SMU S.A. (SMU.SN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by and I'd like to welcome you to SMU's Strategic Plan 2026 and 2028 Conference Call on the 5th of December 2025. [Operator Instructions] The format of the call today will be a presentation by the management followed by a question-and-answer session. So without further ado, I'd now like to pass the line to Ms. Carolyn McKenzie, Head of Investor Relations at SMU. Please go ahead, ma'am.

Great. Thank you. Thank you all for joining us today. I am here with our CEO, Marcelo Galvez; and our CFO, Arturo Silva. This week, we launched our new 3-year strategic plan for the 2026 to 2028 period. And the purpose of today's call is to describe the key initiatives and targets associated with the plan. We have a lot of slides, but I'm going to try to keep the presentation as short as possible so we can leave time for Marcelo and Arturo to answer questions. An audio recording of this call will be available on our website later today. We will be making a lot of forward-looking statements today. So please remember to take a look at the disclaimer regarding forward-looking statements on Slide #2 of our presentation. On Slide 3, we have the agenda for today's presentation. We're going to start with some highlights from our plan for 2023 to 2025, which we are wrapping up this month. This will set the stage for where we are today as we get ready to kick off the new plan. After that, we will provide some market context and then we will get into the details of the new plan. On Slide 4, we have an overview of our strategic plan for 2023 to 2025. The plan was structured in 4 pillars. Omnichannel growth, customer experience, efficiency and productivity and committed and sustainable organization with financial capacity and technology providing support in order to implement all of our strategic initiatives. The omnichannel growth pillar featured an ambitious organic growth plan with 43 new store openings in Chile. And as you can see on Slide 5, to date, we have opened 37 with 6 more planned for this month, reaching our goal. But in addition to the actual physical execution of opening the stores, we want to highlight the fact that these stores have been outperforming our expectations, on average, selling 16% more than the plan that we evaluated when we made the decision to approve the project. We assume a 3-year maturity curve and around half of these stores, which have been operating for less than 3 years are already outperforming the average sales per square meter and sales per full-time equivalent for their respective formats. On Slide 6, we have one of the most important accomplishments of the 2023 to 2025 period and one that is extremely relevant for our plans going forward. During this period, we have transformed our mix of formats in Chile. On top of the store openings that I mentioned on the previous slide, in 2025, we made the decision to accelerate the conversion of our Mayorista Diez formats. We have been gradually converting these stores into the Super Diez format with plans to finish the conversions between 2026 and 2028, but we decided to make the whole change this year and we realized that there was an opportunity not only for Super Diez, but also for Alvi. Consequently, the 58 Mayorista Diez stores that we had at the end of 2022 are now operating under the Super Diez and Alvi banners, giving them significantly more scale and geographic coverage. Between store openings and Mayorista Diez conversions, Alvi has grown its footprint from 32 stores in 2022 to 54 today, and should be ending the year with 57. Super Diez has grown tenfold from 5 stores in 2022 to 53 stores today with one more opening in the pipeline for December. By streamlining and consolidating our mix of banners, we are positioned to compete better going forward. On Slide 7, we have the progress on our organic growth plans for Peru, where we have opened 9 stores to date and expect to end the year with 13. Our store opening plan is focused on the Piura zone in the north of Peru and as part of that plan, we also opened a new distribution center in the area in order to support further growth. These openings help us move towards the scale that we need to compete more effectively in Peru. On Slide 8, we have other part of omnichannel growth, which is e-commerce. Online sales have grown 22% per year on average during the period, driven by our Unimarc.cl and Alvi.cl platforms, which grew an average of 18% and 138% per year, respectively. We also significantly expanded our click-and-collect coverage, adding 11 new regions with click-and-collect locations for a total of 13 out of the 16 regions in Chile. We also expanded our partnerships with last milers. The number of stores operated with last milers grew 29% in the period, reaching 146 stores and sales through last milers had a CAGR of 12%. On the next slide, we move on to the customer experience pillar of the plant. With our private label strategy, where we have developed a portfolio of specialized private label brands covering a wide range of product categories including bakery, fruits and vegetables, meat, seafood, pantry basics, cleaning supplies, paper products and more, achieving a 13% sales penetration with over 500 product launches during the period. To date, 33% of our private label assortment has eco-friendly packaging, up from 11% in 2022. On Slide 10, we have a summary of the efficiency and productivity pillar, providing examples of the progress we've made with respect to in-store logistics and energy efficiency. In stores, we've implemented our efficient operating model in 100% of Unimarc stores. And as a result, we've seen an improvement in product availability. We expanded the coverage of digital treasury reaching 39 stores, generating savings on cash transportation expenses. And we also increased the number of stores with self-checkout by 66%. In the supply chain, we have voice picking implemented for 95% of our box volume leading to a 15% improvement in productivity and picking processes. Electric trucks are used for 8.4% of shipments from distribution centers to stores. And we've implemented the Blue Yonder demand planning system for 99% of fresh categories. In energy efficiency, we've increased the share of facilities with unregulated electricity rates from 3% and in 2022 to 18% in 2025. This has generated savings of CLP 3.6 billion in 3 years, and it also means that the same 18% of our electricity consumption is now coming from renewable sources. Our sustainable store project has helped to reduce energy consumption by 5% to 10% in the stores where we have implemented the system. And 100% of the facilities we operate in Chile have an energy management system certified under ISO 50001. All of these initiatives are part of our efforts to optimize our operations and generate savings helping to offset the significant increases we have faced in labor and electricity costs. On Slide 11, we have the fourth pillar of our plan, committed and sustainable organization with initiatives that drive the sustainable development of our business. including supporting small and medium regional suppliers by providing mentorship and dedicated shelf space in our stores to increase the visibility of their products. Reducing food waste is a key part of our environmental initiatives, and diversity and inclusion is a central part of our culture. 36% of leadership positions at SMU are held by women, 1.5% of our employees have a visibility, and we have partnerships with nonprofits that are aligned with our sustainability strategy. And finally, on Slide 12, a great indicator of our progress in many different areas of our operations and sustainability management is the fact that we qualified for the Dow Jones Sustainability Index Chile and MILA last year for the first time, ranking it #1 for the food and staples retailing industry in Chile, #2 for LatAm and #8 worldwide. Now that we've provided context on where we are today as a company, we have a few slides to go over customer and industry trends. On Slide 14, the changes that we've seen in the industry in recent years have largely been driven by lower consumer purchasing power. In the pie chart above, you can see that food is the most relevant budget item for Chilean households, accounting for 23% of spending. And below, we have a comparison of food inflation and wages. These are nominal cumulative figures, and you can see that between 2019 and 2021, the curves moved together. But in 2022, following the liquidity events of 2020 and 2021 with pension fund withdrawals and government aid, food inflation grew almost 30%, while wages grew closer to 10%. This meant a significant reduction in purchasing power as the most relevant budget item suddenly became a lot more expensive. As a result, customers became much more price-sensitive and began changing their shopping habits in order to adjust to this new reality. Down-trading in their product selection and buying fewer quantities. And the market responded with changes in pricing and promotional strategies and the appearance of new players. However, as you can see, in 2024 and 2025, the gap between the food inflation and wage curves have been shrinking as we return to more normalized levels, which we think is good news for the coming periods. As we should see a reversal of the down trading and an increase in average ticket. On Slide 15, we have a little more detail on changes in customer purchasing behavior in recent years. At the top, we have an increase in fill-in purchases, as opposed to stock-up purchases. Fill-in purchases are identified based on the frequency and size of the ticket and the number and types of products. These are lower amounts and fewer products than a stock-up purchase, generally fewer than 15 categories in the ticket and they tend to include a high rotation fresh products. The increase in fill-in purchases is due in part to household sizes, which are around 10% smaller than in 2017, and the increase in single-person households. The share of private label products has grown as customers see these products as a way to spend less without necessarily sacrificing quality. Consumers have also been shopping around more, increasing the number of channels they visit in an average month. Growth in online sales is another clear trend we've seen going from 1.3% of sales in 2019 to 7.5% in 2025. And with respect to the traditional trade, which is relevant for us because our Alvi Cash & Carry format sells predominantly to mom-and-pops and other B2B customers. There has been a 13% increase in the number of stores and they have maintained their share in food sales at around 33%. Finally, on Slide 16, we'd like to highlight 3 trends that we see as favorable for our formats. First, we expect to see some improvement in purchasing power due to more economic stability with GDP expected to grow around 2.3% and inflation in the neighborhood of 3%. Next, fill-in purchases are highly relevant for both Unimarc and Alvi. And as we saw on the previous slide, fill-in purchases are on the rise. And while we have seen online growth, physical stores are also growing. Food retail selling space has grown an average of 1.6% since 2019, and food retailers, big and small, have announced plans to growing their store count. That includes us. Now that we've provided our current status and also the industry context, we will go into the details of our plan for the next 3 years. On Slide 18, we have the structure of our strategy for 2026 to 2028. Our focus is to drive growth, competitiveness and efficiency. And we will do that by building on the foundation of our newly streamlined multi-format strategy. Today, in Chile, we are operating 3 formats with critical mass each of which has a clear, well-defined value proposition. The new plan has 3 key pillars: growth with value for the customer, technology assets and efficiency and productivity. Our sustainable culture will support the execution of this plan. On Slide 19, the growth of value for the customer pillar encompasses many different areas of our operations and strategy, but the overarching goal of this pillar is to grow and to enhance our value proposition for all of our customers and all of their shopping habits. So this includes both final and B2B customers with different levels of sophistication and both fill-in and stock-up purchases. Our initiatives target all components of the customer value equation. Assortment, freshness, private label, off-line and online purchases, competitive prices and fast and easy shopping experiences that help save time. On the following slide, we describe what this will mean for each of our 3 formats in Chile as well as the role private label will play. We'll start with Unimarc on Slide 20. Unimarc leads in fill-in purchases, offering a fast and easy shopping experience at its nearly 300 stores. We want to continue to strengthen Unimarc's leadership and fill-in purchases, making sure that our assortment is attractive and relevant for our customers through a focus on fresh products and private label, as you can see on Slide 21. Competitive prices are a key part of creating value for our customers. Glenmark's pricing strategy is focused on ensuring highly competitive prices for products to which customers are most price sensitive and private label is a key role here. At the same time, we have a strong promotional offering that combines both long-lasting campaigns that are easily identifiable by customers and short high-impact campaigns focused on products that are highly relevant to customers in order to generate traffic. On Slide 23, our broad geographic coverage and robust customer base provide us with an opportunity to build up strategic partnerships to continue adding value for our customers. Our Club Unimarc loyalty program rewards loyal customers by offering better discounts and benefits to customers who shop more with us. Over 9 million customers visit Unimarc over the course of the year. And in the last 3 months, 3.8 million club members have made purchases. So we see an opportunity here to attract the customers who already shop with us, but not as frequently as we would like. Improving competitiveness, assortment and benefits will all help with that. On the next slide, Unimarc offers its customers a variety of ways to shop, including multiple online channels. Our hybrid model includes our own Unimarc.cl platform offering home delivery and click and collect as well as partnerships with last milers. In the next 3 years, we will continue expanding coverage, adding operations in 58 municipalities where we don't have online coverage today, taking advantage of our existing brick-and-mortar footprint and reaching 86% of the population. On Slide 25, we have our organic growth plan for Unimarc with 23 store openings for the next 3 years as well as 51 store upgrades with a little more information on the next slide. As I mentioned earlier in the presentation, we've had great results from our new store openings, which naturally have our most up-to-date value proposition implemented. We, therefore, see an opportunity to upgrade existing stores, bringing them to the same standard that customers value and driving same-store sales growth. We've selected 51 stores for this period. And on the slide, you can see pictures of the 2 types of prototypes we want to implement, premium affordable on the left and classic on the right. The upgrade includes changes to the store layout and assortment, increasing fresh products and arranging the different sections fruits and vegetables, meat, bakery, dairy, dry goods in a more intuitive way, making for an easier shopping experience. And we will, of course, update the look and feel. These changes make the stores more attractive for fill-in purchases with a positive impact on sales and margins. On Slide 27, we move on to our Super Diez soft-discount format where the focus is on offering low prices and an efficient assortment covering fill-in needs but where stock-up purchases are more relevant. 80% of Super Diez's customers belong to the C3 and D socioeconomic groups seeking a less sophisticated assortment than the average Unimarc customer. Super Diez operates 53 stores today, which is a significant change from the 5 stores it had at the end of 2022. This is a result of the Mayorista Diez conversions that I described before as well as 7 new stores that we added during the period. And most of the increase in the number of stores took place during 2025, as you can see on Slide 28. This radically different scale creates a lot of potential for the format as we now have the critical mass necessary to carry out communication campaigns creating brand awareness, increasing loyalty with existing customers and attracting new customers. At the end of October, we relaunched the Super Diez brand, including the new Super Diez, Super Barato or Super Cheap tagline. We have a little more information on Slide 29. The Super Barato strategy aims to position Super Diez as the chain that offers the lowest prices on the basket of products that is most relevant to families in the C3 and D socioeconomic groups, with a higher penetration of private label and high visibility of the low prices we offer with the Super Barato tagline everywhere you look. On the next slide, an efficient assortment is a key part of the value proposition. We cover the full range of products on our customers' shopping list but with limited variety. The goal is to offer 1 private label and 1 or 2 national brands. As a comparison, the average number of SKUs per store at Super Diez is around 3,700, whereas at Unimarc, it is closer to 6,000. This efficient assortment contributes to both operating and commercial efficiency. Private label penetration at Super Diez is currently around 20%, and we strive to increase that number as it is essential part of the efficient assortment. Finally, on Slide 31, we have a big opportunity to grow sales in the stores that we recently converted to Super Diez, and we also have 10 new store openings in the pipeline for 2026 to 2028. On Slide 32, we move on to our Alvi Cash & Carry format, which is a leader in the self-service Cash & Carry segment and focuses on meeting the needs of its over 120,000 B2B customers. Alvi's omnichannel strategy features multiple sales channels to meet the needs of its B2B customers who are at the center of its strategy. These channels include the self-service brick-and-mortar stores, e-commerce through our Alvi.cl platform, and direct sales, especially targeting hotels, restaurants and catering businesses with a specialized sales force, helping Alvi to extend its reach. Currently, e-commerce and direct sales together account for 6% of sales and we aim to grow that penetration to 15% by 2028. On Slide 34, we provide a little more information about Alvi's customer base. The focus is on B2B customers, as I said before, which accounts for 75% of sales. Within this segment, 90% operate in the traditional trade, that is mom-and-pops, liquor stores, mini markets, et cetera, and 10% is hotels, restaurants and catering businesses. While B2B is a clear focus for Alvi, 25% of sales come from final customers, and we see an opportunity to grow in both of these segments. On Slide 35, Alvi offers an efficient assortment aimed at meeting the business needs of our B2B customers, while also satisfying stock-up needs for price-sensitive final customers. Alvi carries a specialized assortment for its different customer segments. For example, bakeries require giant bags of flour. Private label plays a role in price perception and differentiation, and fresh products represent a growth opportunity, as the Alvi prototype has walk-in coolers that are efficient to operate and attractive for customers. Alvi's pricing strategy on Slide 36 is based on offering competitive everyday low prices with a tiered pricing structure with volume discounts, complemented by the promotional offering that highlights key categories that drive traffic to stores. On Slide 37, Alvi's loyalty program is a central part of its value proposition and is aligned with our goal of helping our B2B customers grow their businesses because that means they will also increase their spending at Alvi. The club offers discount coupons specific to the customers' needs, as well as training, credit and partnerships with businesses that can add value to Alvi customers. We plan to continue adding benefits to further build loyalty. On Slide 38, we have the growth plan for Alvi, including 5 new openings and 29 store upgrades with the same logic as Unimarc. We see upside potential from upgrading 29 Alvi stores, including the 15 newly converted Mayorista Diez stores. Now that we've covered the 3 formats, we will move on to our private label strategy. On Slide 39, on the left-hand side of the slide, there is a diagram that explains how we look at our mix of private label products. At the bottom of the diagram, we have opening price points, which are the most affordable account for 30% of sales. Then we have national brand equivalent and superior quality products, which account for 70% of sales, but their contribution to profitability is higher. Our strategy is to make sure we have a very solid opening price point offering, but to increase the share of national brand equivalent and superior quality products, which is why these products account for 98% of new product launches in the last 12 months. In the middle of the slide, we have the 3 key points of our private label strategy, differentiation, profitability and competitiveness. By implementing each of these points, we plan to increase our private label sales penetration from 13% in 2025 to 16% in 2028. With respect to differentiation on Slide 40, we plan to redesign our portfolio of brands, starting by redefining our brands equity, then redesigning the brand's images and then concentrating products in the most relevant value brand increasing customer loyalty. We will continue to launch new products. And in addition to our own brands, in some cases, we will also complement the assortment with exclusive brands. The second point of the private label strategy on Slide 41 is profitability, which will be driven by shortening the value chain, sourcing at the origin and bringing manufacturers closer to SMU. We are looking for sourcing opportunities all around the world. We will also look to grow more in the national brand equivalent and superior quality segments rather than an opening prices. Finally, in competitiveness, we want to reinforce the idea of quality at the best price through an attractive and efficient brand portfolio. Our Merkat brand is very strong in the opening price point segment and we have recently added a Super Capitan brand for basic products. We don't need to add a lot of new products to the assortment here. We just need to add a few to ensure full coverage of basic categories in each format and ensure an efficient and competitive pricing strategy. Now that we've covered how we are going to grow and create value for our customers in each format, we are ready for the second pillar of our plan, which is technology assets on Slide 43. Technology plays a central role in retail. And it has provided us with many opportunities to operate -- sorry, to optimize our operations in the past. Going forward, we need to make sure that we are prepared to take advantage of new opportunities from digital transformation and AI. Customers increasingly rely on technology in their daily lives, using virtual payment methods, digital shopping channels and mobile apps. At the same time, new technologies become available for Houston stores and the supply chain and the integration of AI agents can boost productivity and help to optimize costs. On the next slide, as SMU looks to grow sales, open new stores, upgrade existing stores, grow its logistics network, expand private label and increase efficiency, we need to implement digital technology assets that will help us build a more flexible, efficient company that is prepared to deliver greater value to customers. Between 2023 and 2025, we updated our ERP system, SAP to the S/4HANA version and so we are prepared to take the next steps to transform our existing transactional core into an agile digital core that accelerates the adoption of new technologies. In 2026, we will rationalize our infrastructure and migrate it to a modern hyperscaler cloud, enabling cost savings and laying the foundation for adopting new technologies, such as an enterprise AI framework, to build optimization algorithms for operations and new digital business capabilities. All of this will be implemented under ISO 27001 security standards. Building our digital technology assets is key for the next pillar of our plan, efficiency and productivity. This pillar has been a constant presence in all of our strategic plans, and this time is no different. A disciplined approach to expenses is part of our culture, and we will maintain that while adding further process optimizations and technological tools to drive productivity and help mitigate cost pressures, thereby, contributing to profitability. We have efficiency and productivity initiatives throughout our operations, including supply chain, stores and back office as well as energy efficiency. On Slide 47, we have our logistics efficiency initiatives where we have plans to both optimize and expand our network, technology upgrades, such as the transportation management system and the warehouse management system will contribute to operating efficiency. And by expanding our network, we will be able to support our organic growth, supplying new stores and also improve our inventory management. We plan to expand our logistics network capacity by 25% by 2028. On Slide 14 sic [ 48 ], we have our in-store efficiency initiatives. Where we aim to increase product availability, improve productivity and use processes and technologies for less prevention. On Slide 49, we also see opportunities to continue driving efficiency and productivity in our back office processes through digitalization, the incorporation of AI agents, the implementation of enhanced RPA and other smart technologies. Finally, on Slide 50, we have energy efficiency, where the focus is on both energy consumption and energy expenses as electricity rates have increased significantly in recent years. Regarding savings on electricity costs, we will migrate more than 180 stores to unregulated rates, generating an estimated savings of CLP 2.5 billion. By 2028, 55% of our energy consumption in Chile should be under unregulated rates, up from 18% this year. And we have also negotiated these contracts to ensure that the energy supply is coming from renewable sources. We also have a project called Sustainable Store that uses energy monitoring systems and automated controls for lighting and air conditioning systems to reduce energy consumption. We've implemented this in 16 stores that account for around 6% of energy consumption, and we expect to see savings of CLP 130 million next year. We also have a new pilot program to optimize refrigeration in source, which accounts for 50% of consumption. We've now covered the 3 central pillars of our plan for 2026 to 2028, but the successful implementation of these initiatives requires a strong organizational support and that will come from our sustainable culture and corporate values, closeness, excellence, respect, collaboration and agility as well as our corporate sustainability model, driving shared value and environmental initiatives that are aligned with business needs and contribute to sustainable development. On Slide 52, we have one of our main sustainability initiatives aimed at creating shared value, which is our support of small and medium businesses. We have programs at both Unimarc, where the focus is on developing suppliers through our 100% Nuestro program, enhancing Unimarc's product assortment and Alvi, where the focus is on helping B2B customers to develop their businesses so we can grow together. On Slide 53, food waste is one of the most relevant environmental impacts in the food retail business, and we will continue working throughout our value chain to reduce waste. This will be a natural result of many of our strategic initiatives, ensuring an attractive assortment with competitive prices, using technology for more accurate demand planning and technology in stores that helps manage inventory. And at the end of the chain, we work with nonprofits to donate the products that we do have left over, and we're not able to sell so they don't go to waste. And finally, diversity and inclusion is part of our culture. Our diversity and inclusion model has 4 focus areas: gender, generation, disability and partnerships and share value. So far, I have talked about our strategy in terms of how it relates to our operations in Chile, but the same framework applies for our operations in Peru. On Slide 55, we have an overview of those operations. We have 2 formats. Maxiahorro is a soft discount format, similar to Super Diez with a focus on stock-up purchases at low prices and efficient assortment and low sophistication final customers. Maxiahorro has 27 stores, largely concentrated in the Piura zone in the north of Peru, which is our focus area for future growth. We also have Mayorsa, which is a Cash & Carry format, more similar to Alvi with 6 stores catering to B2B customers. While the focus for growth is on Maxiahorro, Mayorsa contributes scale to our Peruvian operations. On Slide 56, we have the focus areas for enhancing Maxiahorro value proposition, very much in line with our formats in Chile. Private label is a key initiative where we can take advantage of synergies with Chile. As you can see, we have a picture of Merkat products on the slide, which is the same brand that I showed earlier when I was describing the opening price point strategy. We also have opportunities to make operating improvements, generating savings that we can pass on to the customer through more competitive prices. On Slide 57, we have our organic growth plans for Peru. We're looking to open 22 stores in the next 3 years, continuing to build the scale that will help us be more competitive. We've redefined the parameters for new stores in order to reduce the CapEx required, enhancing profitability. The new store openings take advantage of existing capabilities, including the new distribution center that we opened last year and our technology and back-office infrastructure. On Slide 58, we have Unipay, which is our credit card operation. Unipay adds value to our retail business by offering enhanced benefits to customers. Customers who usually pay get discounts on top of discounts, amplifying our promotional strategy. When we look at similar groups of customers in terms of socioeconomic group and shopping habits, customers that use Unipay as their payment method spend much more at our formats than customers that don't. So the card generates incremental sales for us. We plan to grow the use of Unipay out our formats, increasing penetration in sales by 2.5x between 2025 and 2028. On Slide 59, we have some of the financial numbers with graphs showing revenue, operating expenses, EBITDA and net income. The revenue graph is quite consistent with the graph I showed earlier with food inflation and wages. We had stronger growth between 2019 and 2022, and then the high inflation and lower purchasing power led to changes in consumer behavior, resulting in lower tickets and lower sales growth. Our gross margin performance has been very strong over the period and in the last 12 months, in particular, reaching 32%. While we've kept tight control on expenses, we have seen significant increases in labor and electricity costs. Revenue for this period has grown 4.1% on average, whereas expenses have grown 6.7%. We need more top line growth to achieve the operating leverage that will help us generate more EBITDA and that is why this new plan has such a strong focus on growth and enhancing our value proposition. At the same time, we need to maintain our disciplined approach to operating expenses. Our net income is closely linked to our EBITDA, except when we have nonrecurring events such as the sale of OK Market in 2022 or the asset sales we've had this year. As a result, growth in EBITDA should be reflected in the bottom line. On Slide 60, we have our cash flow for the next -- for the last 3 years. I won't go into all the details, but the main point we want to make here is that we have healthy cash flow generation that has allowed us to finance our CapEx with operating cash without taking on new debt. And below, we have our debt maturity profile where we practically don't have maturities next year and the following years, the profile is quite flat, which gives us added financial flexibility as our EBITDA recovers. On Slide 61, we have our investment plan for 2026 to 2028, for a total of CLP 370 billion in 3 years. This is very much in line with the 5-year plan we announced earlier this year for CLP 600 billion between 2025 and 2029 as we should be investing around CLP 120 billion per year. Growth initiatives, especially store openings and store upgrades, account for around 55% of CapEx with 20% going towards efficiency initiatives and the rest of maintenance. On the right-hand side of the graph, we have the CapEx and OpEx we'll be spending on technology and digital projects as we sometimes get questions about this. It's important to note that this OpEx is not incremental. In fact, our cloud migration is going to generate savings. On Slide 62, we have the financial impacts that we expect to see from this plan. As we saw on the previous slide, CapEx will be CLP 370 billion, and that will be financed with operating cash. We expect to see annual sales growth of between 5% and 6% driven by our new store openings, store upgrades and improvements to our value proposition. The next slides are just a summary of the 3 pillars of the new plan. And in the interest of time, I won't go through them, but they do provide an easy overview, and the presentation is available on our website, so you can check these slides out at any time. That's it for our presentation. Thank you so much for listening. Marcelo and Arturo will be happy to take questions now.

[Operator Instructions] Okay. So our first question is from Alonso Aramburú from BTG.

Yes. I was curious about the private label penetration of Super 10, which you mentioned at 20%, I believe. What's your target there? Many of these discount operators operate with a private label penetration of 50% or more. I mean, do you have a target that high? I mean how much do you think you can increase private label there? And do you have the capacity to do so? From the consolidated increase that you're showing from 13% to 16%. Also, where do you see that increase happening? Is it more at this at Super 10 or Unimarc? How do you balance that increase?

So the fact that the number of the -- the idea is to increase the pricing level in the old format, but especially in portions that will be higher in Super Diez than Unimarc, of course, because we need to reach more important level in the soft discount format [indiscernible] the penetration of 16% but will be higher in Super Diez, no doubt.

And do you have a target for that? I believe you said you're at 20% right now. Right?

It's almost 28% in the case of Super Diez and also, we are going to launch almost 600 new products because we have -- in some categories, we don't have a private label products. So we have the opportunity to launch new products, especially in this categories where we don't have private label.

[Operator Instructions] Okay. It looks like we have no further questions and the presentation was comprehensive enough. I'll hand it back to the SMU team for the closing remarks.

Great. Thanks so much, everybody, for joining us today. Feel free to get in touch if you do have questions. And again, thanks for listening to the whole presentation. Have a great day and a great weekend.

That concludes the call for today. Thank you, and have a nice day.