Vivara Participações S.A. ($VIVA3)

Good morning, everyone. Welcome to the video conference results for the first quarter of 2026 of Vivara. In this quarter, the company will dedicate 100% of the time of this video conference for the Q&A session. The audio with the initial comments and the analysis of the financial performance done by Thiago Borges, CEO of the company. And the CEO. [indiscernible] Is available since yesterday and can be accessed at any point in the site of IR of Vivara. [Operator Instructions] The dynamic is that your name and the company and your company you're present so you can make your company live with your audio turn on. [Operator Instructions] In representing Vivara we have Thiago Borges, CEO. Elias Lim, Cassiano Lemos. Now we will collect your questions. Remembering that make question, all you have to do is send your request through the Q&A icon on the platform in the bottom of your screen. Please wait while we collect the first questions.

Our first question is from [indiscernible] from BTG.

Two questions from my side. The first is in relation to the balance in the life and the pricing about the demand. We saw a need for so bigger need in the quarter. How do you see this in terms of pricing and life looking forward to the categories and the categories and the higher price category. And the second question is how do you see the dynamic of SG&A of the company compared to what we saw in the first quarter? The initiative to accelerate certain investments since the end of last year. I wanted to understand how we can expect this dynamic during this quarter?

This is Thiago, speaking I'm going to start with the first part of your question. And then Elias can finish your second part, to answer your second question. as far as the matter of balance between the pricing of the net demand. In the category, in the life category, we have already done the adjustments in price and the necessary price adjustments. So I think that this is a decision that we have already taken. I think it's worth mentioning, that the elasticity that we've seen, how it behaves between the 2 categories. It's not just in this price adjustment that we've done, you've had a positive impact on the commercial category an increase in prices in the volume in the adequate volumes and as we mentioned in the moments category, this price has happened in the second half of last year in second quarter last year. Just remembering the strategy that we used in the past, in the fourth quarter of '24, we reduced greatly the category of moments to be able to do for Christmas launches at that time. We had certain guidance with lower prices in the first quarter of '25. This category represents 30% of the revenue of the subcategory moments, it represents 30% of the Life brand but it has half the volume because there are several different -- there's been several items that have prices below average in the category. So we look at this volume in the Life category, that for us does not scare us. In fact, it was expected and committed with the reduction of the subsidies affecting the product produced volume, a very large volume at the beginning of last year in the beginning of '24, and it generated this higher subsidy, which in this quarter realized the production into -- in the factory. However, when you exclude the moments category, you see that the other categories that respond the good part of our sales the moment is only 30%. The rest 70% represents growth in volume of 17% in volume, while it has shown an average ticket, a stable ticket fee -- so average ticket price. So the pricing -- the repricing that was done and to speak a little bit about the question of average ticket we have worked a lot in the average tickets in the lower level and the T1 level, which is very important since it's a category very, very used for presence. It's also a main focus of ours. We look at the velocity of same-store sales for Life. In one of the questions to accelerate the same-store sales would be to work in these categories, especially in the entry-level price range. We're looking at life is to work on the introduction of new collections, which we have been doing. We believe that we're going to open a portfolio of products in life and a level that we're working here with the cycle of launches and production that these things will happen over time with Silver in the second half of the year and closer to more heavily in the fourth quarter. However, this fall off in the volume was expected and is connected with the strategy that we've been using since last year. In the second quarter of last year, this increase in the light category this managing note has already started going to pass it over to Elias now to comment.

But I think it's worth it in the previous call, the major focus of the conversation was in gross margin. And we had a level of visibility of the business. I think it's very important to accompany our business, see the dynamic, however, quarter-by-quarter in a retail company like ours, $2 million or $3 million or $4 million of this quarter can just be a number -- when you put in the next year something else. And you put on the lines of other expenses. A question of provisioning of labor cases, labor losses and we also no longer plan to adjust eventual operations and collections working with the numbers of planning this. So on a recurring basis, when you remove only the effect of these subsidies, the age that the company has grown and we've maintained this margin. Even with this base of comparison of expenses a little bit stronger this year compared to last year. In May, we came on strongly, had a great deal of tranquility the level of SG&A of the company always rising in a healthy way. When we look at the line of freight. There are 2 actions, which we believe bring a good return to the company. The first of which is the DC and eat which is we're going to have this base of comparison in the third quarter, but it brought approximately $12 million in benefit in the subsidies, benefit subsidies in the first quarter. And the other stores that will be more priced in the second half of the year last year. And we have a base that's a little bit in comparison to previous numbers. and the products that we transferred and the capacity turnover they have in new stores is one of the motors that we have to explain our stock in this first quarter compared to the fourth quarter of last year is the lowest in the series. Since the IPO, so we reduced 77 days compared to the first quarter of last year. And we look at the growth in the quarter -- quarter-on-quarter is the lowest business lowest growth since the IPO. So this is also is compared to the 3 stores, which happened last year been very successful but an embarrassed comparison of freight for this pressure in the first team. So when we advise these numbers, we don't advise these numbers compared to this revenue. Okay, is we see 3.8% of gross revenue and our expenses have grown by approximately 20%. Almost all the growth in this line -- the percentage of revenue comes from the line of freight and marketing talk we're going talk a little bit about freight going forward, but I wanted to bring a little bit of color about what we see in the line of marketing, when we see our stock series of marketing in this semester. It represented 3.7% of gross revenue, and this percentage is going to be higher than the same quarter of last year. Since 2021. Comparing the first quarter, you see that our marketing line has been every year has been higher for 75 and in '25. It's not in 2025. We made several companies and reduced our investments in marketing, principally in the offline medium and over 2025, since 2024 and during all of 2025. We have been increasing this percentage in a way that the percentage marketing expenses trended revenue is now 3.3% of gross revenue versus 3% of gross revenue in '24 which are levels that are much lower than what we saw in recent years in '21, '22 and '23. When we saw -- when you see this, what we expect for this year, this percentage that I mentioned was 7% is competing within the trajectory in which we don't see big increases in marketing expenses, I read last year. The marketing expense to grow we look at online media as well as off-line media is a little bit above the gross revenue of the company, especially because the revenue that we've had is growing more than the company's revenue. We continue to invest in performance media, branding media. And we continue to have these excellent results, and we've been able to have in the digital world and even growing at this rate, we're able to compare the ROS that we had last year, and we think we're going better. On the other line, the line of rent personnel, other sales expenses have all grown in line with gross revenue, it includes, in fact, the personnel line since the second semester of last year. We have new stores coming online into our base, which bring and additional expenses, higher expenses for personnel as they go maturing, and this tends to come back close to the average as they reach 2 or 3 years of maturity. As Carsten mentioned, how we see the free line.

This is Cassiano. We make a detail about the freight costs, as Thiago mentioned, there due to 3 factors, several separate factors. One, the remanaging of products between stores, in line with our program of optimization of stock so we have the [indiscernible] as part. This is an effect which will have an effect on costs as we have a new model of distribution between stores, the cost significantly lower and the direct transfer between stores. Another factor was the attendance and e-commerce giving directly from the stores to the house of the clients. This above 50% of the e-commerce orders in this first quarter level should be -- should drop slightly with the rest of the year with more products in and more express delivery. New distribution model for the network with the utilization of the new DC in titan large part of our stores. This was inaugurated in July last year and is part of our design our basis for comparison on this new network will be the second half of this year. So the levels of freight compared to revenue, net revenue in the second half of last year are good reference points for our operation. And in the second semester is the expectation that the expenses will grow less than the sales driven with operational growth and growth of net revenue.

The next question is from Danniela Chambô Eiger from XP.

I have 2 from my side. The first is in relation competitive dynamics, we've seen some players doing movement the against [indiscernible] question -- in the case of silver at the beginning of the year we also saw [indiscernible] making some adjustments. Not passing through the increase of gold and the gold products, and I want to say how is your vision of this -- do you see eventual impact for you of these movements, both in gold as well as silver. So it's a vision of more of a competitive environment. so we can look a little bit more gold in gold as Cassiano about the working capital. Do you have any other effects of seasonality. And we also see clearly the beginning of this movement of improvements, but we're not seeing clearly the improvement of the working capital of the turnover -- you see the same-store sales, you have activities to accelerate that. How is this movement of optimization of stock in the life stores? And if you're having any positive signs of improving turnover in the stores. It would be very interesting to understand how is this rollout going.

This is Thiago. Thank you for your questions. I'll try and answer them here. As a competitive scenario, starting with [indiscernible] with gold. We perceive that the pieces have a higher added value and the level of elasticity for the company here. is more positive from other categories in which we increase prices and bond continues to grow. We can for market research every week, we evaluate the position of our competition in these areas and when we look at that, we see very few pieces right few categories in which we do not have to put it into the numbers that we are a player -- we are top of mine players, so have our price associated with the credibility and the confidence an experience positioning within the shopping center and national coverage in e-commerce which gives us a differential in prices. When you look and compare what the competitors have done, our price of gold is still very attractive. And the movements that we've done the impact above these categories are very positive. And I think within the gold category of gold, we have seen -- we've been presenting gold and silver within Vivara, which is evolving very well this category together with the category of silver in Vivara doubled in participation in the first half of -- in the first quarter of this year compared to the first quarter of last year. Despite of all the commercial activity that these pieces combined volume as elegance and status for a price that is very attractive and a store experience, which is superior in the question of gold, it's a very interesting dynamic that we see silver. I think that the movement that competitors have done was to get the prices the same as or close to ours. It's a stream that some have prices that are outside of the market and they arrive more closer to our presence. However, running the stores we see -- the traffic in our stores our listers, especially we have a mix of an assortment in the Life stores is extremely superior to the competitors in terms of the coverage and offerings for and the of each category that we offer and also offer other categories as well. So we develop stores, and we see that these other stores have 3 or 4 times anecdotally, more clients in the same schedule, the same time period, as we have 3% [indiscernible] in practice, we look at other categories beyond the direct competitors. It is a scenario of retail in recent years was very inflationary and certain categories have already passed through to their prices, the inflation that has happened with our past through now we're having a careful look at other categories, that might possibly enter into the selection of present products, patency, regiving and which brought our share. So it's very coverage of the competitors is very high. We are -- we don't -- we're not just -- we don't compare to other companies to sell silver in Brazil. So more than having said all of that, when we look at the moment of prices that we have and the replacement that we've done in the commercial line the answer in volume was positive. So the collection don't even mention it was even better. So looking at the different category by category, we're very attentive to the competitive scenario in general. And I'm going to pass it over to Cassiano to talk a little bit about more about our working capital.

This is Cassiano. Thank you for your question. In this first quarter, we have continued to evolve in our question of stocks in our plan our growth plan with the opening of new stores and new areas in the digital stores and a better store products, along with the efficient management of inventory. We have 77 days of inventory compared to the previous period. And with finished products in the stores as far as the inventory of raw material, even with the increase in the price of gold and silver, we've been able to maintain good levels with high level of efficiency. In terms of the creation of basis for a more precise coverage of our inventories, we look at the base of the management of each category and look at our model, which is a gradual process, which combines the use of data, the use of data, and with people that understand a great deal about our jewelry business and that we have confidence that will give good fruit over time. As far as the levels of inventory that we desire for our business, as I mentioned, we are used to working with 400 to 450 days of inventory, we can mention that the comparisons of inventory over the years, the best represent our business are the comparison equivalent period in the first quarter with other the first quarter. And looking at the seasonality of sales and a dynamic of preparation for events, especially when we look at turnover in life, our stocks -- our average stock in the stores have been reduced by approximately 20% and 10% to 15% in Vivara. In Life we see people with the lowest level of stock. We observe an evolution also in the evolution of the turnover in the stores.

Okay. This is from Joseph Paravan from JPMorgan, Joseph.

I'd like to explore a little bit more question of inventory. We see a moment that's very relevant and the composition of the inventory of finished products and raw material. And I want to explore a little bit more. If you see a tendency as we mentioned in previous calls, but also looking at the next 2 years, you have 600 days of very high level of inventory. In this context, how should we think about the occupation of the factory, we understand that the factory is in a position below that, which might be the ideal you want to understand how we might be able to help you out in a listing your margins provider to look at in the short term. And then looking at the question of life I've taken a moment which is a very different picture. In some way, we could change our mentality looking at the short term and as you normalize the prices of silver.

This is Cassiano. Thank you for the question. consider the but the management of inventories is in position on our stocks, which is basically to third finished product and 1/3 raw material, we didn't see a big change. But you can expect that the stock of raw material will have a an adjustment a little bit higher than it had the previous quarter. However in general, it is the composition of the business, which is very stable. The raw material -- we have seen a reduction in the stocks, especially in the gold, the stock of gold. The inventories are over doing a great deal of work with stones and other components which are items which are very relevant in our raw materials inventories, which is different from gold and silver that a great diversity of material. So we're doing an evaluation, a specific evaluation of these items, looking at the turnover discussing the development of new products with the materials and we have the possibility of being utilized and so now we're very confident that this work will have an evolution that's just in the stock of finished products in the stores, but also of assortment as well as the management of our raw material. As far as the integration with our factory, which is an aspect very important for our business, the fact major differential for us to change the profile of the products that we need, and we direct break closely to the factory. So when we need less of below reduce the volume produced, and we need more gold than we can China has more time on the being on this bench being has more added value, but will also reduce the total volume. We work very close because over time, we change and adapting our production to attend our demand. As far as the utilization of capacity on one side, we can adjust with this visibility, our internal the size of the factory to our demand, we also see as a counterpart, a special plan for life, are we keeping gradually this not quick to internalize the production from third parties, which today is about 4% of our total and over time, increase the production in our factory. We're working very hard on the development of new products that allow us in the future to increase the internalization of this production. And so this management of capacity is something that we look at very closely over time. To gain efficiency and not lose efficiency. [indiscernible] mention here a little bit the vision of stocks inventories and how we would see it in the first quarter and look at the competition if you're the company for quite a while, you see that we have come for an important revolution since 2023, when we changed the factory. We increase the space for the factor you could absorb more and more demand for new products, especially in the life market. And over 2024, we increased the quantity of people working in our factories. And in '25, we started to gain productivity. So we've been reducing over time over the cycle, reducing the index of reworking of pieces the same sometimes has to be redone. There were failures to defects. And so we corrected this in the production process. There's a lot of learning, we pull from the jewelry factory which is a process, which is quite stabilized. And well established best the life factory life production where we meet our scale. And we see in life the use of stones manually and also done by the robot, which we don't have with the jewelry. So over 2025, we have been able to look at this number, which we shared with you in our results starting this year as we publish the consolidated numbers and numbers inside the CMV. Even so, we're able to see this gain productivity. Everything that does not have in terms of reworking and losses in the productive process is all reflected in the quarter in which it happened. So everything that I mean to allocate the product -- it goes to our inventory, and it posted results when the sale actually happened. Then we look at the fact you're being more productive those pieces that we contracted this year with a higher level of maturity and it continues to evolve, tends to continue evolving as this maturity continues to grow. Another aspect that you see we compare last year to this year, we also see a level of production, which is very high, both in a number of pieces for life as well as in the gold in the due factory and this means that in the productive fact process, the losses are less when you compare last year with this losses in the production process in [indiscernible] was proportional to that which is being produced, both in monetary value, we lost versus year than in last year. And also gaming the efficiency in controls has had a lower level of loss. When we look at our inventory over the next 18 to 24 months, it's very important for us to remember that we have the seasonality. Since the IPO, this is the evolution of the fourth and third quarter and even so we did not have to increase those time. So all the opportunities that we mapped out and haven't been able to map out with the reduction of coverage of the different lines as Tatiana might mention, this should remain during the rest of the year and into next year. It's very important for us to maintain these inventories in a healthy level. We need a healthy level of inventory and to replace and reduce the coverage of that, which we don't need. So we have stones, components and many things that we can incorporate into the products that we're developing, so they reduce this level of coverage and this was being used over time. And the effective reduction depends on the seasonality and the rent in the seasonality, which have in the second and fourth quarter so that there have an increase in the inventory in the first fourth and in the second quarter, the reduction sequential revolution in the first quarter to the second as it is every year. As we continue to evolve and reduce the quantity of days that we have of inventory. And finally, the question that came from the competitive scenario for a moment, moment line in terms of sales, number of stores and the brands were much bigger than our competitors. So we rather analyze when they think in their position in the market. They are much more trend setters rather than followers. So when we see the revenue that we've had in our stores in Life stores in shopping centers that don't even have Pandora. There's no correlation. We see, at the moment, the behavior moments this quarter has much more to do with the pricing, which is very between the first quarter of '21 and '25 than the first of '26 any effect of any action of our competitors. To give you a little bit of color about what I'm talking about, we let the BMV average moments of approximately 2028 were down to 180 in 2025 and only came back up to 2024 in the first comparing first quarter to first quarter. So this the principal effect of this is the reduction of pieces of moments year-on-year. And the principal leverage is the increase in quantity at a moment from '24 to '25 to '24 the what the competitors are doing, but we're very focused on following the gains in productivity and the discussions and the inclusion of the silver products discussion of new galleries. All this is much more important for us than the actual moment of our competitors. Let me ask a question about the moment February. Even though we have to we had an accelerated investment as we've been investing in fundamental category and inspect the aspect of the growth the remodeling of the calendar of launching new products. And for this second semester, we have a very, very well prepared calendar the launching of new collections. And we're very optimistic as we look at the rhythm of the renewal, which will grow top the growth of this business I'm going to ask a little more about the gross margins, especially starting in the second quarter is true, and you've been saying that the base. Different base of comparison in the first to the second quarter last year was very high. I wanted to see how you see this challenge gross margin over the year all the incentives that you've already done. Please list the levers that you've already placed in the game can bring a relief for these margins during the rest of the year. there to prices. I think something was very relevant was at the beginning of the year. All that you already mentioned in the call, these products from the effect, I wanted to get a little bit of the perception and the level of confidence that you have in the maintenance healthy levels of gross margin and not large expressions of gross margins on the basis of comparison and the evolution of the markups.

Thank you for your question. I think out a little bit on this question of quarter-by-quarter. For the moment, since our IPO, we have been trying to transmit a message that our margins, our gross margins are very high, and they're predictable because the company has several levers in our business with the first the initial opening is in the question of repeating that since the IPO or the margin of the company the gross margin of the company is around 59%. And so I think that, obviously, the commodities have behaved in this period of time. And we reacted to this and introducing new levels, new levers and working with the levers that we had and use some of that had made sense at that time or in the future would make sense. So this is the first point. The margin of the company is for 7 years stays at the same level of 69%. Approximately 69% and as we're bringing again in this quarter. So again, it is a base of comparison quarter-by-quarter, which has been done in [indiscernible] But when we look at the year, we don't see and we said this in the last call as well and also the object of note, the management is confident that the margin of this quarter for the year will be without pressure. I think we're confident of that that's due to the levers that we have in our hands. One lever, that's very important, which is the management of our categories. So we have different categories indicating markup in different markets among them that we can manage and sometimes leverage even reducing credit. So you take a category that has a high market such as collections and you will do a lower markup, but it still is above the average of the company and continues to help to increase the average margin upwards. So the pass-through of the gold price of gold in our finished products is much more slow than of the competitors. So we have the capacity to serve mountainous with margins in some categories in gold higher than. And also category of silver gold silver and bread, which you've been doing very well in the Vivara stores with markups, superior markups raising the margin. So in this category, we have 3 examples I can list others as well. But there, we have lots of sources that we can work with. The team can work with and the company historically has been -- are doing. So I think that another lever that we can work with is the horizon of medium to long term a little by little. The company has been doing it or lighter pieces set you can make these pieces later basically in 2 ways. The first designing in lighter and people that are 100% noble materials, where a piece that you have today redesigning it and then we can do the transfer of technology, but principally in gold today, it makes sense. And in the future, maybe it will make sense in silver, but we're investing more time in gold in our portfolio of products to gold products, 30% -- approximately 30% doesn't make any sense to produce them with the technology of direct foundry which is the [indiscernible] metal. The other 60% of these 60:20, we have space to raise this 20 to a higher -- much higher level over the next few years. And this always helps a little bit with our gross margin every quarter, you substitute a little more transfer of technology direct foundry and little by little, you can for that and that helps offset the rental other effects. I think that there's also a roof the internalization of Life. It was 60% and now of production versus third party. And right now, our focus is to bring new products to the stores, as Cassiano mentioned, in the moments category and other categories once we stabilize these introductions, the factory will then become more updated to handle the focus profoundly on the moment of products to support the production of the collections and the commercial and the commercial needs. The fact is similar factor will become a factory of complete silver jewelry and has been doing this and we've been investing in that direction. So the internalization is very, very important for us. And finally, we have the lever of pricing. The lever of substitution of stone and metals. We have laboratory diamonds with [indiscernible] today. We've already introduced we've been working with without accelerating it too much, knowing that our core clients preferred diamonds, natural diamonds. But in the future, it could be a category point category and our life pieces, which are gold plated, yellow gold and rose gold, we look at the competitive competition and the competitor uses an alloy in these pieces. And the rose gold completely different, which is able to silver legal silver. So we're investing in studies and tests so that in this material, which present important part of our sales of the life like France, we do this, which is already widely utilized in the market from the market logical point of view, we're developing in technical aspects to be able to do the rollout of these initiatives. So just repeating, will pass a little bit to Elias comment a little bit on the short term. But I think in the long term, that's what we enforce the levers that reinforce our competency and these are not the levers they are working with for the first time. The company works with them very works very well with these levers since the beginning. And looking a little bit more at what we see over the year, we see that the first quarter of this year we already see that the rhythm of the factory has been reduced a lot because revenue on the stock that we have was lower than we had in the previous year. However, since the second quarter of last year, we've had a factory rhythm similar to what we have today. So during this year, we tend to see this revenue our subsidy revenue, nominally speaking, very similar to the levels that we saw last year. So we're able to see as a percentage, some changes since the third quarter, we've had percentage and operational percentage is very high, the net revenue versus gross revenue, but when we look at the nominal revenue [indiscernible] has an important effect. The maintenance of the level -- nominal level and the factor tends to continue. The resi continues as it was in the first quarter. So this dynamic of subsidies is exactly reflected in our gross margins. Thiago mentioned about the increased gap and the pricing average cost of gold spend to continue to grow in a very gradual way also softened by the -- by our cost of goods the melting of gold we have and the coverage of the metal that we have here which is a very protection margin protection we have in our gold and also the pricing which we have almost retained margins in. And have all these initiatives, as Thiago detail here so that we can offset the increases in silver prices and the gross margins of life. Remember that since the second quarter of last year, we started to -- it would be reduced reduction in prices of expensive pieces that we've had. So when we look at the dynamic for the rest of the year, second part of last year was when we had the biggest margin. The comparative base as the most difficult that we've had during the year. Even though all these initiatives that we have had are being used bring us closer, we look at the second and third quarters especially the third quarter are the fourth quarter, the base of comparison is not so difficult as in the second quarter. The third quarter, we see diverse opportunities which we've been mentioning. Materializing. And also in the fourth quarter, we especially see a gross margin above that when we see the picture of the whole year in March of next year, and we were talking about it in March of next year, we expect to have a gross margin stable order is slightly positive. As we mentioned in the last call, our perspective for the year remains the same compared to the first quarter of this year.

Next question. from Vinicius from UBS.

I wanted to see if you could explain a little bit more about the dynamic of price of gold and how do you see the rising prices of Vivara in jewelry with the price of gold and your cost. You commented that you have advantage in sales and margins, but can you explain how is the price of the competition competitors in the categories of jewelry, is real jewelry. And how do you see this evolving looking at the coverage of stocks of inventories when you place your raw materials at the current gold spot prices. if it is something that we can see a signal of this in the second quarter -- second quarter, how do you see the prices of goals going forward. And you commented on margins for '26 and '27. If you confirm that you do not see this as a risk for your gross margin in 2020 due to the timing and the time average cost of your inventories?

Okay. Vinicius, let me start here and then this is Elias speaking. And afterwards, Cassiano and Thiago might want to add. As we have been anticipating, we have lagging coverage of raw material of gold as well as raw material as well as finished products in the market. So this brings us in a -- it's a competitive advantage in the scenario where gold has gone up a lot, where we've had a delay of several months in having to replace, redo our prices once since our average cost does not go up as quickly as our competitors. So we saw an opportunity during the first quarter to increase prices in several subcategories of jewelry and with a very positive elasticity. The elasticity is 2 principal explanations. The first -- it's one that we already knew, and we knew that if you count on it, which are products with a higher added value and less as the tax from the companies have less or less elasticity. So the problems in the products and the collections of Vivara. Life collection tend to have a lower level of comparison with our competitors, while the commercial products and the you can find them in other jewelry stores and they have a higher level of elasticity. That's what's happening in this quarter. So as we mentioned the average cost of the raw material and of our inventories being lower, we are have been working with very competitive prices compared to our competitors. But even in our release, an example of the wedding rings from Vivara, where we increased the prices and still growing quantity. This reinforces [indiscernible] intuitive because we don't think that would happen in any other category, but a competitive price that we understand that we have and the lectin up being different than what we see in our history, our experience I'm saying this because we still feel that our price is very competitive, and we're very satisfied when we look at the we're fostering prices and have positioned it in the diverse subcategories. And we're going to accompany this price spot price enacting where the spot prices for gold go and what our competitors are doing and also the performance of each 1 of our SKUs of each 1 of our businesses, and we are accompanying this to see where we need to making tens of adjustments. However, in the past, coming back in February and increased prices and the replacement than in April were satisfied the with the level of prices that we have.

And just complementing here, Elias mentioned that obviously, we have categories that look at the competition and a very much better way of looking at it looking at the commercial and commercial products and the wedding rings and the current chains and so forth. Categories have important representative, but also in the collections which have a very high level of importance, is something that we'll be able to be -- have a great differential on the comparability so when we see the collections that we've launched this year, we focused on some of them. On the gold silver gold, which brings a ticket to competitive ticket in a better market for the company -- and even so it was a scenario of average ticket below a pure gold product. We've been able to see sales in these collections, which have been launched with very positive impact. Having a product which is as Cassiano and Elias has mentioned, the more value you've seen, but the question of price is secondary. So we're creating a desire in our clients, creating the store experiences, which is very motivated and irresistible products and bring us traction of clients to distort our collection. And then commenting as Elias mentioned, it's very fundamental. We've been working on this so that we don't wind up becoming easily compared categories in which we are not comparable.

Next question is [indiscernible]

. This is actually [indiscernible] team we've already. Some of the -- but I had a follow-up on several points of questions we already made. How do you think about the trade off in gross margin and stock inventories. The point you prefer a reference of price over volume. And second question if you have any better expenses, nonrecurring expenses, I would like to think about this going forward now has to break down which are more structural factors in expense and which are more one-offs sales.

Okay. Talking about these expenses we come in bit we've had G&A very much in line with the past year. And we've been able to be very disciplined to maintain these general expenses and the level a good level fixed level and we shouldn't have any surprises as far as that goes looking forward and the SG&A with these sales. The 2 principal expenses that we've had in this quarter were in large part, dependent on our decisions. So we're doing a transfer between stores as Cassiano mentioned to be able to have more optimization of our inventory because a direct reflection on our ROIC, we're spending more now we're producing less we sent from one store to another story without having to have any production in the other store utilizing invested capital. This is routine for us but in the level that is that brings to we didn't have over time. So in this sense, this line of freight should be optimized once we see look at the picture of the whole year, we're going to see that the gross revenue will be as it always was. And the marketing line, I want to involve a little bit the line, as I mentioned previously, it was the basis of comparison with the first quarter. But we still have the second best quarter in terms of percentage of gross revenue in marketing expenses. So we're looking at the marketing expenses, we look at it much more than just a percentage of gross revenue. We look at the expenses we've had in this first quarter had a bigger effect based on a comparative basis also due to the lower revenue that the first quarter normally has. But in no way should it change the dynamics of on expenses or SG&A. So it should have an impact. As far as the trade-off between gross margins and turnover I think that it's case by case to understand item by item. What makes sense to put product, for instance, it's not active, but that's still representing some sales in the next few months and obviously, we can also do a quicker turnover for us in the short term this investment to our margin to getting from look at our historic levels, where see no pressure. The margin pressure from this attitude looking at the inventories. Our business has a spectacular characteristic, which is that we can melt down our pieces. We're talking about gold -- it's an option which is very viable. And this also as both products which we may have a coverage, which is a very high level of coverage. Do you think you're going to have a quicker or a quicker turnover but by melting it down or you can welcome you don't have to put it on sales, you can melt it down and make a new part and you presume that it will sell in a better period of time. And those products that you actually have to see that the turnover is very low and you have no perspective of recovering this cash in a reasonable horizon of timing. In the past, last year, we did a lot of melting and now we continue to do melting. And we do more or less in our estimates, about 2 months goal for production to melt into finished products, which means that we avoid buying coal from third parties during a large part of this year. These are initiatives without having any impact on sales. We do all of this to maintain our sales losses. So these are initiatives which for us are very viable. I think the trade-off that we have is always looking at these 2 pillars will margin the turnover and bringing the gold back and turning into something new we can be down.

Next question, Felipe Rached from Goldman Sachs.

We get this all the quick follow-up use me for insisting on the gross margin and cost in 2027. By our estimates, if the pressure on gold cost of growth should reduce in more or less in the middle or second half of 2027. Does this agree with what you expect? And in this sense, it is very clear. As we look at all of the levers that you mentioned that surprise the coverage the long level of coverage that you're having jewelry to produce you tinting more than your currently thinking more about silver in '26 I think specifically in '27 you think that this level, which is available to you on jewelry, enough to offset the prices on gold. Or do you think that in the future, it could be another category, perhaps like itself and the pipeline of innovation where we see dynamics that are better if you look at the eventual price people I don't want to repeat all the levers you already mentioned in previous question if there's any other change or a specific situation in 2027 specifically in 2027.

Thanks for the question. very important for us to remember that we can -- but the growth that we have in Life even we Vivara [indiscernible] gold in terms of our jewelry, we're able to do category management the different of these categories in different venues and different -- the plan for the year us to continue to. And now this lags the gap in prices to the costs of our finished products, the cost of our gold as a raw material and the price spot price over time when we have to go back to buy gold from our suppliers in a more normalized way. We should continue to evolve. As part of our strategy in everybody. It's always been a prior strategy to have a stock in stores, which makes it possible for us to not do sales. So this increase that we're going to have to get to the -- until we get caught up with the spot prices, it will be gradual in '26 and '27, '28 by then, we will have this introduction of the initiatives that we've been speaking about are. And as Thiago mentioned, the growth that we see in the old silver and Vivara gold Maintaining our gross margins of approximately 70% we've always been maintaining over time. This is a dynamic which we should see during the rest of this year. And we'll see this softened over time and aligned with the margin prices that we will be maintaining. Also to add to what Elias said, it's important to remember that in the major brands, the price can never surprise. The surprises has always been gradually scheduled and with that jump or down have a stock coverage. It is a differential, which helps us to get through periods of great price variation. Frankly, without huge increases because we're constantly attentive there's great equalizer, which is the prices there are different types of products and the price of the raw materials and the performance by subcategory, which is always gradual but always continued. And I was looking at the market and adjusting this as part of our business without any this fall.

Thank you very much. The question and answer question session is now ending and we'd like to pass the to Thiago Borges for his final words.

Thank you for your participation in this call. Lots of good questions due to the time of the call, which I wanted to make a very short comment in this quarter. When you exclude the effect of subsidy, the company grew its EBITDA in line with revenue. We have an operational performance with extremely healthy trajectory and the reduction of inventory with the maintenance of top line of approximately 14% with same-store sale stores are 10% and the lowest level of growth in our inventories quarter-over-quarter since the IPO, showing that we're on the right road. The generation of cash was extremely strong in this quarter and our expenses in this quarter hit above the previous year, above the revenue of the previous year are still 100% within what we expected -- what was expected and with the annual comparison without bringing any pressure on us. Having said that, want to reinforce a invitation, which I did at the opening and providing everyone for the next 45 days to visit our stores. We have Mother's Day coming up on Sunday, a special period for us to give that spec person uses in our lives. We have the open data pieces, which are restore resistible but also beyond prices, but also an experience store experience is superior with a team which is very involved to bring you a solution of what you're looking for and to be in [indiscernible] the team. I want to thank you all very much and please stay with us and our team and happy Mother's Day to all.

The video conference results with reference to the first quarter of 2026, Vivara is closed. The IR department is actually service to answer any other questions that you might have. Thank you for the participation, and please have a good day. Thank you.