous growth, you had a big growth in terms of area. It's implicit here an important growth in terms of efficiency, yes. Some might ask, but you didn't do this in the past, a growth coming from sales bigger than in the past, true, Daniel showed here. We are already doing this in the last few years despite being a big challenge, not just an intention. It is already real. Our growth in the last 2 years comes from this and the initiatives that we were talking from now on is to maintain this growth and now bringing new leverages like accelerating once again, the digital that is very profitable now. We balanced that out the last 2 years. It grew from 23 to 24. Now it gained profitability. Now it's ready to grow. We're ready to accelerate the expansion and to keep a good level of growth with efficiency. And a final question that I receive sometimes when we talk about expansion, acceleration also, why now? Sometimes people ask, why now, it's not -- it's uncertain. Isn't it worth waiting a bit? Why now? Because the projects are great. They bring a lot of value to the shareholders. We are ready. Installed capacity is there. The team asking to move and we're ready. That's why now. Well, I want to use the opportunity to thank everyone. We finish now our online event. Any questions, we're always available. Thank you guys. [Statements in English on this transcript were spoken by an interpreter present on the live call.]