Wal-Mart de México, S.A.B. de C.V. (WALMEX) Earnings Call Transcript & Summary

Hi. Good morning, everyone, and welcome to our Walmex Day 2024. It's a pleasure to see you again all of you in person. I'm Salvador Villasenor responsible of Investor Relations at Walmex. And on behalf of everyone, I want to welcome you, those who've come here in person and also those who are joining us through webcast. Thank you for joining us today, and thank you for your interest in our company. As it is customary at these events, we will have several activities throughout the day for you to be able to learn a bit more about the strategy and meet our leaders. We will start the first part of the management presentations. After that -- these presentations, then we will go to a couple of stores. We're going to be visiting Walmart Supercenter and Bodega Aurrera Walmart. After the visit, we will return to the corporate offices for a launch with our leaders, and then we will go back to this auditorium for the second part of presentation and the Q&A session. Before we begin, I would like to ask you if you could please read the legal notice on the screens. This notice and the presentations that we are about to see are going to be available at our website, www.walmex.mx once this event is over. And now I will leave you with our CEO, Gui Loureiro. Thank you.

Good morning. My voice is bad because I got a cold. I don't have COVID, I tested negative. What I must admit that the doctor put me some injections so I'm surviving. Good morning, and welcome to our Walmex Day 2024. I want to thank you for being with us today, one more. That's my #9, I think, Walmex Day. I want to give a special thanks to our long-term investors. Great to see you back. Today, I'm looking forward to showing you how our growth formula is working, driving value in every part of our business and helping our customers to save money and live better. You will see the success we are having growing our stores. The success we are having growing our new businesses. The success we are having using our reach to reduce prices to our customers. The success we are having growing our technologies. The success we are having growing our leadership on our organization. We believe we have the formula that will allow us to capitalize the growth potential of business in Mexico and Centroamérica. We've been executing this growth formula since our foundation to give people access to more affordable products at our stores. More recently, we have expanded beyond these stores by providing access to the digital economy, focusing on what our customers need and want at a price they can afford. So we provide access to e-commerce, to Internet and phone service, to primary health care, to education, to financial solution, among others. Today, I'm here to tell you that our growth formula is working. Throughout the day, you'll hear how we are levering the strength of our stores, our reach, our technology, our customer centricity, our talent and above all, our purpose which is the foundation of our growth formula. All of us have seen how technology has impacted our lives. Technology has made the impossible possible. Technology drives abundance. As business leaders, we are facing a choice. We are standing at a crossroad and we have 2 possible paths. One path is to put technology first to maximize what's possible without considering potential implications such as people evolve it. We see another path, a path that uses technology to serve people and not the other way around. A path that helps our associates to work smarter, not harder. A path that helps us to free up our time to connect with our customers. A path that help us to better serve our customers and help them to save money and time. This view has led us to evolve our purpose. We are a people-led, tech-powered omnichannel retailer dedicated to helping people save money and live better. This purpose is what guides us every single day. We are a customer-centric retailer that serves our customers whenever, wherever they want. We have dedicated every single day to help them live their lives in a better way. The message I want to give you today is that we are not growing every part of our business separately. We are connecting every part of our business. This all starts with running great stores, which will always be our focus. We are building a business that is much more than the sum of the parties. We are building a business that will deliver more access to more products and services, more access to health care, more access to education. We are building a business that will deliver more value to our shareholders, more access to what the people of Mexico and Centroamérica need for a better life today and tomorrow. By building a growth formula where the sum is bigger than other parts, we are creating an exponential opportunity for Walmex to grow. Today, our leadership team will walk you through the main components of this formula, our purpose, our reach, our customer centricity, our technology and our talent. Dolores and Ignacio will give a perspective about our stores and omnichannel business. Later, Bet and Mache will present how we are accelerating our ecosystem. And after that, you visit our stores and experience the delivery of that strategy. Coming back from the store visit, we will host a panel about our 4 enablers, [indiscernible] Tomas, Gaston and Brian to talk to you how we are driving technology and innovation for the benefit for our associates and customers. Then Cristina will show how our business in Centroamérica has evolved during the last few years and how it is leveraging and learning from what we do in Mexico. To finalize, Paulo will talk about the results that demonstrate that our winning formula is working and driving value creation. But let's begin with what are the successes that demonstrate that our growth formula is working. One of the successes that prove that formula is working is the fact that we doubled the business less than 9 years. In 2014, at the same event, we committed to doubling the size of the company in 10 years. We are very proud we did it faster, and we'll do it again. As we doubled our business, we managed to further increase our already best-in-class ROIC from 14.7% in 2014 to 20.6% in 2023. Another one of the successes that prove our formula is working is the fact that each one of the last 10 years, we grew same-store sales faster than the market measured by ANTAD, year after year. A lot of the successes is the fact that during the same period, we opened more than 920 stores despite COVID. Our stores are close to where our customers live. Last year alone, we opened 162 new stores. And this year, we will accelerate our store expansion even more. Another success is that we sell approximately 63%, these numbers for Mexico, more per square meter than our competitors, 63%. Our EDLC philosophy allow us to reduce prices. Lower prices bringing more sales and higher sales help us to further reduce costs. This productivity loop differentiated us and benefits our customers. Another success is that our on-demand operation expanded to 1,200 stores and we have a profitable operation. We have rolled out on-demand services to Bodegas customers at the price that they pay that is lower than what they used to spend on transportation. We help them to save time and money. One more success is that our e-commerce GMV -- our e-commerce penetration reached 6.8% of total GMV. I know this is still behind the double-digit goal we've shared and promise you 4 years ago. And Ignacio explain what actions we are taking to grow faster and further. Another one of our successes proving our formula is working is the acceleration of our new businesses. We are giving millions of customers opportunities that open new doors, new doors to our services, new doors to the benefits of the digital world. As we invested on data and become even close to our customers, they asked us to provide new services such as health, education, internet, entertainment, that were mostly outside of the traditional scope of a conventional retailer. In parallel, technology evolved dramatically, and many companies started to offer digital services. So if traditional banks, brick-and-mortar banks were not willing to open account for our customers due to their very low balance power, new fintechs started to offer it. If our customers did not have resource, not the time needed to attend a school, digital schools became a very good alternative, the same with health and other services. However, to make it as viable, we need to overcome 2 major barriers. Number one, internet in Mexico was before us disproportionately expensive. Number two, companies providing digital services had a huge acquisition cost, which has made it difficult for them to scale their products and to sell at lower price. We found a way to overcome those 2 barriers. First, with BAIT, we solved the problem of providing affordable internet. Second, we managed to reduce the acquisition cost for the digital players by connecting them with the 5 million customers in Mexico that come to our stores every single day. When we started selling BAIT at our stores, we did not know how to do it. So at the beginning, we made very lots of mistakes. We could spend the whole day, you would have a lot of fun, but it's not the idea today. We learned, we adapted and now we are growing faster than anyone in the market. Our customer also became more aware of their service. Despite the fact our model had lower advertising budget to make BAIT even more affordable. Today, BAIT internet and telephone plan, BAIT internet plan offers up to 7x more megabytes than what the market leader offers for the same price, 7x, not mistake. Our operation reached 11.8 million active users in December and continues to grow at an exponential rate, as you can see in the chart. And you guys know once you reach those numbers, you can start to monetize. We are repeating our winning formula with the health membership. We shared with you the launch of this product last year. And as you can see, it is starting to grow much faster because we have learned to develop our business in a more agile way. Last year, we sold 1.2 million health memberships and over 1 million patients were served at our doctor offices and farmers at stores. These include our first primary health clinic that started operations in Mexico City last year. Another important success of our formula is that in 2023, Walmart Connect, our omni retail media business grew 34% versus previous year, reaching ARS 3 billion in advertising income. The growth potential ahead of us is huge. Finally, we continue to expand our remittances, credit and digital account service through cashing. In 2023, we granted more than 500,000 credits to our customers and in the fourth quarter alone, cash [indiscernible] tripled versus 2022 and it's still a closed loop. Our formula is resonated with our customers and with our associates. We welcome 5 million People Choice stores in Mexico and the 1 million People Choice stores in Centroamérica every single day. And in 2023, they rewarded us with their loyalty as our EPS last year alone grew 420 bps versus the previous year. With treasury, the trust we've been building. Last year, we reached all timing high associate engagement score of 90%. This is 4 percentage points higher than previous year. We have over 230,000 associates dedicated to driving the best possible experience to our customers. As Sam Walton used to say, take care of our associates and they will take care of your customers. And Ali is going to say during the panel, how much we reduced the turnover in our company, brutally. Last but not least, we have put together a very strong leadership for illustration, talking about our key speakers for today, Dolores brings a depth of leadership experience, fostering customer centricity to grow the whole business is stronger and faster. Ignacio is a natural digital innovator, focused on solving customer needs by disrupting traditional methods to drive business growth and success. Bet is making a massive progress to give every Mexican and Central American access to a better presence and better future. Mache is committed to building disruptive financial solutions to provide more value and opportunities to our customers. Cristina excels at driving impactful change, spurring growth and showcasing relentless determination. And finally, Paulo is a curious and optimistic leader determined to generate value creation to all stakeholders. You can see that each one of our leaders brings tremendous determination and the experience to serve our customers and accelerate growth. Our leaders are committed to a servant leadership culture that inspires. Our leaders are committed to working together to achieve our purpose by improving the lives of people in Mexico and Centroamérica. Now what are the strengths of our ecosystem that drive our growth formula. One of these strengths is having great stores. We welcome 6 million people every day in Mexico and Centroamérica, stores that are close to where our customers live, stores that sell more per square meter, stores that enable digital connection with non-digital customers through our kiosks and our associates. We started to offer up to 8,000 SKUs and serve as a [indiscernible] point for the [indiscernible] sell online. The stores that are led by people that serve people, stores that generate trust and loyalty. Another strength is our everyday low price and everyday low-cost philosophy. We have lower prices and lower costs versus our competitors. We value each cent we negotiate on behalf of them and we value each cent when we manage our expenses. One more strength is that we have omnichannel business, a true omnichannel business that serves our customers whenever, wherever and however they want. A key strength of our ecosystem is that we have become a platform that connects our customers with the benefits of the digital economy. We are that link that enables customers to access the services and products they want to need at a price they can afford because we negotiate those prices to them, just like BAIT, health, Cashi and education. Another strength is our ability to leverage Walmart in global sourcing, technology, supply chain, talent, among others. One more strength is our focus on the customer. Last year, you mentioned [indiscernible] Carlos and Lucy. We have invested in getting to know them better, and this has allowed us to better serve their needs and serve their pain points. Another strength of our growth formula is already resilience. We know and I told you last quarter, Walmart Supercenter, Walmart Express and our 1P e-commerce business are current areas of opportunity. We are learning from our mistakes and taken the necessary actions to turn around performance to acquire new capabilities, change and adapt. We are determined to learn and succeed, and we have seen some improvements that we're going to share with you today. And the most important strength of our existence is having the best talent that drives our strategy. As we implement our strategy, we were committed to become regenerative company by 2040, meaning that we are aiming to have a positive influence in environment, society and economy. Our regenerative strategy is focused on 4 strategic pillars: opportunity, sustainability, community and ethics and integrity. We believe those are the greatest strengths of our system, which will drive our formula going forward. So as we look into the future, what are the goals of growth formula we allow us to achieve 10 years from now? We believe our formula has all the elements that will allow us to continue to deliver to our customers in the future and accelerate growth. Again, it always starts with our stores. If the stores are not good, forget the rest. One of our goals for the future is to be even closer to our customers. We will accelerate our expansion plan while enhancing our omnichannel retail capabilities. We will build a fully automated omnichannel distribution centers and fulfillment centers, merging or continue to merging our online and offline operations in order to deliver a unified and improved customer experience. Today, we are 10 minutes away of almost 90% of the population in the top metro areas. And in the future, we will be even closer. A lot of our goals for the future is to further expand our position as omnichannel player in Mexico and Centroamérica. We believe we can double the size of our business again this time in less time than it took the last time. Our e-commerce operations will strengthen and expand even further. We will invest to improve our digital platforms and delivery models powered by Walmart to ensure a seamless, convenient and enjoyable shopping experience for our customers. Another goal for the future is to use digital to come closer to our customers in order to know them better and serve them better. We are very excited to share with you that next quarter, we will roll out our new digital connection program, something that I particularly fall in love with. Customers provide their phone number at the checkout. And once they are restored, we get to know each of them better by analyzing every interaction with us. We have tested this program in 3 states for 2 years now with strong results. Half of the adult population signed up to the program. And among other results, sales increased as customers became even more loyal and acquired BAIT, Health and other services. By scaling this problem, we will be able to learn from our customers' behavior and offer them tailor-made experience. This will create a stronger connection with them and better decision-making. They will have a single sign on and we will have a simple way to manage their multiple interactions with our business, thanks to interconnected systems and data. And don't worry, we are not going to give 2% rebate. There's no rebate, and this follows completely everyday low price rules. Another goal for the future is to further expand and invest on our service by providing Walmart customers full access to primary health care, credit, remittances, connectivity, educational systems, all of them at a price they can afford through the digital economy. One more goal for the future is to have an even stronger Walmart connected business. Our suppliers will benefit from increasing returns on their advertising investments. And our customers will benefit from an enhanced experience as Connect's income will be reinvested in prices and in our ecosystem. Our last goal for the future is to continue investing we're having digitally enabled, better paid and better-trained associates serving our customers. We are very energized and excited about how our formula is leading us to the Walmex of the future. Our formula is helping people in Mexico and Centroamérica to live better. Our formula is also creating value for our stakeholders. To build the Walmex of the future, we need trusted leaders who are driving innovations and our winning formula. You already know most of our leaders. Let me just introduce you our 2 new recent additions. Cristina, our recently appointed and the first female CEO for Walmart Centroamérica and Brian, our Chief Technology Officer. As you can see, there are 40 members in our Executive Committee, and there are more than 230,000 associates out there in our stores, in our clubs, in our [indiscernible] and in our offices, more than 230,000 people united by our purpose and empowered by our winning formula. Going forward, we would attempt to accelerate growth in all parts of our business. We are determined to deliver even more value to our shareholders. And altogether, we are determined to make a difference in the lives of all the people in Mexico Centroamérica every single day. I'll hand it over to Ignacio and Dolores to talk about the strength of our reach stores and omnichannel business. Thank you very much.

Hello. Good morning, everyone. Thank you. It's great to see you all here today, and thank you for your interest in our company. I'm Ignacio Caride, COO of Walmart Mexico. And I'm here today with Dolores Fernández Lobbe, our Chief Merchandise Officer. We are excited to talk about how our growth formula is propelling us forward. How our growth formula is allowing us to deliver our strategy, executing our 3 priorities to win in discounts, to leading omnichannel and to become the ecosystem of choice. A lot has happened since we set these 3 priorities in 2020. Since then, we're starting connecting our stores and our e-commerce business in a more intentional way to become a true omni organization, an omnichannel player powered by our stores, powered by our technology, powered by our talent and above all powered by a growth formula by a purpose to help people save money and live better. So what are the results that demonstrate that our growth formula is really working. The first result is that we are consistently winning at our core. Our stores are at the heart of our ecosystem. And running great stores is a key differentiator as they continue to be the main point of access to serve customers. And we keep getting closer and closer to them by accelerating our store expansion. In 2023, we reached a record of 148 new stores openings in Mexico, and this marks the highest number of openings in the last 10 years. Another one of the results is that we are winning in the merchandise -- with merchandise and value. Those 2 elements has been in our formula for years, and they are the most fundamental element for winning in retail. Our strong relationship with suppliers allow us to curate the best items for our customers with the best value. And a great example of this is a [ Barbie ] event we held last year. We jumped into the big trend by offering 200 items across 9 categories, from food to apparel. The Barbie Fashion Doll grew over 18%. And overall, our toy category share of market increased 210 basis points. And what makes us the proudest it was a truly omni event. And by this, Barbie drove 870 growth in on-demand and allow us to reach our sales plan for the event in half the time we expected. Our stores and platforms are open to all big and small suppliers, including, of course, our own brand suppliers. And last year, we launched more than 800 of our brand items, aiming to offer our customers a high-quality products at price they can afford. This led to 125 basis points market share penetration. And when you combine great items and great prices, customers really notice it. In 2023, our price perception increased 120 basis points versus 2022. But how are we building price perception? And of course, we have a formula for that, too. First, a wide and sustained price gap. We continue to invest to improve our price positioning. Then we had our brands that besides driving loyalty [indiscernible] of our products, at a much lower price, while driving higher profitability that is later reinvested in price. Next, we streamline communication. We are making it clear and simpler for our customers to identify the lowest prices. And now we are adding another element to our price perception formula, technology. With technology, we are enabling our merchants with tools and data to make them more targeted and efficient investments to further improve our price positioning while maintaining profitability. Another of the results is our progress towards becoming a truly omni company. We have made many changes in this direction from revamping our technology to merging our teams. And there is now one end-to-end view towards serving our customers' omni needs, and they are noticing it. In 2023, our digital business grew faster than the industry delivered a 23% increase versus 2022. With that growth, digital penetration reached 6.8%. In Walmart formats, where digital adoption is higher, digital penetration reached 11%, but our strategy demands even more. Later on, I will talk about the plans we have to accelerate digital growth. Last year's growth was underpinned by a solid performance in our marketplace. We doubled our catalog, enabling customers access to a wider range of products and services. We improved our technology, making our marketplace even more competitive and attractive to our customers and sellers. And as a result, our marketplace delivered a 40% growth versus 2022. On demand is still the other pillar of our digital strategy, and I just need to talk [indiscernible]. I really love our own demand model. It's such a great business model. It's a model where we leverage our stores. We reach our customers fast, thanks to our footprint, and we can offer a thousand of items in a matter of hours. And the best of all, it's profitable. And last year, we expanded our own demand operation to all 3 Bodega formats, covering now 650 Bodega stores. This includes our big Bodega formats with Bodega Aurrera in rural areas and the proximity format Bodega Aurrera Express. And looking at on demand across all our business. In 2023, we delivered more than 22 million orders across our 1,200 units. And it's important to mention one thing, 99% of those are delivered on the same day, 22 million orders delivered on the same day. We continue to be the main destination for our home grocery shopping in Mexico. And in 2023, we increased the number of new customers, more than 45%, along with a 2.5x increase in customer retention. I am really, really proud of what we have achieved. And I want to really thank our associates for their great effort. And I believe these results show that our growth formula is working. But of course, we recognize that we have some growth challenges in some areas, like our particular Walmart in our 1P operation. But we've got the focus, the strategy and the talent to turn around those issues and move forward. And I'm very glad to see that some of our plans are already starting to show results. And now I want to take it over to Dolores, and she will talk about the opportunity we see to continue to win in discount.

Thanks, Ignacio, and good morning, everybody. It's great to see you all here. At our core, we are merchants in Walmart. And winning in discount, winning in our stores is the foundation for becoming the ecosystem of choice. So we share the initiatives in winning discount that will help us accelerate the growth of our business in 2024. One of the initiatives is EDLP, our EDLP philosophy, having low prices every day, this trust with our customers. Our goal for 2024 is to increase our price perception twofold versus what we reported this year. We will do so by further investing in pricing, enhancing our brands, adjusting our communication and strengthening the consistency of EDLP. Our Morralla program that you in the stores in Bodega is a great example of this. It used to be a campaign that we run twice a year where you would find a wide variety of amazing products at the lowest price points. Last year, we made a decision to make Morralla a permanent program, increasing the penetration in tickets by 30%. This shows that our customers love the program and it improves our price perception. Another initiative is to further reinforce our fresh categories. We will keep improving quality and experience while we move forward in the transformation of our operations. This involves centralizing processes and integrating vertically with suppliers to better serve the customers. So far, we have transformed our fresh operations in 80% of our stores. And in 2024, we will complete the transformation to all of them. In parallel, we will enhance our meat processing plants and bakery health facilities. Our goal is to improve quality, availability and experience to drive more traffic to our stores. Our improvements are being well received by our customers. Fresh NPS increased last year, 700 basis points. And in 2024, we aim to increase it even more. Another initiative is to expand the strengthen our private brands. During 2024, we will continue to innovate faster and better, tapping into new categories powered by Walmart's global sourcing infrastructure. We see the opportunity to give more access to our customers to great products at the lowest prices. Let me share some facts. First, our brands today reach 88% of Mexican households and 80% of Mexicans consider Aurrera as the lowest price run in Mexico. Another example, last year, Great Value in Snacks grew more than 340 basis points in market share, and it grew 4.5x more than the rest of the market. And also on higher value items and not only on food and consumables, for example, our brand ATVIO grew more than 400 basis points in market share in the home appliance category growing 1.5x above the brand leader. These data points show that our customers trust our brands and that it goes beyond phone and consumables. This is why will reinforce our commitment to double our brand's penetration in the next years. Another initiative is to keep leveraging the collaboration with our commercial partners to provide our customers with the best assortment, innovation and value. We have many examples, as Ignacio showed before, based on our strategic relationships, we were able to develop great seasonal events, sustainability initiatives or b, the platform for innovation. They have seen the value of our ecosystem, and they are developing their commercial plans to leverage different parts of it. Our small and medium suppliers, which represent 85% of our supplier base play a key role in the assortment we offer regionally and nationally to our customers. This is why we keep expanding our Adopta una PyME program to help our small suppliers grow. And the last initiative is productivity. Technology allows us to drive more efficiencies. We are focused on implementing new tools in our core to simplify processes. You will see many examples of what we are doing in the store basis today, but let me share a couple of those. One example is [indiscernible], a project that simplified the execution of price changes, reducing the number of hours dedicated to the activity. It save our associates from walking 133 kilometers at the same time reducing the usage of 230 tons of paper equal to saving almost 4,000 trees. Another example of our new tool, you will see during your store visit is RFID or radio frequency. This technology drives huge improvement in productivity, while improving omnichannel inventory, visibility and the flow in our supply chain. With this technology and collaboration with our suppliers, a task that used to take our associates 70 hours now takes only 3. This is a great example of how by leveraging technology, we drive productivity. I don't want to spoil all the examples, and I'm sure you will see them at the stores today. And last, but not least, as Gui mentioned earlier, we are committed to generate a positive influence in the environment, the economy and the society. That's why another part of our formula is being a regenerative company. We have many initiatives I am very proud of and let me share just 2 of them -- 2 examples of them today. The first one is that by 2025, 100% of the private brand's packaging will be sustainable. And the second one is our small farmers program. In the last 10 years, we have supported more than 30,000 farmers creating the conditions for the growth and increase in their income by more than 40%. In the next 2 years, we will add more than 5,000 new small farmers to the program. Now Ignacio, please tell us what we are doing to continue leading in omnichannel.

Thank you, Dolores. We see great potential ahead. We are on the right path, and we are confident that we have the growth formula to lead in omnichannel. So what are the initiatives will help us accelerate our growth in the omni space? First, starting with on-demand. One of the initiatives is to increase customer acquisition. Today, we are the main destination for our grocery home shopping and in 2024, we plan to continue investing further to improve our value proposition and our customer experience. Our stores are the key to propel on demanding forward, and we plan to keep expanding the service nationwide. The second initiative is to accelerate Walmart Pass. In 2024, we will focus on increasing membership, traffic and experience and expanding the complementary service for greater adoption of the ecosystem. Another initiative looking to reach faster, more customers is to expand our express delivery service, [indiscernible]. We are investing to increase our capabilities to deliver more orders in less time, and we are expanding the service so orders can reach customers in less than 90 minutes. Another initiative is the expansion of the Bodega [indiscernible]. In 2024, we will get closer to more customers by enabling the service in around 150 additional Bodega stores. Now regarding extended assortment. One of the key initiatives for 2024 is the revamping of our value proposition in general merchandise. We know that in this acceleration context of digital channels, these categories are the ones that need to transform the most. And we are working on catalog differentiation and our omnichannel experience as main drivers. Another initiative is to continue to accelerate our marketplace while taking care of the experience through Walmart fulfillment services. Currently, 70% of the orders are delivered in less than 48 hours. We will continue leveraging our omni logistics capabilities for marketplace sellers to deliver even faster. And in addition, to provide a broad offer of extended assortment, we will leverage the cross-border model to double the volume by adding around 10 million SKUs to our catalog this year. And lastly, on omnichannel experience, a key initiative is to leverage our Walmart U.S. technology. We are implementing a platform that will allow us to integrate sellers and SKUs from U.S., Canada and China. This will expand our catalog to millions of SKUs and hundreds of thousands of sellers. With the power of technology, we have improved our checkout experience with better navigation, integrating more product information, reviews, ratings, among others. And in 2024, we will make a significant lift towards a personalized, friendly and seamless digital experience for our customers. Also this year, Cashi will gain more relevance as payment solutions and giving access to bank customers to our digital business, and Mache will explain more details later in the presentation. Additionally, Walmart Connect, our omni retail media business will allow us to connect customers to suppliers by communicating details about products and improving the omnichannel experience, but while we are monetizing our assets. Beatriz also will give us a little bit more context later to date. Empowered by technology and leverage our core business, omni -- the omni returns initiative will be implemented in 2024 to create a seamless return online purchase. This is that customers will be able to carry out a return process at any of our stores in a simplified way, and it will take less than 2 minutes. Now I turn it over again to Dolores, who will share more details on our strategy and omnichannel assortments.

Thanks, Ignacio. Last year, we talked about our omni assortment strategy, where through a data-driven model, we defined which categories have the highest potential in brick, click or in an omnichannel way. As a result, during 2023, we added 9 million SKUs to our extended assortment. This boosted our online sales and in some categories like home and technology, we achieved record online sales share. This 2024, we will go further. This 2024, we will strengthen the connection between the stores and the digital world, among others, increasing the number of showrooms that we have in our Walmart stores, highlighting our extended assortment catalog that we have online. In 2024, we will further invest to elevate our best-in-class omni merchandising talent. Last week, we launched our first ever omni merchant academy, where our merchants will learn to leverage new technology tools to connect everything we know from our customers, our stores and our full ecosystem. We are helping our merchants work smarter and faster to make the best decisions on behalf of our customers. In 2024, we will implement new tools, leveraging customer knowledge and data to empower our omnichannel business. I am very proud to share that this year, we will launch Luminate. Luminate is a suite of products that provide deeper than ever insights into Walmart stores and shoppers. Luminate is about shared insights, stronger decisions together with our suppliers. This will allow us to improve customers' experience even more. When Walmart suppliers and merchants have access to the same robust omni data, great things happen. And lastly, another of our goal for 2024 is to leverage our strong relation with commercial partners to develop the best omni assortment and solutions for our customers. We want to grow with them by developing a global assortment. We want to grow with them leveraging our supply chain network, and we want to grow with them to develop our strong omnichannel business.

I'm really excited about the opportunity ahead of us. About how by winning in discount and living in omnichannel, we will accelerate growth about how our growth formula is propelling us forward. Our formula has proven to be successful over the years. Some customers want to shop digital. Some customers want to shop at stores. Some customers want to do both. We can serve them all. Thank you very much. Now I will leave you with Beatriz Nunez, who will explain the third category strategy become the ecosystem of choice. Thank you.

Thank you. Thank you, Dolores and Ignacio, and good morning, everyone. Thanks for joining us today. My name is Beatriz Núñez. I'm responsible for the growth office. And today, I'm very excited to talk about how we are becoming the ecosystem of choice. Earlier today, you heard we have expanded beyond stores by providing access to the digital economy, focusing on what our customers need at the price they can afford. Some of you may wonder why are we going beyond stores? Why beyond omni? It all started when we ask Andrea, our customer, how can we serve you better? She said, I need to maximize my budget. I need internet access always. I need credit. I need help with my family health and so on. Andrea has so many unmet needs. So how can we help Andrea? How can we solve her main payments? By understanding her needs and leveraging the trust she has on us, we embarked on a journey to solve her main pain points. The first thing we learned was that many of her needs could only be sold through digital. Technology made the impossible possible and allowed us to offer solutions to Andrea at the price she can afford. We had to find digital solutions for her and use our EDLP and EDLC philosophy to make them affordable. We have learned how to use our stores as our customer acquisition points where we recruit customers, both digital and non-digital. Our acquisition cost is minimal, and this is one of the main cost of the digital players. For every need that Andrea has, there were already many digital players tried to solve it. However, their cost was still too high, so they couldn't offer Andrea affordable prices and they couldn't build a viable business. We learned that we can be the platform that connects our digital and non-digital business partners with our customers. Reducing acquisition costs, negotiating affordable prices that Andrea can pay on her behalf and making the business still viable, thanks to our reach. This is a win-win-win solution. So it sounds like the same formula that our founder used when we opened the stores. We are on a journey to become the platform that connects customers with products and services on the digital world, leveraging our customer base on a journey to become the ecosystem of choice to help Andrea, to lever and create a valuable business to our partners and to us. Ignacio and Dolores talked about how we are winning in discount and living in omni, becoming the consistent of choice, build open these 2 priorities to go even further and accelerate growth. Along with marches, we will take you through each key vertical of the ecosystem. I will start with BAIT, our telecom service. BAIT addresses Andreas main pain point by offering telephone and unlimited Internet services at the price she can afford. In Mexico, Internet penetration remains low, given telecom companies high prices. Mobile Internet is around 78% and home Internet about 57%. BAIT has come to disrupt this space. Our customers want to and need Internet during the whole month. Now they needed even more with the new services we are starting to offer to them. Internet is the door of the benefits of the digital economy. But with current prices, customers either have it or only when they have money, or they don't have it at all. BAIT is solving this problem and opening the door to health, education, entertainment and more. Let me share with you, Andrea's journey in Bodega. When Andrea visits Bodega, she discovers BAIT. She realizes our service gives her 7x more megabytes than their current carrier. She joins BAIT. She's surprised with the BAIT, BAIT speed and experience, but when we value the most, is that when she gets free, she -- sorry, for she value the most is when she gets 3 megawatts every time she shops at Bodega. And our suppliers and having benefit to get more connectivity for free by interacting with our brands in our stores. She gets what she needs. She is connected all the time to BAIT. So whether the results that demonstrate our growth formula is working in this vertical of the ecosystem. The first result is growth. Our number of users is growing exponentially. We ended 2023 with 11.8 million BAIT active users as their only 4 years of operation. The second result is trust. Each active BAIT customer visit 2x per month to top up increasing average traffic 20% versus non-BAIT users. Another result is digitizing our customers by enable them to become omni customers and by doing so the frequency and ticket increases. We are very proud of BAIT results; we have become the MVNO #1 in Mexico. So what are the opportunities do we see for BAIT going forward? We see a huge opportunity to continue to grow by having more active users. We see a huge opportunity in devices and value-added services. Telcos have more than 50% of mobile phone market share bottling connectivity, cell phones, entertainment, services and credit. We can tackle this opportunity in an asset-light way. Leveraging our stores and platforms, we can do so with almost no CapEx investments. BAIT is a great example of how our growth formula is working. Now we bring the formula with that -- let's talk about our health vertical. I was moved when I hear, Andrea, just like 72 of Mexicans cannot afford private health. Actually, 51 of us Mexicans don't have access even to public services. That means that any time Andrea or someone on interfamily get sick, they include a very high unexpected expenses. The out-of-pocket spend in health service events is close to 40%. We realized we could use our reach and technology to help Andrea. Her journey begins when she visit our store. She goes to 1 of our 1,500 in-store pharmacies for medicine and advice. 36% of Mexicans attempt to a doctor office adjacent to the pharmacy. You will see this later store. At the pharmacy, I would also say they offer her the health membership for less than $2 per month. The membership includes 1-free visit to our 500 in-store doctors' offices or at our health clinic. She gets unlimited consultations 24/7 with our remote doctors. She also gets 5% of discount on her prescription in 1 of 1,500 Bodega, Walmart or Sam's pharmacies, all of these for only MXN 30. The health membership is a great example of how we are becoming a platform to connect customers with the digital world. We connected our in-store pharmacies and doctors' offices with digital health services. So what are the results that demonstrate our formula is working also in these health verticals. The first result is growth. Last year, we sold 1.2 million memberships. The second result is that the average ticket of a customer who purchased the membership was 4x bigger. Another result is traffic. The membership drives 16 of the traffic into the doctor offices located in our stores. We performed more than 1 million health care services to patients at our doctor offices at store and health care clinic at affordable prices. In parallel, the partner that provides the telemedicine service got a huge number of patients with a little acquisition cost. So they can build a viable business despite the low prices they charge. Another result is innovation to serve customers even better on the health space. Last year, we launched a primary health care clinic proof of concept here in Mexico City. This clinic offer a center for diagnosis laboratories, specialist medical care and treatment at affordable prices. It has performed over 10,000 services in few months. The preliminary results are exciting. So what are the opportunities we see for our health business going forward. We will continue to reinforce our pharmacy, expand our doctor's offices and our health membership to more services and customers. In 2024, we will broaden our pilot with 3 more primary health care clinics. We are working together with suppliers and other digital partners to improve the health of Andrea and her family through a better diet, exercise routine among others. Our goal is to double our health business in the next 5 years. Now I would like to introduce the next vertical, the most recent one. education. The current situation and challenge of education in Mexico can be summarized in 2 facts. 89 of people can only have access to public schools. The average education is 9.7 years, equivalent to complete middle school. Andrea wishes for her children to be among the 30% of Mexicans who obtains a high school certificate and obtain opportunities she never had. We want to help Mexicans to keep studying and reaching better income opportunities. We create an education program through partnerships with digital players and a top school in Mexico. We launched a proof-of-concept to provide Andreas family and opportunity studying in $100, they can receive the education that will allow them to get a high school certificate in 4 months. There are other courses available as well. The preliminary results are encouraging, and we are planning to scale in the next 12 months. In parallel, we're also making education available to our own associates. Last year, 2,500 of our associates graduated. BAIT, health and education are the verticals that are allowing us to connect with Andrea vision stores. They are the new services, the new opportunities, the new doors we are opening for customers in the digital world. Now I will talk about a vertical that it's a little bit different from the other 3 verticals. It is Walmart Connect, our omni retail media business. Walmart Connect drives advertiser sales by increasing their connection with Andrea, communicating the benefits of our products, informing her about opportunities to maximize value for her money and improving her shopping experience. Walmart Connect is fully omnichannel, and this is very valued by our advertisers. As of today, our advertising revenue comes from physical stores, e-commerce and verticals of the ecosystem. So where are the results that demonstrate our growth formula is working in this vertical? One of the results is growth. In 2023, we grew revenue by 34% versus 2022, reaching MXN 3 billion. This position us among the top 5 advertising companies in Mexico. We work with more than 600 advertisers, and we implemented over 7,600 companies, representing 32% of growth versus 2022. We delivered omni solutions and accelerate growth for advertisers of all sizes, top advertisers and our marketplace sellers. Another one of the results is innovation. Walmart Connect is a great example on how technology drives above that. We have built new capabilities as retail ailments achieving a triple-digit growth and advanced technology tools. These revenue streams offset cost increases in our business, allowing us to keep prices low for our customers. So what are the opportunities we see for Walmart Connect going forward by 2028? Our projections indicate a fourfold increase over our '23 figures. We anticipate maintaining our double-digit annual growth. We are taking retail media to the next level. No other platform can correlate online and in-store activity like Walmart. Walmart Connect provides a holistic view of Walmart customer behavior and creates accountable, measurable results for our advertisers in Mexico and Central America. As Dolores mentioned, this year, we will launch Walmart Luminate, a collaborative tool for our suppliers, which share data and sharper view of the customer store and e-commerce. Luminate will help suppliers and merchants collaborate closer than ever before. We are ready for faster and more impactful decision-making powered at every touch point. These verticals together with our omni retail media allow us to become the platform that connects our customer with the benefits of the digital economy to become the ecosystem of choice. But we don't stop there. We are seeing an opportunity to reinforce our connection with Andrea even further. In 2024, we will roll out our new digital connection program. The digital connection starts by Andrea providing us her phone number. And with that, we will be able to analyze every transaction she does within our ecosystem. We will know her much better. And we will also be able to connect directly with her and create a special and differentiated experiences. We will provide her an easy way to manage her multiple interactions with us. We piloted this program for more than 2 years, and we have seen positive customer interest. We test that, we iterate, we learn, and we are ready for national rollout. This program will bring us so much value for Andrea by analyzing each of one of our interactions with her, our program will help her to discover products and services will allow us to complete -- will allow her to complete missions to win benefits. We will give her access to the benefits of our ecosystem will allow us to communicate with her in a more relevant way to expand her budget value. This program will also bring great value for Walmart. It will increase loyalty and stickiness and it will generate growth as it increases frequency and ticket. Our plan is to implement a digital connection program in the second quarter of 2024. I'm very excited to see how we are connecting every part of our business to deliver more value for customers and shareholders. Our growth formula is and propelling our ecosystem forward. We truly believe we are positioning to become the ecosystem of choice for our customers. Thank you so much for being here today. Now I will leave with [ Machi ] who will conduct a deep dive into financial solutions. Thank you.

Good morning. I'm very happy to be here with you once again. My name is Marcelino Herrera Vegas, but they calls me [ Machi ], as you have seen. I am In-charge of Financial Solutions for Mexico and Central America. As Beatriz just mentioned, we have the right formula to provide our customers solutions for all their unmet needs inside and outside retail. Low access to the financial system is one of the main points that our customers face. Through our financial solutions, we want to improve our customers' lives, providing them with access to convenient safe and easy-to-use solutions like a digital wallet, credit and remittances collections. Our variety of financial solutions continues to gain relevance. Today, we have a wider range of solutions that closed 2023 with strong results. Regarding Cashi, our digital wallet, we more than doubled the active customers base in the last quarter and almost tripled the value of payments processed through our application, thanks to our e-commerce integration and the expansion of our payment service offering. I will expand on Cashi future capabilities in a moment. For credits, we increased 11% in the number of granted credits versus 2022, which means that more people had access to our everyday low prices in the way they can afford for them. In remittances, we increased our transactions by 10%, growing above the market. This was a direct consequence of the improvements we made in the collection experience, which will be -- we will continue improving more and more with new innovative solutions. Our growth formula has been successful by not only looking at direct customers' pain points, but also solving our suppliers' needs to guarantee that they continue offering the best products and prices for our customers. By offering the possibility of anticipating payments during 2023, we reached a 32% income growth in our factoring business versus prior year. In 2024, even greater things are coming. This year, Cashi will evolve into an open platform with many features. We are very excited about our Cashi account launch with which our wallet will become an open-loop financial platform. This will allow us to expand the range of financial solutions we offer to our customers, consequently adding features such as a Level 2 account where customers may receive up to MXN 24,000 per month. This account will be connected to the space system to receive and make transfers from and to any bank. Our physical debit card as well as digital debit card to make safe online purchases. Cash deposits and withdrawals at our more than 3,000 stores with the app, and withdrawals at any ATM with our debit card. Also the capability to receive digital remittances. And this is just the beginning. Now I'm going to show you a demo where we will see the upgrade of a current user who decides to open a Cashi account. Remember that anyone can use Cashi by enrolling with their full name, cell phone number and e-mail. So let me show you how the experience of opening an account looks like. Let's imagine that I'm a Cashi user, and I'm interested in knowing more about the account, so there is no cost. It does not require a minimum balance and has no monthly commission. And among the main benefits, I can receive money and send it to any Cashi or bank account. I have more than 3,000 stores where I can withdraw money or do it at any ATM. I can use the digital card instantly, and I will purchase a physical debit card like this one for MXN 50 at any store, which will be credited automatically to my account. Okay. So let's open the -- let's start opening the account. I type my cell phone number, I receive the PIN to validate it, then I write my e-mail. I confirm it with another code. Now I must create a password with certain rules. I confirm it. And it asks me to validate my identity. So I take out my [ DNI ID ], I take a picture of the front. Another one from the back. I answered some questions like my occupation, the user that I will give to the accounts, my source of income, how much will I receive monthly and how often will I use the account. And ready. Now I have my Cashi account. Let's go to my account. I can see the card for the account I just opened on the home page. I tap to access the financial features of my account from deposit. I access my account data, which I can share with anyone from transfer I can send money to any accounts. And from the digital card, I see what I need to make safer purchases with a dynamic CVV. If I decide to go back, I return to the Cashi home, where I also access the features that I already use, such as seeing my balance, seeing the promotions, paying for services, or topping up my cell phone. And other features that soon users will also be able to access on their accounts. Without a doubt, this checking account represents financial inclusion and personal growth for our customers and members. For Walmex in the Financial Solutions team, this milestone is driven by our purpose of helping our customers save money and live better. But as I told you, this is just the beginning. We will continue integrating our ecosystem to become a one-stop shop for our customers. In the future, we will have an integrated ecosystem that will allow us to fulfill our purpose through different areas of our customers' lives. This means that Andrea will be able to receive her remittances directly in Cashi, saving her time and adding security to the collection process. We will also have tools that enable users to improve their financial health, like bill payment reminders to avoid service interruptions and extra charges due to delays and help them use their money in an efficient way. Have access to our EDLI, everyday low installments. This means that Andrea can take advantage of our everyday low prices on general merchandise items in the way she can pay for them. It is not about having the lowest interest rates. It is about having the lowest installments for the same products at the same amount of installments. Our Cashi credits will become more accessible because we will know Andrea much better through the integration of our digital connection program. Andrea will be able to also buy insurance products and accessible warranties in her Cashi app to protect her mobile phone, computer, TV, and a lot more against unforeseen events. And of course, she will have access to other solutions from the Walmart Ecosystem through the same app. Together with the solutions that Beatriz recently presented, our growth formula allows us to be ready to break access barriers and deliver quality experience in all areas of our customers' lives. We are more than the parts of our business. We are now an integrated ecosystem that is changing how our customers interact with the world. Today, we are building the future where we want to see a future where every customer is valued, every need is met, and every experience is personalized. Thanks again for your interest in our company. I'm very excited about Walmex Financial Solutions outlook. Thank you.

Good afternoon. I hope you all had a great visit to the stores and hopefully, a great lunch. This morning, we shared our progress on the 3 strategic priorities of our strategy. Win in Discount, Lead in Omni and be the Ecosystem of Choice. These 3 priorities are reinforced by our 4 enablers, technology, customer centricity and data, supply chain and people. Over the next few moments, together with Thomas, Gaston and Alexandra, we're going to share with you how technology is a catalyst across our core strategy. Our technology strategy leverages the global reach of Walmart. We're being disruptive technology solutions that allow our customers to interact with us digitally and in an entirely connected ecosystem. Our solutions grant a frictionless experience for our customers, giving them access to our products across each of our banners and across all of our verticals, including BAIT, Cashi, health and education. I want to share with you the 5 areas where technology is driving a differentiated experience across our enterprise. First, we are building solutions that allow us to know our customer on a personal and intimate basis, solutions such as our digital assistant, allow Andrea to interact with us as she chooses across our apps via WhatsApp or by voice. Second, our ecosystem of modules connected across our global platforms, drive a seamless interaction and orchestration across our stores and across each of our verticals. Our common customer identity, our single sign-on solution enables traceability of our customer interactions at every step and allows us to be there with our customer through the experience to drive better insights, and allow us to be there in the shopping experience, improving our store experience across all of our digital channels. Third, by creating a connected ecosystem of platforms across all of our domains, we create an AI-driven insight that helps us push the boundary of productivity and efficiency. This happens across our stores, across our supply chain and across our home office. Our automated price change engine allows our team members to now spend the time where they need to, which is with our customers. Fourth, utilizing our global platforms, and artificial intelligence, we improve all of our decisions using the breadth of data across all of Walmart. Solutions such as Luminate, allows our suppliers and our merchants to see the likely outcomes of their sales across the banners and digital formats. It lets them make the right choices, maximizing their reach for the benefit of our mutual customers. And lastly, and it's important that we don't forget. While we are technology powered, we remain at our core, a people-led company. Our solutions serve to improve the lives of every associate, improving their productivity, solutions such as [ Merch 1 ], help our merchants make the right choices surrounding our products and our inventory. And with artificial intelligence, we help to optimize those decisions and we do that at velocity. The next generation of technology allows our associates to work smarter, not harder. Thomas, leading our newly created customer office now for approximately the past 18 months. Tell us a little bit about how do you see technology enabling the journey of customer centricity?

Sure, Brian. Thanks so much. The customer office mission is to contribute to win the heart and loyalty of our customers. In order to do so, we need to transform millions of data points to insights, actions, but finally and most valuable results. With this in mind, technology becomes a key enabler to keep evolving as a customer-centric company, mainly in 3 areas: understand the customer, serve them better and finally engage better with them. In order to understand the customer, every year, we receive millions of contacts through different channels, especially service at the stores, e-commerce or our customer care. Technology actually help us to work smarter, not harder by reading millions of comments read the sentiments behind, transform them to concrete recommendations to make better customer experience. Customer feedback through our NPS program go all the way from the stores to multiple corporate teams and has a real influence on strategy and execution, but most importantly, in result. Last year, we grew 420 basis points in NPS, leading also to market share gain. Another area where we see technology helping a lot is serving our customers better. We are very excited about the launch of our new digital connection program. As Beatriz mentioned, this will allow us to understand millions of customers in each of the interactions they do in our ecosystem. But it's not only that. Most importantly is to interconnect the services and offerings we have for Andrea easily. In the very behind me, you can see how AI is empowering our ecosystem, allowing Andrea to easily move between our different verticals. This is something on which we are working on and will be deployed later this year. All in all, we want to serve -- we get -- we want to get to know each one of our Andreas better in order to serve them better in a more personalized way. Finally, our technology not only allow us to understand our customer better, serve them better, but also to engage better with them. That's why Mama Lucha, Bodega Aurrera below brand icon, I'm sure all of you know her. It's a Mexican heroine of savings, and we are transforming here into a digital influencer. Mama Lucha will become even more present in the life of Mexicans with saving tips on their daily lives, improving their family's quality of life. Empowered by technology, Mama Lucha will further envoy the promise Andrea asked us to deliver on. Please, I need product and services at the lowest price I can afford. [Presentation]

Thank you, Thomas. Gaston. So Thomas shared a bit about how technology is fostering our level of customer centricity. How are we using technology within supply chain to create a differentiated and competitive advantage for Walmex.

Thank you, Brian. Good afternoon, everyone. Certainly, we see that technology is also powering our supply chain as a competitive advantage. We are progressing fast in combining our extended and very urban, more than 3,000 stores network with our first, middle and last mile infrastructure. This journey will enable an integrated distribution network powered with strong data and algorithm capabilities. Let me give you just 2 practical examples around this journey. In the first case, we are enabling state-of-the-art automation in our distribution network. To that end, we have signed a memorandum of understanding with Symbotic that leverages the same -- the very same tech solution implemented by our DC in Walmart U.S. As you can see in the video, this tech and AI solution not only fully automates our DC operation. It actually provides the unique capability to deliver pallets to stores organized by aisle and by category, enabled productivity to the next level at our store backrooms, while also improving customer in-stores. In the end, these productivity gains in the business back end will free more than 1,000 associates to serve better our customers in the front end in the selling areas, and ultimately to improve our sales conversion. Smarter, not harder way of working towards reinforcing our winning discount strategy priority going forward. We will start this deployment in the buildup of our new DC Bajio, our biggest one in the supply chain network that we expect to open in 2027. Additionally, we are working to further deploy these type of technologies across the entire network in the years to come. We will actually be the first movers with this type of solution in all the Latin American retail industry. Let me give you a second example. In this case, we are also leveraging on Corporate Solutions, also already implemented in Walmart U.S. Those 2 -- among those 2, 1 is a new warehouse management system, Atlas. Another one is a new omni routing platform. Both solutions being implemented in Mexico as we speak. In the first case, Atlas platform enables our brick-and-mortar [ DC ] to also dispatch items to the end customers, acting as both a traditional DC, but also an extended assortment fulfillment center. We already enabled 5 DCs in Mexico, we are progressing on the entire network in the next months to drastically reduce our delivery times all across the country, but specifically or especially in the inner regions far away from our fulfillment centers in Mexico Guadalajara and Monterrey cities. In the second case, the new omni routing platform will enable the merge and integration of the different fleets being using a stores DCs and fulfillment centers to consolidate our volumes in the last mile. This volume consolidation within a single one transportation platform will enable the optimization of the existing more than 4,000 vehicles that we use in last mile. This in turn, we'll optimize the entire fleet utilization. With expected 20% reduction in our lead times for e-commerce omni routes deliveries, paired with 10% reduction in our cost per shipment. Again, smarter, not harder way of working towards superior customer service and business strategy reinforcement.

Thank you, Gaston. Alexandra while tech and AI continue to accelerate our journey. However, as our founder highlighted, it's our people that make the difference. Can you take us through what we are doing to improve our associate paradigm and what that means for value creation journey.

Thank you, Brian. Good afternoon, everyone. As we presented today, we're a people at tech-powered company, but what does it mean? As a company, we chose a path where benefits of technology are practiced, but people are considered all along the way, a path that uses technology to serve people and not the other way around. What you saw today in our stores is a story about our people for embracing change in the service for Andrea. We want our people to enjoy their jobs and for them to know that they belong at Walmart. Our associates will be leveraging technology, but most importantly, we'll continue to build on our values and humanity. Let me give you 3 examples of the things we're doing in people. We continue investing in our people's compensation, learning and well-being to improve our associate value proposition. First, we're driving competitive advantage, wages to attract and retain best talent. Second, in learning, we just launched last year a new set of actions to improve their development. Among them through -- at Walmart, we launched -- we granted 2,500 scholarships for our associates to obtain their high school and university degree online, and we expect to continue to support this program. We're upskilling and reskilling our capabilities across the company. Third, to support our associates in their well-being, we also offer a free digital membership called Mass that allows our people and their families to have access to physical, emotional, financial and family health. All these initiatives have had a very good impact in our attrition that went from 65% in 2019 to 38% in 2023, and also in our engagement index of 90% and improving 4 points versus 2022, reaching our all-time mark as it was mentioned this morning. To make our associates lives smarter, not harder, I'm going to give you 3 examples of how technology is helping our people. First, in training. 85% of all the courses that we give to our associates are delivered digitally. Second, something very excited for us is by leveraging our global solutions, we will accelerate the digital journey for our own associates with an app called Me@Walmart that it has been built in the U.S. These solutions combined 300 systems into one single user experience. We are launching Me@Walmart and will be implemented in 2024. And third, you're going to be seeing this in the video. We just launched last week for our home office associates, My Assistant. There is a feature powered by Gen AI with similar functionalities as ChatGPT. my Assistant can translate languages, create content and answer questions in an informative way. My Assistant is helping our associates do their jobs smarter, faster and easier. These platforms will help our people spend more time with our customers, improve their way of working, solve problems faster and communicate better. We will continue creating technology that serves our people and know the other way around, investing in improving how we work and how effectively we can serve our customers and associates. Walmart is indeed a tech-powered company, but it is our people who always make the difference.

Thank you, [ Ale ]. And thank you, Gaston. Thank you, Thomas. These 4 enablers allow us to maximize our people engagement, the quality of life and our decision-making processes. Using and developing technology will continue to be a key and an unlock for our success now and in the future, ensuring that we continue to support our associates and that we continue to make world-class experiences for our customers within our digital experience, across our ecosystem and in our stores. Now we leave you with Cristina, who will show you how our business in Central America is evolving. Thank you.

Good afternoon, everyone. I am Cristina Ronski, and I am the new CEO for Walmart Central America. 5 years ago, I joined Walmart Central America as the Chief Merchandising Officer; and also as a Board member for Walmart Chile. Now after 2 years of leading health and wellness in Mexico, I am returning to Central America region to ignite growth building from this foundation. When you think about Central America, what do you think about? You probably think about rich cultural heritage, you probably think about diverse ecosystems, ancient ruins, perhaps complex political environment. When we think about Central America, we think about opportunities. We think about the opportunity to bring our low prices to more communities. We think about the opportunities to go beyond product to services to solutions. We think about the opportunities to go, we think about opportunities of improving the lives of millions of families in the countries that we operate. Today, you're going to hear about Central America's transformation. You're going to hear about our future opportunities, and you are going to hear about the bold actions we are going to take to accelerate growth. In 2020, we have started the transformation to prepare the organization for acceleration. We focused on having solid stores. We focused on the core. We focused on building a stronger financial performance. We were determined to create the capacity for omnichannel acceleration and for launching our ecosystem efforts. So what are some of the initiatives that we implemented through this transformation to prepare the region for acceleration. One of our initiatives was to create a more customer-centric culture to better understand our customer needs. We achieved an NPS increase of 300 basis points versus 2020. We reinforced our customer value proposition with our everyday low prices, we increased private level penetration in our discount format, increasing 470 basis points and reaching 21.6% penetration. Another initiative was to reinforce our low-cost culture. We improved our SG&A by 100 basis points. We improved our supply chain efficiencies and built a leaner structure. This, in turn, supported our CDP investments and increased our profitability, creating this positive momentum. We achieved a sustainable annual growth rate of 10% in sales and 14% in profit. We accelerated close to 1.5x versus the prior 5 years. Beyond the financial achievements, we also made a significant progress on our regenerative agenda versus 2020. So what are some of the initiatives? We focused on our associate value proposition. We increased our engagement rate 600 basis points, reaching 93%. We advanced our diversity and inclusion initiatives. We now have over 1,800 associates with these abilities. This is an increase from 3% to 5% of our workforce. We increased our female representation going from 44% to 49%, which is close to parity. We grew our purchases from small suppliers by 39%, and we increased the use of our renewable energy by 700 basis points. Due to all of these initiatives and many more, I am proud that Walmart Central America was recognized as the most trusted company as well as the company with the best corporate reputation in the region. We built the foundation we needed to accelerate growth to unleash the opportunities. So what are some of those opportunities we have in Central America to accelerate growth. Let us start with our Central America customer. Our Central America Andrea has a budget between $1 to $2 per person in her family for food and consumables per day. We see an opportunity to further enhance our everyday low prices offer and at the prices that she can afford, we know how important price is for her. Andrea walked several kilometers to shop and many different stores, looking for the best deals. We want to provide her with a one-stop shopping experience. We want to save her time and money. Another opportunity we see is remittances. Remittances are one of Andreas most important source of income. She uses remittances for basic purchases. There are $40 billion of remittances that come into the region every year. In 4 out of the 5 countries where we operate, remittances contribute more than 20% to their gross domestic product. We can now offer Andrea a seamless remittances collection at all our points of sale. Another opportunity is to support Andrea with her big purchases. Andrea does look for a refrigerator, stove for her home. But with her income, she cannot pay for it at once. She needs to be able to have an opportunity to pay on a installment and on a monthly basis. So we have an opportunity to offer her not only the lowest price, but a feasible option that fits her monthly budget and access to interest-free installments. In Central America, they used more than $1 billion per year for credits. In addition, we can deliver this refrigerator, stove and any other products to Andrea to her home. This way, we can save her on the cost of transportation, we can save her time, and we can save her money. So what are the bold actions we will take moving forward to go faster and to accelerate. Our strategy is aligned with Mexico's growth formula. But we are sequencing the execution based on the opportunities that we have in Central America. We believe that by leveraging Mexico's learnings, we can go faster, and we are determined to take those bold actions moving forward. One of the bold actions is to more than double the number of store openings per year in the next 5 years. We plan to open 200 new stores in the region. We know that with more stores, our customers can be closer to our low prices. Another bold action is to invest in supply chain expansion and automation to support the growth strategy that we are looking for. We will increase our investments 30% more in CapEx in supply chain in the following 5 years compared to 2023 as a percent of sales. Most of these investments will be allocated to our new distribution centers to expansion and to automation. Another bold action is to accelerate our private brands especially in our discount format to 26%. We will further leverage our global sourcing to offer quality products at prices that our customers can afford. Another bold action is to grow omnichannel approximately 7x faster than our physical stores. We are leveraging Mexico's and global technology developments to improve our customer shopping experience. To date, we have been able to reach a sales penetration of 3.4% in our Walmart format in just 3 years. Another one of our bold actions moving forward is to expand our omnichannel to our Bodegas in the region. This will help Andrea save on transportation on time and on money. Our goal is also to become the Ecosystem of Choice. Last year, we launched Walmart Connect, leveraging Mexico capabilities, expertise to bring our products to our over 1 million customers that shop in our stores every day. Going forward, we expect that Walmart Connect will enhance the shopping experience by connecting our customers closer to the benefits of our advertisers' products. We expect Walmart Connect to become a substantial source of revenue that we can, in turn, reinvest in our customer value proposition and in our other growth initiatives. Another bold action we will take to serve our customers better is to bring collection of remittances to our checkouts such as Mexico did. We want to be the best option for remittances, connecting our Walmart-to-Walmart infrastructure to make Andrea's budget go even further. We want to give Andrea a secure, easy way to receive her money in our stores, where she can in turn make her purchases. We are excited about the future of our ecosystem because as Mexico implements new services, Central America can leverage the learnings and technology to expedite the deployment locally. In conclusion, we see big opportunities, and we are taking bold actions. I am convinced that Walmart Central America will accelerate and continue to be a source of sustainable, profitable growth. And I am even more convinced that we have so many opportunities to realize our purpose. We are committed to improving the lives of Central America families. We want to give them better lives today and better future tomorrow. Thank you very much. And I will leave you with Paulo, who's going to talk to us about value creation.

Good afternoon, everyone. I hope you can still handle probably another 10 minutes or so and probably what is staying between the small break and then the live Q&A. So let me start. So it's a pleasure, once again, having you guys and being hoping you are enjoying the WALMEX day that we prepared for you. You had the opportunity to visit our stores today. And I think you had the opportunity to experience our strategy materializes on the sales store. Today, I am pleased to share with you the results of our growth formula that we've been talking about. Our growth formula is driving value creation. Last year, I shared with you that our long-term vision and our commitment to sustainable value creation. Today, I'm telling you that we've continued on the same path. We remain too committed with the goals we set. We continue to prioritize long-term value creation while addressing the short term. We are confident our business delivers sustainable profit growth. In our effort to double the business in less than 10 years, as Gui has mentioned, we have maintained our investment in high-return projects. We have continued, as you can see, to expand return on invested capital in 2023. So you can ask, so what are the results that show that our growth strategy is working. And I know that my colleagues have already shown a lot of results. Let me highlight some of them. One of the results is growth. In 2023, we achieved an increase on our total revenues of 9.3%, excluding exchange rate effects, which was driven by both growth in Mexico and in Central America of 9.3% and 9.4%, respectively. Another result and an important one is the quality of our strategic investments. In 2023, we accelerated CapEx deployment, as you know further expanding our reach, remodeling our stores and increasing technology investments in the level of automation in our ecosystem. Another result is returns. Our gross investments increased our best in-class return on invested capital by over 40 basis points in line the commitment we made to you a year ago with a commitment to maintain our financial discipline and to create value during an investment phase. These are the key results. And it's important to say we have achieved these results by growing same-store sales ahead of the market, as you've heard before, and by achieving exponential growth in the new businesses. Although there is volatility between the quarters, we managed to meet our goals. We demonstrated the solidity and resilience of our business and of our growth formula. The new verticals such as BAIT, Financial Solutions, Health and Connect are having a positive impact on our core business in very significant ways as you heard today. But you can ask, so Paulo, what are the examples that indicate how is our ecosystem strengthening the core of our business? One example is e-commerce. In on-demand, the ticket size is between 2x to 3x larger than the regular brick-and-mortar customer. In some cases, such as an extended catalog of Bodega, it can be up to 10x larger. Another example is Connectivity and Health. You heard it already. BAIT is attracting more traffic to our digital channels and platforms. The pilot test of digital connection program indicates that the monthly frequency of bike users is more than 20% higher than the non-BAIT users. In our health vertical, as mentioned by Betty, you also heard it in a store. At this early stage, we have observed that the customers with the health memberships, pharmacy tickets that are higher about 4x larger than those of a customer without it. Another example is financial solutions, which are also generating traffic and purchases that otherwise will not occur. As [ Martin ] mentioned during the store visit, we estimated our -- out of our remittance is collected with us, around 50% is spent at a store. We've also seen that there is an up to 20% sales uplift when our customers spend with Cashi. So each of these new verticals is driving growth and strengthening our core business. I have mentioned in the past years, but I really want to say it again, the whole is really greater than the some of the parts. In all of this, it's possible, thanks to our gross formula. It's probably what you expect in terms now. So what are the investments we need to make to further strengthen our growth formula and our ecosystem? In 2024, we plan to invest [ MXN 34.5 billion ] in Mexico and Central America, of which we will locate 45% of this investment to renovating our current stores and incorporating new functions to provide best shopping experience for our customers and continue to align with our goal of being a regenerative company by 2040. 29% will go to the opening of new stores to further expand our reach to more customers. Bodega will continue to be a main vehicle to achieve it. New stores will contribute between 1.4% and 1.6% to the total growth of our consolidated sales in 2024. 15% will be allocated to supply chain. As you heard earlier from Gaston, our distribution centers are evolving towards an omnichannel approach and with unprecedented levels of technology and automation in the country. Lastly, 11% of our CapEx will be allocated to technology. As you heard from Brian, we are making investments that not only improve our current capabilities, but more importantly, pave the way for the future. With technology as a key enabler, we are prepared to transform and improve the lives of our communities. Important to mention, our above-mentioned technology CapEx spend represents only about 1/3, I repeat, 1/3 of our technology total spend if we contemplate also local and global OpEx investments. This illustrates how much we are investing in technology to unlock the growth potential of our business. As in the past, as you can expect from us, these investments will be made with the financial discipline that characterizes us and will be reflected in the returns on investments that you will be seeing. So what are our goals for the future? As Gui mentioned, we will accelerate growth, doubling the business faster than before. We deemed growth, and it's an important number here as well, we are committed to extend our reach, opening more than 1,000 stores in Mexico and Central America in the next 5 years. Since stores, as you heard from Ignacio, are the cornerstone of the ecosystem. Through this formula, we'll accelerate value creation, committing once again to increase returns on invested capital over this next 10-year period. To fuel this value creation, we will rely on the development of e-commerce in the new verticals proposition. Both together, that's the number you're seeing there, should account for up to 35% of the incremental profit that we'll generate in the next 5 years. And I think there is potential for more, we think. We believe our growth formula will continue to accelerate value creation. Every innovation we introduced, every step we take forward is just another link in the chain that connects us with our customers. Whether it is through BAIT providing connectivity, Cashi facilitating digital transactions or through our stores, which are really the most important point, offering access to a wide range of products, we are committed to meeting our customers' needs and making their lives better. Is I'm about to wrap up this event? Yes, I am. I would like to leave you with 3 main financial takeaways; one, our growth formula is working allowing us to double the business faster; two, we are creating an ecosystem where the whole is bigger than the some of the parts; and three, driving value creation with best-in-class returns on invested capital. Lastly, what I want you to know is that when you invest in WALMEX, you are investing in a growth company with best-in-class returns. You are investing in a company that pays the consistent dividend to shareholders with the average dividend yield; three, you are investing in an e-commerce company, an omnichannel market leader. You are investing in one of the largest and fastest growing players in telecommunications. You are investing in a top 5 player in advertising. Yes, as you heard it today, you are investing in a future top player in primary health care and digital education. You are investing in a company that is not afraid to challenge the boundaries of innovation. But fundamentally, you are investing in the future of Mexico and Central America. Thank you very much for your interest today. Now let's do a short break and we will turn for the short Q&A. Thank you very much.

Just coming back on, obviously, bringing it all together and the investment plan. And one of the things that stuck to me was the 45%, almost half of CapEx going into remodeling. Help us understand maybe frame what are the focus areas of these investments into remodeling as it relates to the strategy to also grow with the new businesses? How much do you need to invest in remodeling to enable all the new strategies we've learned about today?

Thanks, Ben. I think a good part of that investment is just business as usual that you have the stores that you'll have to maintain over a certain period. You can enter into discussion whether it's out of cycle or not of cycle, but it's what we have to put the stores up to the scratch. And then, of course, there's also a good chance that about investments that we are making, what we're talking about, we want to improve more around the -- some of the fresh experience in the stores, but also in some of the stores, enabling for what we talked about the verticals. But the bulk, if you wanted to stay on message, Ben, will be about actually just maintaining our stores and renew it and updated to the new protos and what we define it going forward, they will look like as well as, sorry, the regenerative component, which comes along.

We have a chart to confirm with you and show it today, but we showed it previously to you guys that show that our growth till 2013, I think, was mainly achieved through new stores. Those stores are now coming to the limit of the remodeling cycle that we use. So the numbers in a couple of years ago going to represent that need that we have from time to time to renew stores. So there are more stores than they will incorporate there will be regular numbers. Also, we are changing a little bit this, we used to have from time to time, full remodels. Given the dynamics of the market today and what's happening about omni, we're probably going to do bigger interventions, but not full remodels more frequently. So you get for a couple of years, the combination of those 2 things, we need to do full remodels for the stores that are completing 7, 8, 10 years, and you need to -- you see the change of what we are doing. I do believe that changing it to doing big interventions for adapting our stores is going to mean that we are going to have the whole fleet adapted much faster for the omni business and the new verticals, then we're waiting for the cycle to remodel it. That's the main reason.

The first one would be for Gui. The last conference call, you mentioned that you figure out well how to accelerate [indiscernible] Bodega or Aurrera if I'm not mistaken. Just curious if you can guide us here on why not to expect more openings in 2024, just on Bodega Aurrera, what could you -- or what would you be doing different in order to accelerate growth here? And then the other one is for Paulo.

You will see. You will see more growth in Bodega Aurrera, especially Express. We have prepared ourselves. So you should take us 2 years to open Bodega Express, it's taking about 7 months. We had to make small changes on the things we do because it required licenses. So we change it the way we do. We change the type of products we offer, but we will offer fresh which sometimes others don't. So we will do it. We will also experiment different sizes, if needed. So you're going to have a growth number. It was in our plan before. We also need to coordinate it with the change in supply chain. Our supply chain was built for big stores, and we've been more and more adapting it to the new fleet we have. So there is a synchronized way that we will share that we'll have the right cost to do that. I think now we are ready to go for bigger numbers in Bodega Express and we will. We are going to see past year solid and we are going to see more this year.

That's nice. And the other one for Paulo, if you can comment on the comment of the [indiscernible].

You get away with this one, but let's make sure everyone asks that I get away with.

I comment on the 35% incremental profit unless I got it wrong, I mean it's like a 6% or so CAGR on EBIT, right? So just curious -- I mean, why this 6% are not higher? Or are you assuming kind of like some contraction on the margin side. Maybe you can clarify on that?

I didn't give you anything on EBITDA growth. [indiscernible] All I'm saying is that the profit incremental that we think we will see in the next 5 years. We are expecting to see that of that incremental profit is growing in the next 5 years. A good chunk of that, and 35% will come from the new verticals and e-commerce. So all the point was there, it's just showing that they are contributing more to the core business. So I've not given any data on EBITDA day. Novo, Renata, Alvaro and then Irma.

It's Bob Ford from Bank of America. How should we think about the evolution in the path to incremental profitability for both BAIT and Health. In terms of maybe some more specific benchmarks in the user base or monetization opportunities or scale thresholds.

I'll do take that. I made a point to you, but I'll take that. First of all, we do various benchmarks. So one of the things that we have learned is that we are going to do this type of business, you better put focus on growth first before you monetize them. Remember, we have changed our Board members. We have brought our board, people that have the capabilities that we need for what we're trying to do in the future of our business. Among those Board members, we brought Eric from -- he was Mercado Libre, now he runs his own fund of management, and we brought the person in charge of strategy for our [indiscernible] business in India. The strong recommendation is that focus on growing the number of users and then you start to monetize. We'd love to do both at the same time. And formally, and we need to focus a little bit. So our main focus is to grow. Once you grow, monetizing options are multiple. So if you look at the P&L of BAIT and you compare that with P&L of phone companies, they are very different because they're already monetizing it. Wait and see. We know the things. [ Beatriz ] has worked 20-plus years in the phone market. So she knows exactly what can be done to monetize. It's about the time to start to think about it but we still have a huge growth plan for this year. I think my personal opinion, take the risk that if we achieve our plans and we will achieve, we'll be able to, next year, start to think more serious and more monetizing BAIT. However, we are also learning about how to look at the P&L, I'm finance background, the Polish finance background. I came from the same school. It's difficult for us to adapt because once in pharmacy, once somebody had this great idea of giving 5% discount for somebody to acquire membership that costs MAX 30. I think my first reaction is that tell me who that person is, I'm going to fire them. I couldn't find the reason. Do I get to realize some months later that the average ticket of that person grows 4x that 1 million people have attended our offices, our doctor offices, that had lower tendency before because it comes free. So if I do the P&L of the office, it's a disaster, the doctor office. If I do the P&L of the membership and I include the 5% discount in that P&L, it is a disaster. So we are learning how to measure those things. But more than that, we are learning how to measure the whole consequence of everything we are doing. So we have initiatives to monetize. This digital connection problem that we are going to launch in quarter 2 are going to give us the data. But more than data, we need the goodwill of guys like me to learn because if I get it the way I used to get it, I want to cure many business opportunities and many monetization opportunity before they start to give us. What I can tell you is that based on what I saw, it is good. It's very good. But we need to -- we will need to learn together first how to measure it. The [indiscernible] system is going to grow faster. So one of the things I'm telling Paulo is that and I'm going to hate me for that. We are going to grow faster. Well, maybe the first few years, process going to grow -- not going to grow as faster but we are happy with us doubling the business and growing profits a little bit higher. Let us imagine, doubling the business in 10 years, 7.2% growth, mathematical, and we are happy or 10 years, good growth -- grow profit at 8% -- but now if I grow sales at 10% and profit at 8%, you say reduce the prices, sell it. But that 10% growth and maybe that's a slightly decline in profit percentage in a few years' time, when we learn how to monetize that extra growth, wait and see, wait and see. That's why I hate when Paulo talks about percentage margin. It's not good. That's my last desperate try to convince him. I'm going to do that public, but we will need and you will need to see our business differently. Unfortunately, my grow former doesn't tell me what's the way is the formula for us to see it. So what we do today should try to give you more data. So we will learn together. We will learn together, but it's good.

It is about the financial solutions. You have presented a series of initiatives that can be transnational for this business line. So my question is, can you share your learnings, especially after the Trafalgar acquisition in 2023. And if that helped to accelerate the plans. And the second point is, can we have some idea of the time frame that this change will happen and when the consumer will have one-stop shop in terms of financial solutions on the Walmex?

Let me help you. Let me share the learnings before Trafalgar, before you learn you had. When we had the idea of wallet, it came together with the idea of BAIT. Our customer had a couple of main pain points, one that they didn't have Internet; second is that they didn't have a payment method. And that was not allowing them to buy in the Internet. So we had this great idea of doing a wallet. An open wallet was a bad word in Walmart at that time. So we've got the rights to launch a closed wallet and we didn't have a bank license. Walmart completely changed its view after the acquisition of PhonePe in India. It's a great business. If you haven't taken a look on this, take a look on this. And then we approach in open wallet. I think the biggest mistake we had was to overpromise. We thought that given our reach, et cetera, we could operate even with closed wallet. It's impossible. Because our customers, they will never lock their money in a closed wallet because they don't have enough. So we were too optimistic, and we sold to you the optimism. We learned. Do I regret having launched closed wallet, no? Because a lot of the learning curve we're going to have now with open wallet, we had already with closed wallet. So I expect this man now to do a very fast and good job. But we have lots of learnings. And then it comes Trafalga and the difficult but he knows better than me, so I'm going to pass the button to you.

Thank you for the questions. Now we are doing 2 things. We are transforming the closed-loop wallet to the open-loop wallet with all the features I told you today, and we are doing all the compliance stuff and paperwork to being able to launch this. Having said that, we're going to launch in a few months, and we are near. Everything that I showed you today, it's already working. We have 40 accounts that were open through the process that you've seen in the video. We have done purchases at stores in Mexico and other countries. We made withdrawals, ATMs in Mexico and in other countries. We make transfers to one from any bank to Cashi from Cashi to other banks. We received remittances digitally already in these Cashi accounts. So we are already -- we have already tested most of the things that you've seen. We expect to launch in a few months with everything or most of the things that you've seen. And we are just in the end of the road, making those adjustments to be able to launch it soon to all of the customers. Most of you received also the mark of the card. I swear that I promise that next time I'm going to give you one with some funds so that you can also try it. Those are just Mux. They are not going to work. But we already have 40 cards working and everything is being tested and it's working well.

My question is for the lot is actually on private label penetration. I think you mentioned that you plan to double private label penetration. You didn't sort of quantify the time frame. So maybe if you can give some color on that. But the bigger question is how you're balancing sort of national brands versus your private label growth on the shelf, right? That's a big battle to have and whether you're seeing some consequences as a result?

Yes. Actually, I talked about this during lunch with a couple of you. What we see is that we want to offer each customer what they want. And what we offer in Walmart is a portfolio of brands. So we know that the value proposition for the customer is not just private brands and it's not just commercial brands. So for each manner, we have a different value proposition and a different mix in private brands. One of the things I've been asked is how much time do you want -- do you -- how many years do you think you're going to double the penetration? My answer was, if I tell you 2 years, you're going to keep asking me 2 years why did it happen, if I tell you 3, same. The thing that we have today, and I think we already been working in the past 3 years in the quality of our brands, in the reputation of our brands and all the data points that I share with you today shows that the customer really trusts our private brands. That's why we think we can accelerate that. Now we have the basics of the quality, we have the specs, we have the innovation. With what we've done, we know that now we can innovate. We don't need to follow the leaders. I told you during the visit, in some categories, our brand is the #1 brand. And we are competing or giving that value to our customers with our brands and with the rest of the brands. Do I see any risk with the rest of the brands or the suppliers? No. We've been partnering with them. We want to grow the business as a whole. That means we can grow the business with them. And at the same time, we can further increase the business with our private brands. That's the way we see it. We really trust the pace at which we are growing our private brands.

[indiscernible] and Alvaro.

Mathematically, if we grow Bodega faster, the private brands percentage of sale is going to be faster. Just making her life a little bit easier, but it has to do better than that.

Irma, over to you.

Irma Sgarz from Goldman Sachs. Just going back to your CapEx plan, Paulo, should we -- when we think of CapEx not in terms of absolute number because that's obviously hopefully going to continue to rise, but when we think as a percentage of sales, should we think as 2024 sort of roughly as sort of the peak or is it -- and it sort of coming down from here? Is it the new plateau?

I think in the next couple of years -- in the past, I think a year ago, we've talked about the next 2 to 3 years. Today, you've heard Gaston talked about a big investment we make in one of BDCs, the full automation. And that you see that we have planned an investment early on actually when I joined the company two years ago and then because now, of course, the levels of the labor costs in this market, these type of investments start to just decline. So I think you will see these levels of investment CapEx as a percentage of sales to be around -- in the next 3 to 4 years hovering around the levels that we probably seen this year. But I think our commitment, which is important, and I said it today, I said it in the past as well, is accelerate growth. But Gui already was making the point illustrative when we say in absolute returns, but also keep on delivering on return on investing capital, keep on delivering on returns. And it's our job to manage that. It's also managed the capital, it's also managed working capital, and I think there's potential there as well.

Yes, I would have -- that would have been my follow-on question. And where do you specifically see the opportunities in working capital, is it inventory?

Inventory.

Let me tell you, last year, we said 2, 3 years of CapEx everybody has a reference of about 3 percentage points. Last year, we said 3 to 4 for a couple of years or 3 years. This year, we are saying 5. I hope next year, we'll tell you 10. And we are working hard to find more opportunities to invest at the return rates we have. So we have 2 options here. Take this as a bad news that CapEx level is going to be higher. Take this as the best thing you get from this day that a company that produces best-in-class ROI, decided that they find a way to invest more. And we also have promised you are going to increase ROI.

Daniela from HSBC. So on digital, the penetration of e-commerce in Walmex is 6.8% of sales, and in Central America is half of that. But I was just curious as to why don't you have like an ambitious target for e-commerce rather you want to grow those other business? Is it because of the profitability of e-commerce compared to this other business? And then in terms of sales driver, that can be as good as. So if you could help us understand why not, oh, I'm going to accelerate in e-commerce because you do have a very big white space there.

Yes. So let me start with the ambitions. We do have it. It's a very big one. We discuss it frequently with Gui. But then it's a matter of priorities, investments and doing it the right way. I come from a background of building sustainable business and not creating crazy unsustainable business just to show big growth or big numbers very fast. And we saw that with -- and I remember a few questions a few years back about ultrafast last milers and why they were growing so much and we're not growing that fast. And the reality now is none of them exist, and we are still here. So believe us, we are doing the right steps to create a profitable and sustainable business for the long run. We need to accelerate. I agree on that. There's a lot of things we need to still do and keep accelerating. But I believe that all the digital transformation we're doing and all the leverage with technology with the U.S., with the Walmart commerce platform, will start paying a lot of or giving us a lot of growth going forward. And together with our commercial team as well thinking differently using technology and using data to create a better assortment and better offer to the customers will help us accelerate. And then we have our core that is groceries. Remember, we are market leaders there, and that part is profitable. We need to keep on working on the rest of the business.

Let me help a little bit more historical view. We, big animals, may start slow, but once they reach some speed, watch. Some years ago, when [indiscernible] joined, we didn't have the knowledge. So I had a huge weakness to grow e-commerce, and I was totally ignorant. And we are playing in 1P and a little bit on marketplace losing a lot of money. And your questions here were a little bit different. Well, how much money you're going to lose? How much time you're going to waste? Why don't you leave it to the experts? Let me -- the investors who are saying, let me invest on the new digital companies and you do your job on stores. And we were telling you, do learn, be patients, trust us and a omni company is more profitable than a brick-and-mortar company or a digital-only company. We bet on it, and we changed our strategy. [indiscernible] with his knowledge, we came to the conclusion we were trying to play on somebody else's stadium, their type of game. And we said that we have our biggest asset were our stores, our big competitive asset was our stores. So we said we have a competitive advantage in our stores, and we have a business that at that time was starting to be attacked by the last milers, which don't forget, was a big threat. They were arriving. They were doing only a small piece of the job, getting all the information and maybe they will be coming profitable by getting that information and monetizing it. That was the threat. So we decided to put our focus on growing where we had competitive advantage and on defending our business for that threat, and we succeeded. And you see what's happened with the last milers. We built last mile capability superior to what some people that we even thought of acquiring them had. Look at where they are now, look where the big animal is today. We had another huge problem. As you saw, we have a big benefit because we benefit from U.S. tech development. We also have a big problem when they are in trouble. So they were focusing on themselves to develop the right tech to fight the battle that they were also behind. So we didn't get the attention that we needed to develop the tech to compete in marketplace or to compete, but we did not even easy to blame them and you say, they didn't give me the tech. But I didn't have the talent. Now I have, because it's different if I try to hire the talent or he does it. He will hire the right people, I will hire the wrong people. So we hired an excellent team for e-commerce. So we build the talent. We build the capabilities. Now we have a good portion of tech that allow us to gain, what, 6, 8 million of new SKUs last year -- 9 million of new SKUs last year. And I think you promised 10 more million this year. And in 2 years' time, we'll be partly to the U.S. So watch is the elephant. We're coming. They're coming. Look at what happened in the U.S. when the elephants started to accelerate, who from here, including -- no, I can't say that, would BAIT Walmart would be in the position we are today in the U.S. The learning is not going to stay there. Wait and see.

You allow me I just wanted to clarify one the 3.2% -- because we are started in Central America, it is a Walmart format, and that is why the huge potential we have when we talk about expanding on demand and expanding to Bodegas. So that is for one format, even though we have.

To be fair with you, you wanted to show much faster than Mexico achieved it. We cut it. But now you have the opportunity to say it.

2 quick things. I want to use the opportunity to say one thing and then we got 2 questions. I'm pretty sure your question comes because you didn't see out there as committing long going forward, what we're going to do there. Where you saw today a lot of numbers that we commit. One, I hope that's appreciated by all of you. And the e-commerce one, we've not committed because we probably made that mistake in the past and there are things that we cannot control. So I think just to clarify that, that you appreciate, there's a lot more numbers out there. No, actually, it was Filipe, Andrew, and then you, Federico, at least once I've seen -- sorry, you were first and then you Federico.

[indiscernible]. I apologize if I don't recall exactly the name of the initiative, but I wanted to explore the pilot to collect data from consumers, the cell phone numbers.

Digital connectivity program.

I'm curious how this could be a game changer for you to be more assertive in the new businesses?

So imagine the following. I have by far the best aggregate data in Mexico and Central America. I know -- we know Andrea. We didn't know that well because we had not invested in data and in insights. Then we did a huge transformation of the business. Now I can say we know Andrea, we know Lucy, we know Carlos very, very, very well. But if I want to talk to her, I need to use traditional methods of talking to her. And if she wants to talk to me, she can not do massively. So we have created the capacity to massively talk to her and to massively listen to her. Tomas mentioned it. So today, using artificial intelligence, using all the technology we have developed, I can talk to them, and we can help to understand her needs and solve them fast. But also we need more granular data. So somebody asked me, is Andrea by BAIT by -- we have pieces of information that shows us there are a lot of synergies among the various verticals. I can prove in those 3 states because I did -- I cannot prove it in the rest of the country. So we will be able to manage our relationship with Andrea and then to take the right action and measure the consequences through the digital program. Because she gives us her telephone number, and we register every transaction she does with us, from a store to BAIT, et cetera. By the way, we will create over time the best credit rating in Mexico for our kind of customers with that information, some consequence of that. So we will know and we have prepared the company that once we know we can take action fast. We're ready to take action. So our information will not be business by business at least as good with the digital players in those businesses, but we will have the view of Andrea in the various businesses. So if you tell me what's the great announcement this year [indiscernible]. And we've been fighting for the last 2 years to build the right thing. We could have done some years ago, for example, by offering join us, and that gives you a 2% discount. Now my view before any benefit would start with MXN 800 million, who would said no. So we've managed to build something that half of the adult population joined in 6 months without giving those 2%, without treating those customers that join different from the ones that are not joining because San Alton told us that if I accept it and I give different prices, over time, to maintain my margin, I have to increase the overall margin. So it's not smart for everyday low-price players. We will give them benefits that we measure, and they are good enough to incentive behavior without damaging of everyday low price. So it took 2 years. That's good. It is good.

I will add that the digital connection program will be the glue for the entire ecosystem. First, we are going to be having this knowledge of Andrea, and we were able to serve her as she deserves. We are going to be able to really deliver value for Andrea's aspect. But the most important thing is imagine the power or gather data massively, we have the knowledge and then convert this data into opportunities for Andrea and for all mix. Let's talk about e-commerce, for example, imagine the power understanding why Andrea [indiscernible] frequently one item, we can offer Andrea to send to her house in a subscription model. Imagine the power for BAIT to convert this data massively to convert to be a BAIT user because we have the best offer. I think we are launching the program in the right moment because connect making the power of having the biggest audience to be contact in Mexico with a deep knowledge of attribution. We are going to be having the power of telling the advertisers how -- exactly what kind of products or what kind of products they can move their offer.

Tell me which other company can advertise directly to customers and measure the result immediately without [indiscernible]. So I think BAIT has been so shy about the numbers of Connect.

Thank you. That's why it's a very important announcement today.

Thank you. So we only have time for the 3 last questions. So it's Andrew, its you, and Federico. Sorry for that, guys.

Andrew Ruben with Morgan Stanley. So calling back to some of the comments on talent. I'm curious how personnel expense fits into your outlook and that's both from the perspective of wage increases for store-level employees, but also the go-forward need for incremental talent around tech, ads, logistics, just putting that all together.

True, very -- Don't take note of that, please. Personal expense I try to avoid. When is the wrong talent, maybe cheap, but doesn't bring. So each of those people plus the people that report to then make a very good salary. I don't care. They produce a lot. The second thing is to -- I don't know how to say in an elegant way, but to hire the wrong person with high initiative. That's the biggest result that you can have. So that's one thing. So our top talent, they are here for 2 reasons. But a lot of them, including myself, we don't make more money we used to make in our lives before joining Walmart. What convinced us to come here, one by one was that with your talent, you can make a much bigger difference than what you can make because you can reach more people. [indiscernible] right to get good money, and we do it at Walmart. But what brought is here is not that. It is the difference is our purpose. We don't lose people. We don't lose senior people. All of us have been invited 200 times to leave, we don't, because what we are going to do is different here than what we can achieve in other companies. Second thing is that for the biggest population, we need to pay better. We have a huge role on helping them after the change in the working life. They need to become digital. So we have heavily invested in the last few years, not yet where we want to be. So we will pay them better. We will recognize the contribution they do to our business better. I cannot correct the past, but I will make sure we do the right future. And we will generate enough business opportunities to pay for that. Be sure about that. But the numbers you got on engagement of -- it's not 230,000 people, 90-something percent of them responded to questionary, the engagement we get, the lower rotation, the e-satisfaction that we didn't show you pays back because they sell better the customer. So maybe the personnel costs will continue to increase maybe because the government is going to give. But if the government doesn't give, I'm going to give. We'll pay back.

Okay. Can I just add 1 more I think -- let's not forget the positive kicker of the labor costs going up and people having more money in their pockets and in consumer spending increasing, which goes directly at a target that is served by our company. So that's always also a way of looking at it. So sorry, I forgot your name.

Héctor Maya, Scotiabank. So you've been building this ecosystem of new businesses over the past few years and e-commerce and new initiatives. So all of this has been building up this critical mass and you've asked for patience. Now you're seeing -- you'll see, right? And for the size of this company, to say that in the next 5 years, out of the incremental profit deals that you'll see, 35% of that will come from this ecosystem. My question there is, is there space for an additional new avenue to become part of your ecosystem that could even accelerate that number further or 35% in the next 5 years. Is that the full picture, the full vision could we even see a higher number with what you are seeing now, your learnings?

Problems that I don't know. I don't know. We try to put in our P&L everything we are doing. I confess, I don't know. I'm learning every month. We're getting better. So we know better on BAIT, we know better on Connect. Asking me the Health membership, I don't know the potential. Last year, my previous boss, [ Judit ], she came back from a Board meeting. And she said, congrats, they like it [indiscernible]. But they're asking me one question. I don't know how to answer. We said, tell me Judit, what's the limit? So I don't know because every presentation I do come to the conclusion, the limit is higher. I don't know. I know it's good. I have this feeling. I have the benefit that sometimes the CEO can take some [ batch ] that nobody believes. Do you know how to launch it BAIT. Betty and I discussed it for months. Alberto, our lawyer, gave the idea. If he found Betty who understood the business by having worked at the 20 years, but we did not hire her because of telephone business, telecom. We talked it for months, and I got very convince it. I didn't have the numbers. So I took courage. I think I never presented to my boss, by the way, but I thought it was too much to launch something without presenting to those guys to the executive committee. So I decided, Betty and I had already decided it. Let's socialize it to the executive committee. And we did, was so absurd that they stay quiet. And I learned that when once something approved then everybody stay quite say, approve it, move. So next day, somebody is very important from my team came to me and said you are an idiot. How can you approve in 5 minutes to enter into a new business that we know nothing about. And I said, sorry, I did not approve this in 5 minutes, you did. I've been looking for that for a few months. You're staying quiet, approved in 5 minutes. I don't want the numbers to be part of my P&L. I said, fine. I am the CEO, certain things I'm allowed to do. But take a look on it. They came back a couple of days later and said, "You know what, give it to me, I want those numbers." We don't know. I'll be lying to you. What I know is that with 5 million customers that need desperate those benefits and the formula that we achieved that can deliver those benefits to them in a profitable way, this is big. The problem is that I see this is big and I try to sell health and I fail, why? Because we know nothing about health. Then I learned. What I can say, if you look at the curve we show, the learning curve is shorter. The learning curve of health is shorter than BAIT. The learning curve of Education is going to be shorter than Health. What's the limit? Don't know. So I need to keep telling you trust me. But I learned that trust is a question, you get trust when you are honest, reliable and caring. I hope we have proven to you guys in the last few years that we are honest, we are reliable and we care about people. That's why I have the courage to ask you, trust me. I hope it works, and it will.

So last question. Fred, you have the chance to end on a high this event. Over to you.

You'll be remember forever.

No. Walmart Express, you made some remarks in the first quarter conference call. With your view for the year, if part of the remodeling CapEx for the format, how do you see to improve the format. I expect this [indiscernible].

I had promised my wife to make these statements because she complains about it everyday she goes to the market. So as I said to you, it happens, stupidity happens, and I used to have a boss that said, if stupidity happens, it is something that happens exponentially. You do a mistake, you want to prove, you can fix. You do another mistake, the result is worse, then you do another mistake, the result is worse, and you keep believing you're going to make it. So more than CapEx, it's more simple than CapEx. When a format totally fails is because it has the wrong customer value proposition. We took the assumption, 2 assumptions that look logical. We cannot compete with the top premium stores. We're not that. We can -- we don't manage 10 stores. We manage much more. And 2/3 of our stores, [indiscernible] stores were located in BCD locations despite. Informally, we got it wrong. Because we recently found another way of measuring who shops with us. And by using this new methodology, which is much more accurate, which is good news that we found it, is not 2/3 in the CD. It's 2/3 on the AB. So we've got the wrong assumption to do it, totally wrong. My fault. Most of them were not even here. So I cannot blame anybody else. Because of that wrong assumption, we did what [indiscernible] store, the assortment. So we said we are going to transform those stores similar to Walmart Express, same price, much simpler, much simpler the e-commerce and customers are going to pay less, shop fast, and they're going to come and say thank you. They didn't come, worse for a while. It went well because it was COVID. They were buying for e-commerce convenience, so we misled ourselves. And then it collapsed. For other reasons as well that you don't see, because we merged everything Walmart, when you enter our site, you can choose which story you want, a Supercenter or and an Express, which one would you choose if the promise of delivery is the same, the price is the same. One of the bigger assortment. So internally, we moved a lot of the traffic to Supercenter. And then I can go on for hours, but I may cry so it's better that I stop here. So we are stopping by redefining the value proposition. Oh gosh, it's so difficult, isn't it? It's in Central America, the right value proposition, but it's not that difficult. What is there? So I think -- I hope it is improving and for it takes a little bit of time, at this time, just look in the next few months. We need to do it fast. So I don't need you to trust me, just go and see in the next few months. It's going to improve. Don't expect to see a market CD or whatever it's called, [indiscernible] market, whatever it's called, not expect to see it, but it's going to be good. It's $1 billion out of $50 billion. That is a big thing.

Thank you, Gui. Thank you, [indiscernible]. You definitely follow the script within it in a high. So let me then just say a couple of things, Admin. Just a couple of hours ago, we actually reported or published our annual report. And just in case of you, it's actually to read the 3 under last pages of our annual report. Secondly, and more importantly, just thank you. A couple of things to say. First of all, thanks of you to all that came here today. You invested one day of your time to listen to what we had to say today on the Walmex Day and because you are following us. Thank you very much on behalf of Walmex. Thank you very much the ones that are online, watching this live streaming and also spend or invested your time in following us. Third one, a big thanks to my team, IR, that have been working endless hours in the last couple of weeks to prepare this show to the teams of communications that is here spending a lot of hours as well in the last week and IT, but also the broader team, I see other people from finance there that has been working there on these hours, a lot of people out there in that corner, they have been now working for weeks and weeks and weeks on this event. Thank you all. Enjoy the day.

Thanks a lot.